Letters

Small businesses need some positive support

Once again, the Government has done nothing substantial to help small businesses with its decision not to ban upward-only rent reviews on leasehold properties.

You gave one example of a restaurant in Soho having its rent increased to £235,000 a year, which shows how landlords are allowed to charge unrealistic rents.

Assuming a 50% gross profit margin on turnover, this would mean the restaurant would have to take £470,000 just to pay that one expense (£9,038 a week).

Small businesses have to put up with too much bureaucratic regulation, high VAT, high interest rates, high business rates and high national insurance contributions for their employees.

Surely, the John Majors, Kenneth Clarkes and Michael Heseltines of this world must realise that small businesses will never "take off" in this country until there is something to help them succeed.

A well-known US business consultant once said: "all businesses proceed on the basis of beliefs or judgements of probabilities and not on certainties." Let us hope this Government can make more small businesses a little more certain.

JOHN GOMERSALL,

Worminghall,

Aylesbury, Bucks.

Rent problems could be worse

I was interested to read about the Government's decision not to ban upward-only rent reviews.

A colleague suggested how commonly adopted "tenants' break options" on new leases could solve the problem, whereby the upward-only review could not be imposed by landlords.

This is certainly not the case. The restaurateur taking new premises on a 15-year lease - Pizza Express in Covent Garden, for example - will perhaps have to spend between £500,000 and £700,000 on fitting out the premises. The real return on capital is therefore only enjoyed from year five and perhaps even year 10.

The only likelihood of the restaurateur wanting to exercise an option to terminate the lease would be if the premises were so over-rented five or 10 years hence that running the business became unviable.

This would only be the case in either a deep recession or where a restaurateur had taken premises in a location which deteriorated substantially.

Using the option to terminate would be an admission of failure with inevitable loss of original capital injection.

The institutional landlord would be prepared to accept a lesser rent, especially from a good covenant, if a tenant did not enjoy the option to terminate.

Since the tenant is unlikely to utilise that option for the reasons above, perhaps Pizza Express would have been better off on its Covent Garden acquisition to pay a lower initial rent, as the upward rent review prospect would be less daunting. In any case, it is probable that over a five-year period rents will rise.

It is surprising that while retail values have in some cases diminished by 50%, restaurant rents have held up fairly well.

Restaurant rents were perhaps at their highest in 1990, and it is likely that parties facing upward rent reviews in 1995 will be able to negotiate a nil increase on premises which will still perhaps be over-rented.

All in all, restaurateurs are not nearly as harshly affected by the Government's decision as retailers and office tenants in London's West End, where rent has fallen from a high of £70 per square foot down to £30 per square foot today, perhaps never to rise again.

ANTHONY LORENZ,

Baker Lorenz,

London.

High hopes for the handover

Your cartoon (28 July) illustrated all too clearly our concerns about the final versions of the food regulations.

I was encouraged, however, to see your picture of the old and new food ministers, Nicholas Soames and Angela Browning, in the same issue.

Let us hope that their handover concentrated on the food industry's digestion of the new rules as well as theirs of the food industry's mouth-watering produce.

R A SMITH,

Secretary to the Council,

The Royal Institute of Public Health & Hygiene, London W1.

You're paying for the service

The letter from Paul Hodson "Daylight robbery hits catering" (21 July) is, I hope, far from the norm.

Service charges relate to costs: the hourly wage rate, the travelling time and vehicle costs - both in and out - and the profit mark-up. These result in a call-out charge, which a customer should request details of, and he then has the opportunity to accept or reject the offer.

It would be interesting to know whether Mr Hodson's mixer was serviced by a manufacturer's service agent or his local equipment supplier. I suspect the former, since the local man has his next sale to consider.

As a matter of comparison, we had a call from the Castle Hotel here in Taunton last Tuesday. This also involved a mixer which had failed. We collected it, returned it to our workshop, replaced one component and the dodgy wiring and returned it later that afternoon. The charge? £27 plus VAT.

FREDERICK PEARCE,

Wessex Catering Supplies,

Taunton, Somerset.

Explaining the charges

As a member of both the Catering Equipment Manufacturers' Association (CEMA) and the Catering Equipment Distributors' Association (CEDA), I was disappointed to read Paul Hodson's letter regarding servicing charges (21 July).

My company is fairly unique in being able to see the argument from both sides. Admittedly, we do not carry out service work in London, but we do have call-outs to many far-flung locations in Scotland that involve considerable travelling time. This must be charged for.

An engineer is an overhead like any other in a business. However, we charge travelling time only when applicable, and not a flat call-out charge regardless of distance.

Perhaps Mr Hodson's error was not to ask a CEDA member to quote for the service work.

Distributors are having to make every effort to keep prices down, just like hotels and restaurants. The client must receive a quality product (and service) at a competitive price.

The end user has his part to play by using his judgement as to who can best supply the complete service at a realistic price.

While we could not have helped him in London, there are half a dozen CEDA members within the M25 catchment who could have, none of whom would have charged £169.91!

QUENTIN MACLAURIN,

Sales Director,

John Kelly & Son (Kitchen Engineers),

Bonnyrigg, Midlothian.

What's small fry to you . . .

The article on Lou Jones, National Chef of the Year 1994, is a brilliant insight into the skills of a master craftsman who is at the peak of his powers.

However, Michael Raffael suggests that the National Chef of the Year title may seem like small fry if he wins the Military World Cup.

Lou Jones acknowledges the title is the ultimate accolade. It is Britain's premier culinary competition award held every two years.

No-one calls the FA Cup Final, the Derby, The Grand National or Wimbledon "small fry". In our field of play, the Craft Guild of Chefs' National Chef of the Year is on a par.

STEPHEN QUINN,

Chairman,

The Craft Guild of Chefs.