Jonathan Downey, co-founder of London Union, the group behind the Street Feast markets, tells Jennie Milsom why he's campaigning for a National Time Out on rent and how delivering the impossible was never going to be sustainable for the hospitality industry
Your Hospitality Union Whatsapp group is a huge resource of advice and information for more than 2,000 members. What inspired it?
I'm in a strange position, really. It seems like a silly amount of influence – I'm just one guy who's got a relatively small business. I'm not a powerful person.
I come up with something, then I sense-check it with a few people before sharing it more widely. I've got four or five people to bounce ideas off. I talk to chief executives and chairs of big businesses and I've got my business partner Rick [Weakley].
I've done some good thinking about what's needed, I've been really clear about pursuing those ideas and initiatives and I've been able to broadcast and share them in an effective way in a very short space of time.
There was a three-week period where I was working 18-hour days without taking a break apart from a pee and a cup of tea. I don't recall a period in the last 25-30 years where I've worked that hard.
I'm approaching this from the viewpoint of what is best for the overwhelming majority of people in our business
What are you focusing on right now?
The best thing for most people in our industry is a National Time Out – nine months rent-free, with a matching debt repayment holiday for our landlords. Understandably the pubcos don't like it, but it is being supported by UKHospitality.
We can't each negotiate 150,000 separate agreements with landlords. We need a national arrangement that everybody falls in line with, that the government decides and legislates on.
We should get the rest of this year rent-free – for most businesses it's the biggest single cost apart from staff – and extend loan terms for landlords, because if they can't get their rent for nine months, they can't repay the debt for the premises. If they have borrowed, they should get a nine-month repayment break. It should be pushed back onto the banks – they can handle nine months of not having loans repaid.
Never has so much changed so quickly in the hospitality industry. How are you feeling this week?
Mixed. Some days I wake up and I feel we're getting somewhere, and days like today I feel really demoralised about the lack of strategy and leadership in our industry. I'm really worried about the next six months for everybody.
I think it's a huge mistake to be lobbying for rateable value grants unless they're proportionate. If we remove the £51,000 threshold, a lot of businesses would do well, but it's not the best solution for most people. It's going to cost billions and not make enough of a difference for most businesses.
How has your legal background served you over recent weeks?
It's been great to have had this experience throughout my career and, particularly now. I understand the landscape, the legislation that's required and what's achievable. I also did a lot of restructuring work so I understand the Insolvency Act issues.
I'm approaching this from the viewpoint of what is best for the overwhelming majority of people in our business. I'm using my personal experience as well as the hundreds and thousands of messages I get each week. I'm getting a good understanding of what the priority is for everyone.
What would you like to hear more of at the government's daily press briefings?
Business is being very badly represented at the moment – virtually none of the questions asked at the press conferences relate to business. No one is asking about the economy. We're going to get to the end of June when the Coronavirus Job Retention Scheme ends and, if it's not extended again, everybody's going to lose their jobs. That's two million people in hospitality being made redundant. Nobody seems to be talking about that.
We needed a shake-up as an industry, but we didn't need one so brutal
What would you like to say to Rishi Sunak?
Give us the debt enforcement moratorium immediately when parliament reopens, please. We need that to stop all the statutory demands and initiate the National Time Out – the nine-month pause on rental payments and debt repayments for landlords, at no cost to the government, so we can get our businesses back on their feet, emerge stronger and be able to pay our rent, stay in place and keep jobs. Unless anyone else comes up with a better solution, it's got to happen.
What has been particularly challenging?
The biggest thing we're lacking is leadership and a united interest and it shouldn't be people like me and others showing the way. Somebody needs to stand up and say, ‘Look, this might not be right for you guys, but it's right for 90% of the industry, so we're going to do it and we'll sort you out another way'.
I've been leading the campaign on the National Time Out – it will be an absolute lifesaver for tens of thousands of businesses, whereas the rateable value grants won't. We're going to push this back on the landlords, they're going to push back on the banks and that's going to keep 80%-90% of our hospitality industry alive to come out on the other side. Without it, it'll be less than half. That's how serious and significant this is.
We've been the key workers feeding the key workers and it's been absolutely incredible to see
If you could turn back the clock six months, what would you have done differently?
Sold my business for £40m and moved to Miami! Not really – there's nothing we would have done differently. We were in a pretty good position compared with most. I can't think of anywhere in the last six months to a year where we could have saved money or made more money. We were cutting costs and running the business really efficiently. Our sales were great, they were holding up well. Then we hit this wall and it stopped everything.
What types of businesses will recover more quickly once restrictions ease?
I think if you're a small restaurant in a town outside London you can probably open and look after 40 people a night. But if you're a 200-seat restaurant in Soho or the West End, or a 1,000-capacity street food night market, like Dinerama, I don't think we're going to be able to open any time soon. Certainly not until late September, early October.
How can operators make plans when the future is so uncertain?
I've been saying from the outset that we'll be in lockdown until May or June and for a long period after that there will be physical distancing where the larger capacity venues won't be able to operate. My venues will be closed for six months or effectively shut down by government advice or action, so we all need to be planning on that basis. Even if we get open for the last quarter of the year, we probably need to look at 50% of sales and at that level we're losing money unless we're on rent-free or some kind of turnover rent.
What do you think the biggest challenge will be for the industry?
Conquering the fear of the virus. Even before lockdown we saw 50% and greater drops in sales because there was a caution and a fear of the virus. That is not going to go away. Since then we've seen more than 10,000 deaths. Once I see a 30% drop at Dinerama there's no point opening, because that's all our profits wiped out. We'd just be opening to break even.
So I think that's the big challenge – conquering the fear of the virus, and that requires a vaccine and new behaviours to reassure people that it's safe to go out, and that if they do go out, they're not going to die.
What positives have emerged over recent weeks and who has stood out?
There's been so much passion and innovation. What John Vincent and the Leon gang and Brandon Stephens [of Feed our Frontline] have been doing is absolutely astonishing. It's incredible what people have done and the time and the food they're giving.
We're not the NHS – we are not risking our lives on the front line, but as an industry we've been the next best thing in this country. We've been the key workers feeding the key workers and it's been absolutely incredible to see and it's one of the reasons I love this industry. It's good people doing great things.
How is the industry going to change? Can anything good come from this?
I don't see anybody doing well. Nobody will do well out of the crisis. I think there will be even more empty high street sites. My next business will probably have to be something outside the hospitality industry. Certainly, the business I'm in – large-capacity venues – I don't see coming back until there's a vaccine, which is a year or maybe 18 months away. Maybe I'll take a year off and come back in the way that music festivals will have to. We needed a shake-up as an industry, but we didn't need one so brutal.
Apart from income, what are you missing most right now?
The thrill and the excitement of new deals, new openings and the potential for that, because nothing new is happening. Everyone in hospitality loves a new opening – it's the hardest thing and the best thing. I miss everyone working together and making stuff happen. We were going to be opening two sites this year in Birmingham and Manchester and that's not happening now.
And I'm missing my favourite restaurants – Luca, Lyle's, Brat, Leroy and all the restaurants I go to every week that are near me. I miss going to Dinerama, to Milk & Honey for a drink, to Brigadiers for a curry and the Marksman's chicken and leek pie on a Saturday… You've got me pining now!
Is the hospitality industry going to be taken more seriously as a result of the crisis?
I think we already are, to some extent, but nowhere near enough because of the lack of strong voices. If you think about some of the most famous people in Britain, they're chefs. There are some incredible voices – Jamie Oliver, Gordon Ramsay and Nigella Lawson – but why aren't we coming together as an industry and harnessing the power of those voices?
It's easy to think we're making a difference, but we're all talking in a big echo chamber. I don't know how many followers Jamie Oliver has, but it's probably millions and most of those people don't work in hospitality. We need those guys realising what a fantastic job John Vincent and Brandon Stephens are doing, and the incredible work Gary Usher's doing. It's more than just a retweet or a "well played" – it's more of a campaign.
I'm working on it. We need to get these guys behind it and make it happen and we've got to stop worrying about the pubcos and the big chains because they're going to be fine. They're well-funded, they're well-resourced and they're run by people who are incredibly experienced in business. But what about the 95% of the industry that doesn't have that? That needs to be supported and recognised.
What has the industry learned from the crisis?
That, to a large extent, the business model of a lot of hospitality businesses is hopelessly flawed. It's ridiculously fragile, the margins are far too slim and it's just not sustainable. We were fucked after 10 days to two weeks of no and low income.
I think there's going to be a lot of reflection and soul-searching and realising that, despite these brilliant things we do as individuals and businesses, if the business model doesn't stack up, you've got to find another way or find something else to do.
We can't pay people what we need to pay them, we can't pay the rent, we can't deal with business rates at this level and with VAT at 20%. It's just insane. Everybody wants something for nothing. In hospitality we always try to deliver, but this has made us realise we can't deliver the impossible or the unsustainable.
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Jonathan Downey to submit proposal to treasury to pause rent payments for nine months >>
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