Does Christchurch have too many bars and restaurants?
A large number of Christchurch bars and eateries are for sale as a still-broken city struggles to fill the growing number of venues in the post-quake city. Liz McDonald asks if the party is over.
"It's not like it used to be – you'd just open the doors and have a big party. Those days are well gone.
"It appears glamorous, but it's a lot harder to make a dollar. Now, it's really difficult. "
This is bar and restaurant owner Max Bremner's assessment of how his industry has changed, just in the last few years.
In the post-earthquake rush selling cold beer to tradies, Christchurch tills ran hot. Busy restaurants ran two sittings a night to get everybody in.
More doors opened. Some operators were replacing lost businesses with insurance payouts. Trendy fitouts went in.
Since those days patronage has shifted with the rebuild, anchor projects have made slow progress, and drink driving limits have tightened. Nationally, liquor sales have been declining since 2010. Rules are tougher on business owners, and their staff, who flout strict liquor sales regulations.
A lot of cash is at stake for the operators. Hospitality rents have jumped in central Christchurch because the buildings are new. Fitout costs can easily top $1 million when the right vibe must be created to draw punters.
A lot of businesses are for sale, some at slashed prices. Others have simply shut their doors, like Iconic Club and Bar on High St which closed after just nine months.
Bremner, who co-owns The Bog and two Speights Ale Houses and is building more premises on the corner of Hereford St and Oxford Tce, says people who restarted early were taking a punt.
"When people set up two or three or four years ago, no-one really knew where and how town was going to evolve."
He expects that when the major hospitality precincts come back, like Sol Square and Oxford Tce, they will do well.
He says that with business tough and more places opening, "the pie is not growing so the slices are getting smaller and smaller. It's Economics 101".
Jonny Schwass of Harlequin Public House says it was no surprise that because hospitality operators are optimists, they were the first business people back into the central city.
"Some of those 10-year leases people signed to secure a venue are proving to be onerous now," Schwass says.
"Businesses have to breathe, and be adaptable, to cope with the quiet times. You can get locked in.
"A small full restaurant is a lot bigger than a big empty restaurant".
Schwass, who has spent 30 years in the food and drink business, describes it as a marriage. Owners must be there and pay attention, he says.
"You have to be committed, you are married to the place.
"Gone are the days when the publican sat at the bar and had a drink with everyone. Now they are all working".
Restaurants would be cheaper if diners came more often, Schwass says. Friday and Saturday nights can be busy but Christchurch establishments are quiet early in the week, and in winter. The overheads, however, do not change.
His own rent was $20,000 a year in a smaller place before the earthquakes. It is now eight times that, albeit in a larger and more central venue. His business is for sale, but he is not in a desperate rush to sell, he says.
'GOOD OPERATORS WILL SURVIVE'
Business brokers see the shiny-eyed excitement of new business owners, and the tired disappointment, sometimes desperation, of those who have struggled and failed.
The brokers all use the same word when describing the recipe for success. Experience.
Even that doesn't guarantee success, but it cuts down the risk of failure, they say.
Broker Peter Harris of Bayleys stresses that some businesses are doing just fine.
"I think the good operators will survive. The ones who have been around a while. But it's not an industry for the inexperienced.
"There are fewer people in town. Drinkers are drinking less. After work now, it's one or two drinks then home, a couple of glasses, then they're gone," says Harris.
Location is key, and getting the right ambience and professional staff, he says. He gives Victoria St as an example.
"Some are doing well there, but there are some who wish they were somewhere else."
Harris does not want to warn buyers off, but counsels them to do their due diligence and other research.
"Rents are a major thing they need to consider. People building these nice new big buildings is great, but the rents have to be affordable for operators."
Timing is crucial too, Harris says, an especially hard ingredient to get right in a rebuilding city.
"Businesses need good turnover and some of them have moved in too soon."
Athol McCully, business broking sales manager for NAI Harcourts agrees about the importance of timing.
"It's everything. Some are in locations where people haven't come to them yet. Office buildings are not yet finished or leased. They need those customers."
Colin Askin of Knight Frank says lenders now are more cautious, meaning less leeway for business owners when the tills are quiet.
Gone are the finance companies which 10 years ago would lend cash to food and drink businesses, Askin points out. Parents or other family are more likely to put up funds now.
"The banks are very cautious in funding hospitality, they see people are struggling," he says.
REBUILD HAS 'A BIG IMPACT'
Brendan Chase, chairman of the Central City Business Association, says there has always been churn in the industry as venues change hands.
"Before the earthquakes people were going bung, even some of the big guys. We can't point the finger only at the rebuild.
"But it's had a big impact. They [business owners] need to get the size of their premises right and get a location that will appeal to customers. You've really got to understand the setting and it's not a built-up environment.
"What was attractive early on may not be attractive now."
Owners also need a good product, the right ambience, and very professional staff. Or patrons will go elsewhere, says Chase.
"It doesn't just work because you do it. People are pretty discerning about where they want to spend their money."
"There's more risk now. When there's risk, you've got to create a bit of a buffer that ensures profit if things go well, and break even if it all goes bad, instead of being in a hole and going under. You have to have your eyes open."
WHAT DOES THE FUTURE HOLD?
Max Bremner is optimistic for the medium-term outlook of the food and drink industry. Otherwise he would not be opening new businesses.
"Town is looking great, and it's going to be great in a few years time," he says.
Schwass also says it is not all doom and gloom, and some people just love the business.
But another experienced operator, who wishes to remain anonymous, says some struggling businesses are keen to sell before big hospitality companies with deep pockets and brewery deals arrive in town.
"They (the smaller guys) can see what's coming," he said. "They want to get out before that time arrives."