Issue link: https://maltatoday.uberflip.com/i/1350550
9 maltatoday | SUNDAY • 14 MARCH 2021 INTERVIEW COVID situation, not in busi- ness terms. As an association, we were obviously running sur- veys among our members, every few weeks; and – especially after we re-opened on 22 May – there was a period when people re- mained very sceptical about go- ing to restaurants, and business was more or less at a standstill. Then, the voucher scheme was launched; and we had a spike in activity. As a result, we were hitting a 60% average, across the island, compared to 2019 fig- ures. As soon as the vouchers were all used up, though… at the end of summer, with low season around the corner… the average dropped to around 35/40%. So basically, we were on life-support: because we were not even breaking even with the wage supplement. Even now, we depend entirely on government hand-outs, just to keep operat- ing. At the same time, COVID-19 seems to have wiped out the tourism market for the foresee- able future; and the situation is not expected to improve before spring next year, at the earliest. Can your industry – especially the smaller establishments – survive that long, in practice? I wouldn't differentiate too much between 'smaller' and 'larger' establishments, at this stage. In truth, the sector has been hard-hit across the board. In 2019, Malta received 2,7 million tourists: excluding cruise-liner visits. That's more than five times our entire pop- ulation. If you evaluate that in terms of monthly attendance, it works out at 250,000 people, per month, missing from the island. In other words, 250,000 fewer 'mouths to feed'. And there are many parts of Malta where catering is totally tourism-dependent. In Vallet- ta, for instance, there was a no- ticeable absence of business be- cause cruise-liners are no longer coming in. Places like Mdina, Rabat, Marsaxlokk, etc. - where the bulk of business comes from tourists - were also impacted far more than other areas. Elsewhere, places like Sliema or St Julian's were less affected, because there is a higher con- centration of locals in those ar- eas. But on the whole, the loss of tourism had a catastrophic effect, if you ask me. Another thing to bear in mind is that the pandemic struck at a time when the country was ex- periencing an economic boom. So in March 2021, when the crisis began: many people in ca- tering – and not just in catering – were taking their decisions, on the basis of the economic bubble they were in at the time. So when you drive around and see the sheer number of restau- rants that have closed – because many restaurants have, in fact, shut down over the past year – was it all because of COVID-19? Certainly, it would have contrib- uted; but I also believe that, in many cases, it is also the result of wrong decisions in the past: for instance, taking over an estab- lishment at a hefty, direct rental cost… which, when there isn't a 'Plan B', is not sustainable, at the end of the day. Obviously, no one could have predicted something like COV- ID-19, at the time. But one thing we have learnt from this, is that you cannot make your projec- tions only on the economic 'feel- good factor' of the present. It is, at the end of the day, a cut-throat market. There are 4,000 licensed establishments out there, in a country with around 500,000 inhabitants: ex- cluding tourists. That's around one establishment per 125 pop- ulation… which makes it high- ly competitive anyway: with or without COVID-19. On the subject of 'high, direct rental cost': your press release also 'calls on certain commer- cial landlords to show a better sense of understanding in these very difficult circumstances'. Can you expand on that? And are you suggesting that – as in the case of extended bank- loan moratoria – this is an area where government should in- tervene directly? To be fair – and not to sound like a merchant of doom – many landlords have, in fact, been very understanding and supportive. I happen to have my own catering establishment; and in my case – on a personal level – they were extremely helpful. Rather than having to approach them myself, they approached us. And others have had more or less the same experience. But then, we do have a few members whose landlords – even though they understand that we're going through a pandemic; that sales are at an all-time low, etc. – are quite frankly doing the opposite. It's as though nothing is happening around them at all. Some are even doing their utmost to oust tenants from their properties. And I think it's grossly unfair. One would expect certain landlords to be far more com- passionate, under the circum- stances. For instance, since last week, we are depending entirely on delivery service: which, on average, amounts to around 10% of the revenue we were generat- ing before. That's a 90% drop in revenue. So how can one incor- porate all the costs – including rental costs – as if nothing had changed? I won't go into the issue of 'gov- ernment intervention', however: because – to be honest - I don't know the ins and outs of how the law works, in these cases. But to me, this is more an issue of ne- gotiation. There are two sides involved in this equation; so let's get together and discuss. Hopefully – fingers crossed – we will start to emerge from this crisis, in – once again, fingers crossed – a few months' time. From then on, we will be look- ing at a brighter future; but for now, let us concentrate on the present. What we would like to see, for now, is a little more awareness of the reality of the situation. It would help if certain landlords – at least, the ones who are being difficult – could be a little more reasonable… Turning to the new regulations themselves: you just men- tioned one effect, i.e., that restaurants are now limited to delivery service. This practice, too, has changed considerably since the crisis began: with the rise of platform companies, act- ing as intermediaries between establishment and client. How has this new reality impacted the sector? Ironically, the perception out there is that, if catering estab- lishments are surviving, it is be- cause there is a delivery service. But most people do not under- stand the nitty-gritty behind how these third-party compa- nies operate. Yesterday, for instance, I had a company – not to mention names – asking me for a 33% chunk of the business they would bring to my doorstep. Basically, the commission paid by restaurants is around 30%: at a time when, as I said before, revenue is already down by 90%. That doesn't leave any room for any profit whatsoever. So when restaurants use those services – especially, the small- er, stand-alone ones - it is not 'for profit'. They do it for two reasons, basically: to keep their brand alive; and to keep a little cash turning over. Then there are the bigger chains - with three, four, maybe five restaurants – and those are in a position to negotiate down to, say, 20 or 23%. That might leave room for a margin of prof- it, but… it's still a giant chunk of an already depleted reve- nue-stream. The situation, to be hon- est, is that we are fighting for crumbs…. At the same time, some might argue that the service provided by catering establishments – especially through home deliv- eries – is itself 'essential': given that many people are stuck at home… and (let's face it) not everyone knows how to cook. Do you yourself consider your industry to be a 'front-liner'? I think that, really and truly, the only people who can be con- sidered 'front-liners', in this very difficult pandemic situation, are the people in the health author- ities. Even though my own asso- ciation may have been critical of some of their decisions, I think these ladies and gentlemen de- serve our outright credit and praise. What they are doing, un- der the circumstances, is noth- ing short of remarkable. I can only say, 'hats off to them': both personally, and on behalf of the association. So no, I wouldn't even dream of placing ourselves at the same level. To call us 'front-liners' would be an insult to the people who are really on the front line.