Bewley’s to shut over ‘crippling rents’

Legacy boom-time rents such as those which Bewley’s Café on Grafton Street in Dublin is locked into are a huge drain on retailers and remain a massive concern for the sector, according to a retail representative body.

Despite a large drop-off in rental prices since the economic crash, many retailers are continuing to pay large rents agreed prior to the recession — often due to upward-only rent review provisions in their tenancy contracts.

“On the issue of upward only rent reviews, it’s something that we’ve long called for a review on. Boom-time rents are still a feature for a number of large retailers and it is a huge drain on them and their resources so it’s obviously still a massive concern,” said Retail Ireland director, Thomas Burke.

Bewley’s, the landmark but loss-making Dublin café, yesterday announced it was to close its doors for six months or so in a bid to secure its future following a fruitless battle to reduce its rental costs.

It will undergo a €1m refurbishment which will see the café concentrated on the ground floor and basement, as opposed to on multiple floors as is currently the case.

Bewley’s said its current 140 staff will be impacted by the decision.

The café lost its legal battle with Ickendel Ltd — a company owned by developer Johnny Ronan and whose loans were transferred to Nama — to reduce the almost €1.5m rent on the property.

The legal action was seen as a test case for upward-only rental reviews which were banned by legislation introduced in 2009 but which could not be applied retrospectively.

The Government has indicated that the retrospective abolition of upward only rent reviews could be unconstitutional and as such is unlikely to happen.

Dublin Chamber of Commerce president, Gina Quinn said that it was unfortunate that the Government appears unable to intervene on the issue and said that most existing arrangements will have to work themselves out or come to an end.

In Bewley’s Cafe’s case, a 35-year lease signed in 1987 provided for rent to be reviewed every five years. As part of it’s 2007 review, the café’s rent doubled to €1.46m. Once the crash came, this became unsustainable and led the company to seek a reduction in its rental costs which was initially secured but was later overturned by the supreme court.

Siptu yesterday called on the Government to take action to end upward-only rent reviews which it said are negatively impacting wages and employment in hospitality and catering.