• Welcome to DOSBODS

     

    DOSBODS is free of any advertising.

    Ads are annoying, and - increasingly - advertising companies limit free speech online. DOSBODS Forums are completely free to use. Please create a free account to be able to access all the features of the DOSBODS community. It only takes 20 seconds!

     

Sign in to follow this  
Covid19 and life to go

Burger King & their rent (or lack of)

Recommended Posts

BBC sorry!

 

https://www.bbc.co.uk/news/business-52362708

Seems BK have said we can't trade so we're not paying the rent.  Looking at the comments it's the usual Brit psyche of they should go out of business landlord has to pay the mortgage blah blah (I'm pretty sure there'd be a different angle to the comments if this were residential rent, especially if there was any 'think of the children' involved).

I personally side with BK - if the pandemic has caused insurers to refund (before they got millions asking them too or non-renewed/cancelled policies etc) then why should landlords get their slice when due to govt restriction trade cannot go ahead as normal.  Okay maybe they should negotiate a reduction rather than a flat out non-payment, seems though the sheep side with the landlords (and by proxy the banks, who they also hate).  Sigh :(

Share this post


Link to post
Share on other sites

Almost without exception for a commercial rental the value of that rental is a reflection of its income generating capability, in essence the landlord is offering the space in return for a proportion of achievable sales/profit from that space. For a food outlet can imagine it is even more tightly related to position/footfall and expected returns. When you look at it like that if achievable sales/profit is zero then rent should be.

Share this post


Link to post
Share on other sites

Er, depends what the contract says.  That bit of paper both parties wiling signed.  That's how we do things here.  It kinda makes everything work.  Else what goes round comes round.  You can negotiate, and negotiate hard, but the contract is just that.

Share this post


Link to post
Share on other sites
2 minutes ago, Harley said:

Er, depends what the contract says.  That bit of paper both parties wiling signed.  That's how we do things here.  It kinda makes everything work.  Else what goes round comes round.  You can negotiate, and negotiate hard, but the contract is just that.

True, but every contract can be re-negotiated if conditions change materially and there is agreement between the two parties.  I suspect that any commercial property that is vacated say over the next 6 months is likely to be vacant for the foreseeable unless the rent reduced significantly anywhere so it is more of a question of how does a landlord want to lose some money.

Share this post


Link to post
Share on other sites

If I'm not mistaken, in the UK McDonalds own the land that they have their restaurants on (so called). BK have made a bit of a booboo by renting the land off landlords and building on it. Who is going to buy a fast food restaurant if they go under? It is clearly not the case that any other business can simply move in and replace them...

The land will still have some value, but there will be a restaurant to move out the way first.

Round here BK converted an old pub into a Burger King drive-through. Literally a few days after opening, the landlord was trying to sell it (with a 20 year lease). I don't understand this business model at all.

Tesco for example own the land that their supermarkets are built on. If they go under, there's still a £10bn landbank there.

Share this post


Link to post
Share on other sites

"The idea is fairly simple and won't cost the taxpayer a thing," Mr Downey said.

What planet does this guy live on?

The brass neck of asking for a 9 month rent holiday when you've only been closed for 1 month!

Share this post


Link to post
Share on other sites
Posted (edited)
19 minutes ago, Harley said:

Er, depends what the contract says.  That bit of paper both parties wiling signed.  That's how we do things here.  It kinda makes everything work.  Else what goes round comes round.  You can negotiate, and negotiate hard, but the contract is just that.

But when it comes down to it contract terms are not really that important business to business, it's the relationship that matters and that can change in a moment.

Edited by Panther

Share this post


Link to post
Share on other sites
4 minutes ago, spunko said:

If I'm not mistaken, in the UK McDonalds own the land that they have their restaurants on (so called). BK have made a bit of a booboo by renting the land off landlords and building on it. Who is going to buy a fast food restaurant if they go under? It is clearly not the case that any other business can simply move in and replace them...

The land will still have some value, but there will be a restaurant to move out the way first.

Round here BK converted an old pub into a Burger King drive-through. Literally a few days after opening, the landlord was trying to sell it (with a 20 year lease). I don't understand this business model at all.

Tesco for example own the land that their supermarkets are built on. If they go under, there's still a £10bn landbank there.

Flexibility is better for BK they can write off the building cost and be quicker at changing locations as a result, also you are effectively making an investment out of the land / position and can imagine some companies not wanting that to be part of their business model Assume both MacD and BK are still mainly franchisee businesses predominantly. There will be a point where land is not a good investment over a considerable period time, many companies have been extra,ely lucky their landbanking has worked for them as they geared up.

Share this post


Link to post
Share on other sites
1 minute ago, onlyme said:

There will be a point where land is not a good investment over a considerable period time, many companies have been extra,ely lucky their landbanking has worked for them as they geared up.

I don't know, it's trite but land rarely goes down in value... Was it not the case even during the Great Depression that land didn't really go down much at all?

Share this post


Link to post
Share on other sites
1 minute ago, spunko said:

I don't know, it's trite but land rarely goes down in value... Was it not the case even during the Great Depression that land didn't really go down much at all?

Relatively housing collapsed after WWII, big old places that had been in families for generations and soaked up generations of wealth were worth little more than tiny places in the cities, big old multi-storey city buildings which would have been home to rich merchant/industrialist/old money type with staff again worth about the same as a tiny new build in the suburbs. Was a very big shift in relative value at the time.

Share this post


Link to post
Share on other sites
Posted (edited)
1 hour ago, spunko said:

If I'm not mistaken, in the UK McDonalds own the land that they have their restaurants on (so called). ...

Indeed.  People make the mistake of thinking McDonalds is a food company when first and foremost it's a land company.  One of the largest.

Edited by Harley

Share this post


Link to post
Share on other sites
1 hour ago, Panther said:

But when it comes down to it contract terms are not really that important business to business, it's the relationship that matters and that can change in a moment.

True.  You can contract all you like but at the end of the day you need to give it life through a healthy relationship.  Ideally a win:win.  But, in extremis......!

Share this post


Link to post
Share on other sites
1 hour ago, onlyme said:

Relatively housing collapsed after WWII, big old places that had been in families for generations and soaked up generations of wealth were worth little more than tiny places in the cities, big old multi-storey city buildings which would have been home to rich merchant/industrialist/old money type with staff again worth about the same as a tiny new build in the suburbs. Was a very big shift in relative value at the time.

Wasn't that after WW1? Partly because of the servant shortage and also the increase in death duties. A lot of country piles just got knocked down - a large part of my family's wealth comes from that era because my great-grandfather went around country house sales buying up antiques cheaply.

It was also then that those large London 'wedding cake' houses went into decline, they were converted into flats or boarding houses as the original inhabitants moved to smaller suburban villas that only required one or two servants. The decline of areas like Notting Hill set in at this time and was not reversed until the 1980s.

Share this post


Link to post
Share on other sites
Posted (edited)

A lot of gentry types seemed to move into hotels around that time too. Then there are the deco mansion flats, all a bit Noel Coward. Isn't Jeeves and Wooster set in such a flat?

Edited by Panther

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.