Mervyn Ellis
Director - Retail Transactions BNP Paribas Real Estate Ireland
+353 (0) 1 661 1233

The Covid-19 Pandemic has impacted all sectors of business in some way but there are few more affected than the hospitality industry.  Over the last 10 years the Food and Beverage (‘F&B’) market in Dublin has experienced exceptional growth, particularly in the core Dublin city centre market. 

At BNP Paribas Real Estate we have been tracking this growth in 6 key location clusters, which are 

  • Dawson Street & its environs
  • The Creative Quarter
  • St Stephens Green & Merrion Row
  • Camden & Wexford Street
  • Temple Bar
  • O’Connell Street

These areas are home to 100 bars and 350 restaurants and cafés, with the total of 450 representing an increase of 30% (80 new restaurant and café openings) over the past ten years.  In early March all 450 premises were effectively forced to cease trading under the Irish Government’s lockdown guidelines. It is worth noting some of the operators actually pre-empted the 12th March directive, closing earlier than this due to social distancing concerns. We are now in Week 9 of the most challenging and uncertain times on record for the F&B sector and it is interesting to see how some have adapted.

On 25th March the Irish Government passed emergency and temporary legislation lifting planning restrictions to allow restaurant businesses adapt to the closure of their sit-in restaurant premises by operating under a take away / delivery model during this period. Once the emergency period has ceased, the use of the premises for take away will no longer be exempted development.

According to our research, by mid-April, 60 of the 350 restaurants (17%) were open in some shape or form. At the time of writing this figure has increased to 100 outlets (28%).

For Quick Service restaurants (fast food in layman’s terms) where delivery and collection was a large part of their pre Covid-19 business, it was more straight forward to convert and adapt the existing models to pure take out only. 

For the other brands who relied predominantly on dine-in or sit down customers it was much more difficult, but some have adapted.  Some owners and staff are digging deep and are now offering delivery and / or collection services, others are providing the ingredients and instructions to cook at home and others are converting their premises to delicatessens for customers to purchase some of the ingredients used in their restaurants.  The majority are accepting that they will not make any or significant profit from these services but they are hoping to keep their brands live and relevant during the lockdown and garner goodwill and loyalty from their customers.

The Government’s recent 5 stage ’Roadmap’ for re-opening Ireland has now given some clarity to the hospitality sector. Cafés and restaurants can re-open in Phase 3, which is scheduled to begin on29th June, with bars to follow in Phase 5 from 10th August. The roadmap is light on detail in regard to operating restrictions and refers to social distancing and strict cleaning protocols. This allows the Government to adapt the guidelines based on the progression of the virus, however we expect the respective representative associations to flesh out and fill in the blanks.

Revised social distancing layouts are now being considered.  Is the removal of seating sufficient or will partitions between tables to create “snugs” be better to preserve numbers?  Will a combination of both work better?  How will customer and staff toilet facilities be managed and what staff numbers will be required considering both social distancing requirements and potential customer numbers?
These are some of the challenges facing restaurants and early indications suggest that capacity will be reduced by between 50 and 70% depending on the actual layouts and area of the premises in question.  Fine Dining restaurants may fare better as they generally provide a more intimate environment with higher levels of spacing between tables, however larger communal table arrangements will naturally provide ongoing issues. 

It may be some time before bars, cafés and restaurants will be permitted to open in their pre-March 2020 formats. In the interim they will find it difficult if not impossible to match their pre-March 2020 turnover and profit budgets. A challenge for many businesses will be to reduce their fixed costs in line with reduced turnovers, not an easy task. Those that operate close to large office populations will have fewer potential customers as larger companies limit staff numbers at least in the short term.

A similar issue will arise for those operating on or around the retail streets - how many consumers will be shopping and dwelling in the city centre if most stores and offices remain closed?  Casual Dining and Impulse operations will be the most affected here. Will these operators need to ramp up their ability to fulfil delivery and collection orders to remain competitive and increase income? Will this be a short or long-term change?  The triple whammy in Dublin city centre will be the dearth of tourists as we can expect substantial less overseas visitors, after many years of growth. On the other side of this, CSO figures indicate that Irish people spend more money on holidays than tourists spend in Ireland each year so perhaps this will balance out.

As each month progresses there will be more and more customers returning to a more normal way of life as offices become more populated and more shops reopen enticing shoppers back to the city centre.  However, for some restaurant owners who have not been able to adequately adapt operations, the current disruption to normal operations will be too much and regrettably many not able to survive. Our Dublin city centre sample area above shows a current vacancy rate of around 5%. This will increase in the short term with the longer term impact yet to be seen.

Mervyn Ellis
Director - Retail Transactions BNP Paribas Real Estate Ireland
+353 (0) 1 661 1233