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Dubai’s F&B outlets say they are losing over Dhs1bn on a monthly basis

Dubai’s F&B outlets say they are losing over Dhs1bn on a monthly basis

The two most significant issues causing negative cashflow problems are rental obligations and employee liability issues, say operators

Restaurants in Dubai are facing huge losses due to the impact of the Covid-19 pandemic and are now requesting authorities for longer-term assistance to deal with the crisis.

In a letter addressed to Abdulla Mohammed Al Basti, secretary general of the Dubai Executive Council, F&B sector stakeholders said “nobody in hospitality expects to get back to anything like normal pre Covid-19 until Q1 2021 at the earliest”.

“The F&B sector was hit first and hit hardest due to social distancing. Fear of the virus and the long-term need for physical distancing will mean that most restaurant and café businesses will not have sufficient income to cover monthly expenses to reopen,” said the letter, which was signed by several prominent industry players, who account for over 50 per cent of people working in the F&B sector.

The two most significant issues causing negative cashflow problems are rental obligations and employee liability issues, it highlighted.

“We must inform you that in fact, it would be more damaging to open for business now thereby losing more money with rent and employee liabilities than to choose to remain closed. That is what all restaurateurs are faced with especially when landlords are trying to force full rental payment liability with the implementation of stage 1 of the reopening plan announced,” the letter, which was issued last week stated.

Dubai, which was under strict lockdown for three weeks, allowed certain businesses to reopen late last month, provided that they adhered to precautionary measures including maintaining social distancing and ensuring constant sanitisation. Restaurants have also been allowed to reopen, but can only operate on 30 per cent occupancy.

According to the letter, the F&B outlets in Dubai – which employ up to 10 per cent of the emirate’s population – are facing monthly losses of up to Dhs1bn in staff salaries, housing and benefits. That figure does not include rents and operational costs.

“This level of liability is not sustainable without assistance,” it stated.

“We will remain loss-making for many months after the lockdown is lifted and be the last to get back to any kind of normal because of the expected social distancing enforcement guidelines.”

The new measures announced for reopening in the first phase “do not fully take into account the negative impact of social distancing on the ambiance at a restaurant, meaning many people will stay at home or order delivery”.

“Specific new legislation is urgently needed to help during the crisis”, the letter stressed.

F&B operators also urged the government to set up a relief fund to help restaurants, similar to measures taken in the UK, US and European countries where subsidies and/or loan guarantee schemes have been provided to help businesses cover staffing requirements and “simply survive”.

Some of the suggestions and requests outlined in the letter include waiver of rent for 10 months starting March 1, 2020 and then extending the lease by 10 months at the end; waiver of penalties for any unpaid municipality tax dues; waiver of the tax charged on the purchase of licensed beverages up to the year-end; extend DEWA discount until the end of 2020; reduce fees charged by aggregators to restaurants; and extend the relief to freeze loan payments with no added penalty until the end of the year.

“We believe these critical measures proposed in the appendix will protect countless businesses, save tens of thousands of jobs and ensure the long-term health of our sector and the wider economy due to the large number of over 200,000 people that work in the F&B sector in Dubai and the more than 11,000 F&B related trade licences registered at DED,” the letter stated.

“We need your support to assist businesses to reopen and stay open and to keep as many of the employees living and working in Dubai as possible,” it added.

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