Nick McCaw co-founded Mexico, Better Burger, the basement cocktail saloon Caretaker and the nightspots AV and Saturdays. Previously he was behind some of the foundation spots in Britomart including The Britomart Country Club and 1885. After more than a month of lockdown, he ponders what reopening will be like, and what challenges lie ahead for the hospitality industry.
Jeremy Hansen: What’s shutdown been like for you?
Nick McCaw: The hospitality industry felt the effects of this crisis quite early. There was a period at the start where it seemed to feel like we were the only ones panicking a little bit. I remember quite a few conversations where we reached out to people like bankers and suppliers, and there was a sense that we might be over reacting. So for us, the lockdown was actually a relief because we felt like we were having to make some big and serious business decisions in an environment where others were carrying on as almost normal. The reality was that the tourists were gone and people were already starting to stay home.
Have you managed to keep your staff?
We have kept everybody, entirely thanks to the government-backed wage subsidy scheme. Hospitality is a low-wage industry, unfortunately, but it’s meant we’ve had enough money to keep people to 80 percent of what they were previously earning. That means our teams are still together, and when we get a chance to reopen we should be able to do that with a strong team.
What do you think reopening is going to be like?
That’s the most important question right now that we’re all trying to answer. It’s super-tough, but I think people are going to want to go out and eat or to get food they haven’t had to cook themselves. There are some great restaurants opening to provide a standard of takeaway we haven’t seen before. What I worry about is that point in the future where we see the economic devastation filter through to people’s disposable income. Will we ever get back in the short- or medium-term to trading levels where we were? Most hospitality businesses need stable, high levels of trade to be profitable. So it’s a challenge to make decisions now based on a guess about what happens in three months’ time.
Do you think people will be more cautious about being close to strangers, and are you concerned about the effect this could have on businesses like yours?
I think we’re now well-educated as a nation as to why we’re social distancing. If we continue to see almost no cases and there are periods of time where there are no flareups, then I think people will have a lot of confidence that Covid isn’t in their community and in their restaurants and bars and public spaces. I think we’ll be very wary if anything other than that happens. If unexplained cases pop up people will very quickly go back into their bubbles and reduce the time they spend in public. The numbers of cases will define the mood and define people’s behaviour. But long-term, I think people will want to come together and eat and drink and go to festivals and nightclubs; those things are all very human and have been in place in our society for hundreds of years in one form or another. That’ll come back. In the meantime between now and the control of the virus, all sorts of things could occur as people experiment with ways to make people feel comfortable.
There are a lot of businesses that will be under severe pressure.
Some businesses are not going to make it because they won’t cope with the reopening process, and they may not have the capacity to invest and put themselves forward over the next few months. The ones that do open and lean into this new world will do really well. Brands that were strong before Covid-19 will be strong afterwards, and as long as they can be flexible with their costs and their teams work really hard, then they’ll get there and be successful. If you were struggling before, you’re not going to make it, but if you were ok and you’re focused now, then you can come through this really strong into a market with a smaller number of players. We were involved in growing a lot of our businesses during the GFC around Britomart [such as the nightclub 1885], and there’s definitely an advantage to doing new things when nobody else is, and you can get attention. At a time when a restaurant is opening every two weeks it’s hard to get people’s attention. One of the things that Britomart proven over many years is a willingness to be bold and support creativity and hard work. That’s really how Britomart came to be so good as a place. I hope we see that again in Britomart. The opportunity is there for people and businesses to push on and lead again and reimagine what might be able to be improved on.
There have been a few people saying it’s time to look at the hospitality business model as a whole. Do you agree?
This constant desire for newness hasn’t been great for our industry. In some part I’m guilty of being part of that problem. So I like the sound of an industry that’s focused on its long-term health rather than the next new thing. This contraction that’s coming is going to force some clarity about that. Rents have never moved downwards. The cost of goods has never moved downwards. The ability to move our prices or wages up is limited. So your margins get slimmer. The resulting model is a bit broken. So I guess to build a more sustainable industry some of those things have to change.
How will you get through the next 18 months?
I expect this situation will really show you who your friends are and, more widely, who is of sound moral character. One thing is certainly true and that is how you have treated others in the past is how you are about to be treated yourself. If you've built good relationships with your suppliers, customers, landlords, and team then you can expect their support. If you haven't, then it might be tough. It's a great lesson to learn. Setting aside the immediate difficulties, I'm optimistic about the future in whatever form it takes. Small business owners are creative and resilient people who know how to make something work when they have to. Let's all take what's coming to us with some stoic resolve and remember this isn't your fault. Dust yourself off and remember that it's not what happens that matters, it's what you do next. You're in control of that.
Is there anything you’ve enjoyed about this period?
For a business owner, and it’s not just me because I’ve spoken to other people about this, the lockdown has been a forced mental holiday that we don’t ever get. It’s been quite liberating to have that control taken away from you even if it’s just a few weeks. I think I will have enjoyed lockdown infinitely more than the coming five or six weeks. It will feel, looking back, like a reprieve from what is coming. As depressing as that is. I’ve also learned what a support network looks like. That’s something that's often not too visible when things are normal. I've been really grateful for the work that groups like Hospitality New Zealand and Restaurant Association have done over this time. To be honest, that gratitude extends right up into the many hard-working government departments we have dealt with lately and back down to the friends that have just rung up to check in on how I am doing. There's a lot to be grateful for that you don’t notice until something like this happens.