May 27, 2020

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'Bloodbath between landlord and tenants'

Winnipeg east Tony Roma's restaurant first of many expected pandemic casualties

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Tony Roma’s on Nairn Avenue has shut its doors for good, in what some believe is the beginning of a cascade of permanent restaurant closures in the wake of the coronavirus pandemic.

Longtime owner Danny Gonen — the original master franchisee for Tony Roma’s in Canada, who still owns two other locations in the city — said he was unable to come to an agreement with the east Winnipeg restaurant's landlord.

Gonen, who has owned Tony Roma’s in Winnipeg and across the country since 1983, said Tuesday unless there is government intervention, restaurants of all sizes are going to face deeper financial troubles.

"I feel bad for the tenants, I feel bad for the landlords, I feel bad for the employees." – Danny Gonen

"I think there will be a bloodbath between landlord and tenants when this is all over," he told the Free Press.

Gonen, a 37-year veteran of the Winnipeg restaurant scene, said unless landlords take a much more conciliatory approach, many restaurants are not going to be able to stay in business. Even if they get some rent relief during the months of COVID-19 restrictions, when they do reopen, it will not be under ideal conditions and many will be hard-pressed to make their rent for months to come, he said.

Danny Gonen said Tuesday unless there is government intervention, restaurants of all sizes are going to face deeper financial troubles.

MIKE DEAL / WINNIPEG FREE PRESS

Danny Gonen said Tuesday unless there is government intervention, restaurants of all sizes are going to face deeper financial troubles.

"I feel bad for the tenants, I feel bad for the landlords, I feel bad for the employees," Gonen said.

Tony Roma’s at 1212 Nairn Ave. had 65 employees, prior to the pandemic-forced shuttering of businesses.

Gonen said the landlords are being reasonable and understanding at his other two Tony Roma’s locations (St. James Street and Pembina Highway), which he hopes to reopen in early June or whenever the province allows.

The three casual dining locations have been closed since March 23, and did not offer take-out, delivery or patio service — the only kind of business restaurants are allowed to do under the current provincial regulations to mitigate the spread of COVID-19. (Gonen said multi-location operations lose money staying open only for take-out.)

The landlord of the Nairn Avenue location, Superior Management, had asked Gonen to pay 50 per cent of his rent for April and May, deferring the other 50 per cent to a later, undetermined date, and to start back at full rent in June.

Gonen countered with an offer to defer rent to the back end of the lease until reopening, and then to pay 10 per cent of net revenue until business returns to normal.

Crews pack tables and chairs into a truck at the Nairn Avenue location of Tony Roma's which has closed down.

MIKE DEAL / WINNIPEG FREE PRESS

Crews pack tables and chairs into a truck at the Nairn Avenue location of Tony Roma's which has closed down.

"I said that’s all fine and dandy, but what happens in June, July, August, September," Gonen said. "No one knows when we are going to open. We have to take a long-term approach."

When restaurants are able to fully reopen, "I anticipate the volume will not be close to what it was pre-COVID. People will be afraid to come out, people will have no money, I don’t know what will happen," he said.

Gonen said negotiations went no further and he later received a demand of payment for April’s full rent. "I said: that’s it."

Jim Matthews, president of Superior Management, was unavailable for comment Tuesday.

The 2,500-square-foot restaurant was purpose-built for Tony Roma’s in 2007.

Although Gonen acknowledged the landlord/tenant relationship was not ideal — "We were not on such good terms" — he fears there will be even more problems in the industry when the province officially allows businesses to reopen.

"No one knows when we are going to open. We have to take a long-term approach," Gonen said.

MIKE DEAL / WINNIPEG FREE PRESS

"No one knows when we are going to open. We have to take a long-term approach," Gonen said.

"Landlords will see that everything is open and they will want full rent, they will want back rent, and the ones who deferred will have to pay eventually and it is not going to work," he said.

Meanwhile, Shaun Jeffrey, executive director of the Manitoba Restaurant & Foodservices Association, said not enough landlords are applying for the federal government’s Canada Emergency Commercial Rent Assistance program.

Industry members are concerned the application process is onerous and conditions are such landlords are often not eligible and have thus chosen not to apply, he said Tuesday.

"To be eligible, landlords have to have a mortgage and lots don’t, and the government has not made it enticing enough for the landlords to apply," Jeffrey said.

Restaurants have notoriously slim profit margins at the best of times, he said, adding landlords need to be flexible.

"They just think they can take a heavy-handed approach… but that is not going to work," he said. "Our restaurateurs are in tough times."

martin.cash@freepress.mb.ca

Martin Cash

Martin Cash
Reporter

Martin Cash has been writing a column and business news at the Free Press since 1989. Over those years he’s written through a number of business cycles and the rise and fall (and rise) in fortunes of many local businesses.

Read full biography

History

Updated on Tuesday, May 12, 2020 at 10:51 PM CDT: Fixes typo.

May 13, 2020 at 2:12 PM: Name fixed.

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