PL

A touch of indigestion

Property management
The year of the empty office was a shock to the system of the food and drink sector – a time when office canteens saw almost all their custom suddenly evaporate. And not all of them have received any help from building owners

“Canteens found themselves in a particularly difficult situation since their business models are based on selling meals in their particular office buildings to the people that work there,” points out Katarzyna Hauser, a senior leasing manager at Knight Frank Poland. Canteens rarely had any other business line (and many still don't), such as take-outs and deliveries. “In practice, this meant that from one day to the next their earnings dried up,” she adds. She also stresses that the situation was made worse by the lack of help from the government, which did not include office canteens in its Anti-Crisis Shield programme. As a result, these types of tenants were forced to negotiate alone with their landlords for their rents to be reduced or suspended. In other words, their circumstances were much more difficult than for restaurants in shopping centres. From what Knight Frank has heard from landlords and canteen tenants, it appears that in many cases both sides managed to come to an arrangement, although ‘Eurobuild’ has discovered that this was not always the case. “Flexibility in regards to contract terms and rent-free holidays after the lockdown turned out to be an extremely important part of such discussions,” claims Katarzyna Hauser.

The landlord to the rescue

Anna Korwin Kulesza, a senior leasing manager at Globalworth Poland, insists that her company, which is a building manager and owner, has maintained a partnership-based approach throughout the pandemic. “As a result, most of the canteens operating in our buildings have survived this difficult period,” she says and also points out that the health of such businesses, even in less troubled times, is very much dependent on the occupancy rate of the building. “Some of our office buildings, even during the second and third waves of the pandemic, continued to operate and the office workers that came used the services of the canteens within,” reveals the Globalworth manager. Marcin Mędrzycki, the head of asset management at CPI Property Group in Poland, also works closely with such tenants. His company supports canteens with marketing not only where they are located but also in other office buildings in CPIPG's portfolio. For example, the company has launched the OfficeME app, which gives tenants the option of ordering meals as well as paying for them. “Added to this, when the restrictions were lifted we gave a helping hand to our gastronomy tenants. For example, wherever it was possible we gave them extra space in the gardens next to our buildings,” he says.

Adapting to circumstances

Marta Diop, the corporate segment director of Sodexo Polska, whose operations include operating office canteens, believes that the change in circumstances has also resulted in a change in office workers’ habits, as they now prefer to order their meals remotely. “Catering companies need to react to these demands and develop new services,” she explains, pointing out that as people returned to the office, online ordering and mini-canteens with advanced vending systems became more popular. “We want to give workers the opportunity to use vending machines not only for drinks, sweets and snacks, but also for sandwiches and even cooked meals,” she explains. She adds to this that the pandemic situation, something previously unknown, has shown how important it is for businesses to be flexible: “The only appropriate direction for the catering sector to go in is to follow the completely altered demands of the customer. The key to this situation is the ability to develop new solutions to fulfil those needs. Those companies that are not afraid to change the operational strategies they’ve used up till now will be the winners,” claims Marta Diop.

In the dock

But not everyone has the possibility, the means or the resources to change and implement a new strategy, and not every tenant has been able to count on the support offered by companies such as CPIPG and Globalworth. Marek Dębicki, the owner of the Connect Lunch Bar office canteen chain, which has been operating since 2005, believes that office canteens are the segment of the catering sector that have suffered the most. He admits that most of his outlets have been closed since March 16th 2020, the first day of the lockdown. According to his calculations, his restaurants back then were suffering a decline in revenues of 95 pct from one day to the next. “When we were signing leases before the outbreak of the pandemic, we couldn’t have foreseen what was going to happen after March 2020. Moreover, building owners also hadn’t seen what was coming,” he claims and adds: “Unfortunately, most building owners did not help us during this difficult period. Our leases were cancelled and we were taken to court.” Marek Dębicki also points out that even when employees did return, many had got into the habit of cooking for themselves and were bringing meals in from home. “Also, many workers are still afraid of the virus and view the canteen as a potential risk,” he adds.

The only way is up

According to Katarzyna Hauser of Knight Frank, canteens have seen a slight improvement in their fortunes since the lifting of the ban on catering and other services, and workers have now started returning to the office. “For some time, we’ve been receiving enquiries from canteen owners for help in finding office locations,” she says. “Many of them have changed their preferences for the type of location. Now what’s important is that there are residential estates nearby or train and coach stations or other places where potential clients might gather,” she adds. Katarzyna Hauser has also witnessed a big change in the terms negotiated and in the rents. “Tenants want their contracts to reflect the new situation, so clauses are being added so that in the event of another lockdown rents and service charges will be suspended or reduced,” she explains. Such negotiations appear to have been effective, since new canteens are now opening up in office buildings. “Since June, we’ve seen more workers returning to their offices and an increase in the demand for office catering services,” reveals Anna Korwin Kulesza of Globalworth. “Our new leasing agreements are an example of this, such as the contract we signed in June with Nutri Mind restaurants to open in two of our buildings: West Gate in Wrocław and the Warsaw Trade Tower,” she says. Marcin Mędrzycki of CPI Property Group also notes that the leasing department of his company is still negotiating new leases. “We can say there is some optimism because our activities have led to the signing of a contract for a new canteen in the Eurocentrum Office Complex, where work is already underway to adapt the space. Recently, Semolino opened another of its restaurants in the prestigious Atrium Centrum building,” he says. However, he points out that a full recovery will only occur when all the customers come back. “That’s why together with all our other activities, we are running a campaign to encourage our tenants to come back to the office. We believe that a return to normal work will help both our service and retail operators and also improve the work of all our tenants,” insists Marcin Mędrzycki. Katarzyna Hauser also cites the results of a global survey by Knight Frank. In it, 65 pct of those surveyed considered catering to be the most important service offered in an office building and one that is going to be demanded by the workers in their office buildings over the next three years. Marek Dębicki also believes that the lack of a good canteen could be a stumbling block in the signing of a lease: “I am convinced that this forces the lessor to think more clearly about the role of catering in a building and encourages them to be more open in their approach to leasing negotiations.”

Categories