As the co-owner of Fire Steakhouse & Grill in Dublin’s Mansion House and Sole Seafood & Grill on South William Street, Padraic O’Kane runs two of the city’s largest restaurants. Shuttered for three months, both will reopen on Monday, but, due to social distancing, capacity at both will be reduced by 40 per cent.

In this interview, O’Kane talks about the economics of the restaurant business in the world of Covid-19 and outlines a range of measures to help the embattled hospitality sector – from Vat reform to new rental agreements.

Plus, as the man who brings American football to Dublin each year, he talks about the impact of the pandemic on Irish tourism.

Ian Kehoe (IK): Today I am joined by Padraic O’Kane, the co-owner of Fire Steakhouse & Bar in Dublin Mansion House and Sole Seafood and Grill on South William Street. Padraic – you have two well-known, big-capacity restaurants ready to open on Monday. Are you ready and will it be one metre or two?

Padraic O’Kane (POK): It is 14 weeks since we closed the doors, which was unthinkable at the time. We are at one metre and where we can do it further, we will. We welcome the updated guidelines on that because that two-metre guideline meant we could just not open the doors – it was unpractical because it is not just the gap between the two tables – it is when two people from the same household are sitting at the same table and at two metres, that would have been totally unpractical.

The reality, though, of the one-metre guidelines is that in both restaurants we have removed 40 per cent of the furniture, so we are down to 60 per cent occupancy of where we would have been pre-Covid-19. It is a huge amount of covers to lose. We are working on the basis of the ‘new now’ for the foreseeable future and that this will be the capacity of the future until the Spring of next year, if not beyond. That is the reality that we are starting to get around in relation to how we can fit that into the business model. Because it is not the one that we closed down with.

IK: Let’s dwell upon that business model. Take 40 per cent off capacity, and at a very minimum you are down 40 per cent in terms of revenue, and you are also reliant on consumer confidence to get you to that reduced level. The economics of that – is it viable for your own businesses at that level?

POK: This is where there is so much uncertainty in play at the moment. If you take something like rent – and we are tenants of both buildings – when we negotiated in good faith with our landlords, we negotiated on the basis of Fire being a 280-seater restaurant and Sole being a 120-seater. Based on the business plan, everyone came to the fair conclusion of what a rent should be like for units like that. Now, that is not fit for purpose at all.

There are so many uncertainties when we open on Monday. If I take some simple costs like rates – yes, we have a three-month break, but that does not even cover the time we are closed. We need far more certainty around that – as do the local authorities around the country, because we need them indeed as well so the streets can be cleaned as best as possible and we have a nice town. So they will need support and that has to come from central government. We need 12 months – not a holiday, but a write-off in relation to rates.

Vat has been kicked around for such a period of time now. It should never have been moved back in the first place. We open up on Monday and we don’t know whether we will get a Vat reduction. A lot of people are calling for zero per cent. I am not sure that is correct either. I think food and accommodation down from 13.5 per cent down to 5 per cent and beverage – which everybody forgets about – is at 23 per cent and that comes down to 13.5 per cent. That means that as we get back on our feet we are contributing to the economy as well. that is important. Also, I think zero per cent Vat has to go to Europe anyway so there would be a long delay.

Then you look at banking. In Fire, we just did a large fit-out before lockdown – we invested €1.1 million, which we co-funded along with a banking institution. It made complete sense at the time – as part of Fire’s 15-year anniversary, we needed to change kitchens and update the look of the place. We now have a three-month moratorium on banking and capital and another three months coming in, and that is welcome. But businesses won’t be in a position to do capital repayments at that point so it will have to look at interest only, and I understand that banks have to survive as well.

There is labour, where we really appreciate the government support scheme for July and August. That really has helped restaurants and the hospitality but that won’t be there in September.

When you take rents with landlords, the new now is going to have to be new base rents, plus an uplift. To be fair to landlords, there is no point having empty units in Dublin or Cork or Longford or wherever, landlords and tenants are going to have to work very closely with each other. The base rents, like back in the recession, will have to come down, and every landlord should have the right to an uplift as we start to move the economy and move sales up again. Certainly, a little bit of legislative support around that will help too.

When we open up on Monday with 40 per cent occupancy out of the place, we are projecting somewhere between 40 per cent and 50 per cent of 2019’s turnover. Because we have so many uncertainties, we don’t know if we have a viable business – and it will probably be September before we do. That is a scary place to be. But the alternative of not opening up, and not bringing back staff, is not what we want.

Unless these businesses in hospitality can get the support that they need – and it is not all about the government writing cheques, there are other practical examples that I have talked about – unless we get a wider support package, we won’t be staying open for long.

One of our big times is Christmas and it will be a different Christmas this year, dealing with social distancing and people’s attitudes going out in larger numbers. I am optimistic – I am a glass-half-full kind of person – but I am very cautious about the uncertainty around the cost base. And we have not even talked about who the customer is at this stage.

The economics of restaurants

IK: I will come to that in a moment. You are luckier than some other restaurants. You have big, spacious restaurants. I know there are costs associated with that, but when people talk about small, intimate cosy restaurants, social distance will break their business model. At least you are starting with an advantage – your restaurants are elegant, but they are spacious.

POK: We are fortunate. While I am delighted to be talking to you on behalf of Fire and Sole, we also have to keep an eye on the smaller restaurants as well. They are really in trouble at the moment as a result of social distancing. Because when Dublin comes back, and we will, we need those smaller restaurants – we need variety for the customers, we need variety for the domestic market, different styles of culinary outlets. It is going to be a tough time for them. Hence why the cost base that I talked about for a large restaurant, they equally need it – perhaps more – to aid their survival in the foreseeable future. If you are a 40-seater restaurant and you are down 50 per cent capacity, you have 20 seats and that is very, very difficult.

Consumers will only pay so much. They may pay for a Michelin star restaurant for a tasting menu. But in a top-end casual restaurant or a casual restaurant, there is only so much a customer will pay and can pay. Yes, they will come out for a couple of weeks and celebrate the end of the lockdown, but it won’t make up for the lack of tourism. It will be very difficult for smaller restaurants. It will be very difficult for us and we can’t do it without support. Smaller restaurants will feel it worse.

IK: There has been a striking report from the RAI this week stating that the sector could lose 50 per cent of its workforce unless an emergency grant aid package is issued by government. The RAI have already been warning that it was a bad year for the sector and, even pre-Covid-19, was expecting two restaurants a week to go under. Covid-19 has accelerated this.

POK: The reality is pre-Covid-19, Dublin city and some of the other cities were already at saturation point with more planning permission granted – 40 in Dublin alone. This probably has put a stop to some of them, which in a roundabout way is pretty welcome.

When you look at restaurants, we’re not the answer to retail. And I think if you look across the water into London and you’ve seen in 2018 and 2019 in particular, the amount of restaurants that closed and the amount of restaurant groups that had went from 10 restaurants to 40 restaurants because they were picking up reasonably priced retail units that had closed and landlords had went from retail to hospitality. We should have learned from our cousins over there that hospitality was not the answer to retail. And as online continues to grow, we’re going to have a lot of empty retail units now at the end of this.

Certainly, the answer to them is not a change of use into hospitality. So, that’s a huge concern out there as well. And what is the shape of the high street going forward when we come out of this? People are now buying things online that they never even thought they’d be buying online. So, there’s a huge concern over what this night-time economy and our high streets look like on it going forward.

“I can certainly see, again following the trend in the UK, a lot of those restaurants will go to dark kitchens.”

IK: In relation to online patterns, so many people, myself included, would have never thought of ordering a meal from a restaurant and having it delivered or collecting it before, beyond the usual takeaways. But over the last three months, people have got incredibly used to that idea.

Is that an impact on your business or are you positioned somewhat differently in that you’re also an experience destination to go to?

POK: Well, based on the bookings for the first number of weeks back, I would think that a lot of people have tried them at home and didn’t cook them the same way the chef would, so we’re seeing a good run there. But I think a restaurant is not just about food anymore. We certainly are about an experience. It’s the staff, the friendliness of the hospitality, it’s the beverage, it’s the types of menus. It’s the atmosphere. That’s very much what Fire and Sole based the business model around. We’re an experience. We try to do everything right or are as good as we can. It will stand by us.

I had concerns before Covid-19 around Deliveroo and the other delivery services that are out there. If you take the good Chinese restaurants, the Italian restaurants, a lot of these guys were all of a sudden down 50 to 60 per cent in people who were coming into the restaurants. Or, in other words, people were ordering online and getting it delivered at home.

Obviously, they weren’t benefitting from the beverage and the restaurant was paying for the high percentage that they pay to these delivery services. Then when you thought about going out, you might not necessarily pick that restaurant because you’ve already tasted it two Fridays ago. I can certainly see, again following the trend in the UK, a lot of those restaurants will go to dark kitchens. In other words, they don’t need to be on the high street all of a sudden. They’ll be in warehousing and backstreets where they can operate out of, and the bicycles can come and collect there. That certainly is interfering with certain sectors of the restaurant trade. A lot of restaurants opened, I think, opened up during Covid-19 to do meal packages where they were putting together their products and stuff like that. I question how many of them did it for cashflow, for survival as much as doing it for necessity…

IK: And maintaining a relationship with the customer?

POK: Maintaining a relationship bringing in some sort of level of cash? I think a lot of them might’ve been potentially new customers, but they still have to cook it at home and so on and follow the instructions. So, some people would have loved it. Some people won’t have loved it as much. We stood away from it personally because we believe a restaurant is an experience. It’s somewhere you come out either as a couple on date night, or you’re celebrating a birthday, or an anniversary, Christmas or whatever the case may be. It’s part of that overall hospitality experience as opposed to what you can have at home.

Consumer confidence and fine dining

IK: So, you said bookings are good for the first couple of weeks. So, that means consumer confidence is good. But what type of customers are booking in now? Has there been a change in pattern? As the corporate market presumably just collapsed, is it more husbands, wives, boyfriends, girlfriends, partners, whatever, people just wanting to get out of the house?

POK: The first Monday, on June 29, we’ll come back very strong and then Friday, Saturday, Sunday are booked out in Fire and we’re nearly booked out in Sole for the first weekend and not far off for the second weekend. Outside of the first Monday, Monday to Thursday seems to be quiet and it was all my worry that with leading into, particularly in September, when the business corporate market doesn’t come back in the same numbers, or is quite limited, that’s when we’ve got a really big problem. In huge ways. Because if I give you a simple example, remember back in 2009 when the recession eventually hit in March, Fire lost 20 per cent of our trade virtually overnight. By that Christmas, 10 per cent was back. And up until last year, we were in growth every year since. That was a tough recession, as we all know. But this time that business traveller is not going to be about in any big numbers for a while. So that is scary.  Who is going to be in the hotels Sunday to Thursday evenings? Will the domestic market be bringing out their international colleagues who are over, etc? So, it’s a huge worry to who that customer is, etc.

“We now have to sell the city to the domestic market the same way west Cork is selling themselves.”

Funny from a Dublin perspective too, I think the domestic market will be strong. They will want to get out there, they’ll want to celebrate. We’re seeing the trends for far, they’re mostly coming out in twos and fours, which is absolutely fine. They’re poking the toe out to see what it’s like. For the first number of weeks, there’s a majority of twos and then they come in fours and sixes in time as they build up confidence and so on and so forth. But the domestic market can only go so far to make up the difference, as 10 million tourists to Ireland last year is a hell of a lot. I know some of them came in January and February and there will be some hopefully at the back end of the year. That’s a massive amount of people to get out. Our other concern in Dublin is, in July and August, we haven’t been great at selling ourselves to the domestic market, i.e. for city breaks. Traditionally, Dublin people will go to west Cork, Donegal or down the coast.

IK: Down to Wexford, my home county.

POK: How could I miss it? People who come into Dublin from other parts of Ireland normally come in because of a concert or GAA or a rugby game. They have a reason to come. So, we now have to sell the city to the domestic market the same way west Cork is selling themselves or Donegal or Wexford or anywhere else like that. So that’s a new challenge for us too. And that challenge has to come not just for hospitality, including our hotels, but we need retail to come along with that with later opening times in the even time. And we need our museums and attractions to open up differently and look at this on a different model. It’s not tourism now. It’s domestic tourism, as opposed to international.

One figure I heard last week which stunned me, on the Guinness Storehouse for 2019: 93 per cent of their visitors were international, seven per cent were domestic. Certainly, an incredible figure that shows how reliant we are on that market. But the amount of people who haven’t been to the Guinness Storehouse as well is also colossal in Ireland. So, it’s about selling the message and getting people back in. And that’ll help with the survival of the summer, and Pat McCann and the Maldron hotels coming out with the €100 rate, that’s great to see. And I see a lot of other hotels are following through that with good value in Dublin.

Who that customer is long term, or over the next six to eight months is scary, particularly when it’s a Thursday.

IK: Especially because the corporate credit card is gone for a period and that’s undoubtedly a nice market because you pay the extra tenner for the bottle of wine or you order a second bottle of wine. And that’s the value-add.

POK: And it’s the mineral water. They usually come in the sixes and eights and so on and so forth. So, it’s one of the dreaded nights of the year in restaurants, for example, is Valentine’s Day, because it’s all tables of twos, which means trebled the chefs that are on in the kitchen and everything else, but it’s less numbers you’re dealing with, leave the personalities aside. So, a restaurant would like to see fours and sixes, or larger numbers because it’s just an economy of scale. And people traditionally, when they’re out, unless it’s a couple celebrating an anniversary or a special birthday, they normally wouldn’t spend as high as if they were with two friends on a Saturday night or Thursday night, the extra bottle of wine and so on.

But losing the corporate markets, particularly for us… Sole has been different since it’s a two-year-old restaurant which celebrated its birthday during Covid-19, but traditionally in Fire for the last seven or eight years, July and August were two of the quietest months because the business market, the corporate market, went out of town.

IK: So overall, what you’re calling for is not just government support. That’s an easy ask. And every industry is asking for it at the moment, but it’s a broader package with the various stakeholders, from banks to councils to landlords.

POK: Yes, and it has to be because government funding can only go so far. And I think they can certainly help and if this government sees the predictions in one of the papers at the weekend where the Taoiseach was looking at Tánaiste and minister for jobs and tourism. That shows me someone has taken it a little bit seriously because tourism is usually tagged on. It’s been in transport and sport for the last number of years, etc.

Transport is a huge portfolio in itself. So, jobs and tourism together, that shows me someone taking it a little bit more seriously at the top. But we can’t constantly just go back to central government. If you take rent and looking at that at a lower base rate, and banking to get involved in this conversation – we certainly got behind them back in the day.

Insurance companies need to come to the table as well. We’re an FBD client as well. We thought we had a business protection as well, but that’s another conversation. But to be fair, we’re seeing premiums at least coming down. The initial reaction from the insurance industry, was: ‘We’ll look at it when you’re at renewal in relation, if you haven’t done turnover or if you haven’t had that month of labour.’ They have, to be fair in our circumstances, come down 50 per cent on one policy and 30 per cent on the other in relation to moving the premiums down now, which means we don’t have to deal with the cash flow.

So that’s a simple thing that the insurance industry wasn’t doing initially. They were able to bring their premiums down because restaurants, hotels, pubs won’t have the turnover. And it’s things like that. And I think if we have a joined up approach to this as we go at it, I think we have some chance.

Again, Vat, I’m not a fan of zero per cent because I think that could lead onto further closures and effect people starting back into business that may not necessarily should start or should hold off for another period of time because the economic scales don’t make any sense. So maybe having that Vat there is no bad thing at five and 13.5 per cent respectively.

“They’ve done 362 consecutive sellouts since 1962, and that’s only impressive when you realise the stadium holds 92,000 people.”

IK: We talked about restaurants. Briefly, I just want to talk about American football Padraic, because you also co-run an Irish American event, which has been hugely, hugely successful in recent years, bringing college football to Ireland. You should have been gearing up for a really big event in August, Navy vs. Notre Dame. You’re earmarked for the Aviva stadium, 39,000 US visitors were due to come in. If people aren’t interested in college football, college football in the United States is almost on a par with the Premier League in England with the sort of numbers that they get. So, it might have college attached to it, but it’s a really big phenomenon in the US. You’ve obviously had to cancel it, but you’re hoping to bring it back next year.

POK: Well, we’re back next year with Illinois and Nebraska. This was part of a five-game series that we announced in October 2018. So, the University of Illinois and the University of Nebraska are scheduled in for the August 28 next year in the Aviva. That will be a fantastic game. Nebraska is just football mad, the whole state supports these guys. You don’t necessarily have to have gone to the University of Nebraska. But if you’re from there it’s your NFL team and they’ve done 362 consecutive sellouts since 1962, and that’s only impressive when you realise the stadium holds 92,000 people.

Some of these universities, because they don’t pay the team, they give them scholarships, they almost own Premier League teams. That’s how big that value is in relation to television rights.

So, we’re excited about Illinois and Nebraska and potentially like what Notre Dame and Navy did in 2012, it restarted the economy back then for after recessionary times. That game next year has got the ability to do it. So, we’re trying to get everyone in behind that. And we’ve talked to the Tourism Recovery Task Force about doing specific campaigns in Illinois and Nebraska to encourage people that Ireland, when we get this moved on a little bit further, is a safe place to travel in 2021 and so on and so forth.

While they’re coming to see their team, to stay a minimum of seven nights, at three or four days in Dublin, three or four days in the country to make a holiday of it. Some of them go on into Europe from there. So that’s exciting for next year. Navy and Notre Dame want to come back. The figure of 39,000 in 56 would have been a new world record for the largest movement of Americans ever to leave the United States for an event. When you take in Ryder Cups and Olympics and stuff like that and NFL, it’s a huge statement. And it’s been two years of hard work that’s gone down the drain, but rightly so. We had no other option but move it. Albeit the game possibly will happen in early September.

But from tourism, if I go back to Fire and Sole with that in the last week in August, we were booked out having that in town. So was the restaurant in Killarney or in Wexford or in Galway. It’s a huge event for the country. But we have to, unfortunately in this case, move out. Hopefully we’ll have them two teams back within this area. We’re fairly confident in the fact that could be in 2026, but possibly as early as 2022 and they’re dying to do it.

IK: Finally, I know there is an awful lot of uncertainty and trepidation, but having had three months on the sidelines, you must be extremely excited to be back at least open, even at reduced capacity.

POK: It’s like Christmas. We’re doing a countdown to open. Yes, is the simple answer. There’s trepidation, but that there is also optimism and excitement. Seeing all the team back in play. We’re fortunate to operate the round room in the Mansion House as well. So, Dublin City Council uses it for their monthly meeting and the Lord Mayor will be elected in there next Monday night for social distance, etc. So, we were able to bring the whole team back and do a full two-metre social distancing as we started into the training last Wednesday for Covid-19 and understand them. There was a lot of shouting at them because there was a few attempts for hugs and different things amongst them. We’re a family, in a restaurant or a hotel. Like most business would be very like your second family. So, to get the guys back into play, they’re so excited about opening up again. The Fire team in particular.

We had introduced a new range of dry-aged steaks that we’ve been working on for nearly a year. T-bones and ribeye steaks dry-aged for 28 days. The first few customers that come in, if you’ve never had 140-day dry-aged steak, we will have some of them on specials when we come in, because they’ve been in the dry ager since we closed. I tasted one last week and I highly recommend them. They’re brilliant. But it’s simple things like that, how excited the lads are about looking at the dry age steaks and introducing them products that we’re bringing in, and the same over Sole, while we’re away. And the lads got news that they won another International Travel Writers award and so they’ll get to celebrate that and we will get to open up again and so on. It’s exciting times, but it’s damn worrying times.

And again, at Sole, a simple example, because the fishermen around the country haven’t been able to export, which a lot of our lobster and crab and oysters go abroad in huge numbers, it’s very hard at certain times of year to get even lobster and get them in any sort of reasonable price. So, we’ve done a deal with our fishmonger that in July and August we’ll have very good value around oysters, and €20-€30 per lobster cheaper than they were. So there’s an advantage of Covid-19 and we’re able to get our hands on a lot of wild salmon this year for the first time as well, and full of fish, which normally go to Michelin star restaurants, some of which aren’t opening at the same time and so on and so forth.

So, there’s always a bit of a white line underneath a grey cloud. So, if you’re a seafood lover, or a steak lover, we’ve some good options at Fire and Sole from next Monday.

IK: Well, listen, they’re fantastic restaurants and we wish you well for your reopening. And welcome back in a couple of months time to see how it’s all going.