In late 2005 Fiona McHugh gave Irish Times food critic Catherine Cleary a behind the scenes view of her vision for Fallon & Byrne, located in an old Victorian era telephone exchange from 11 to 17 Exchequer Street. 

In a vast empty building covered in dust she shared her “love, passion and dreams”. McHugh, a former editor of The Sunday Times in Ireland, was preparing to plough everything into a Manhattan-style food store, cafe and restaurant modelled on Dean & Deluca in SoHo. McHugh and her husband Paul Byrne, a developer, had often fantasised about creating a similar retail and dining experience in Dublin. Byrne was familiar with the concept having lived seven or eight years in New York.  

“So it was a dream, and we talked about it a lot. Then we were walking along here one day and Paul pointed to the building and said: ‘You know, that is the perfect building for it.’” It took Eircom (now Eir) two years to agree to sign a lease with the new venture. 

McHugh was a passionate foodie who would bring her skills to selecting the right fishmonger, butcher’s counter, coffee and food-hall required by their plans. 

Byrne, as a builder, would manage its kit-out. Brian Fallon, their third partner in the deal, would bring his experience as a restaurateur. He had decades of experience working in his family’s Red House Country Hotel in Newbridge, Co Kildare which had been gutted in a fire in February 2005. Fallon had also founded the Lemongrass chain of Asian fusion restaurants in 2002. 

Originally the three partners had considered calling their new venture – Fallon, Byrne & McHugh – but they had dropped the McHugh because it sounded too close to a firm of solicitors. 

McHugh was pregnant with her second child as she showed The Irish Times around the building. It was littered with debris and dirt prior to its renovation. “I alternate between extreme excitement about it and fear, because from next month I don’t have a large salary landing in my account,” McHugh confided. 

“In a way, it’s a fantasy shop for us. We’re trying to put in it all of the things which we would like, such as a great butcher.” 

“Everybody who is coming to look at equipment has said to us, ‘Don’t do a proper butcher, do pre-cut meats wrapped up in plastic,’ which we don’t want to do,” she added. 

“The whole point is that in each section it will be a full-service great food store.” 

McHugh and her partners were prepared to break the traditional rules in order to create something special. She knew it was far from a sure thing, and a steep learning curve lay ahead.

In recent days, the dream has ended. Byrne and McHugh agreed their departure in a deal thrashed out with other investors.

“It’s all or nothing. It is a big risk, and we stand to lose a lot. But the way I see it, the potential benefits are enormous, and there’s the opportunity to work with Paul and Brian on a project we’ve dreamed about for years,” she said.

In recent days, the dream has ended. Byrne and McHugh agreed their departure in a deal thrashed out with other investors. The move came days after they pulled the shutter on another store in Rathmines in Dublin 6.

Just what happened? And what happens next?

SoHo in Exchequer Street

Fallon and Byrne opened at the end of March 2006. It was a new 20,000 sq ft plus food destination that was described in the press as a “fabulous, Manhattan-style, meet-your-friends-there, taste-the-wine, organic-and-free-range and the chicken-died-happy food hall.” 

McHugh said the fit-out of the building cost over €2 million “and that’s at cost price.” In the basement there was a wine hall and on the ground-floor a food hall – a 120 seat brasserie opened a little later that year. 

There was a big investment in staff from day one. 

Fallon & Byrne employed 100 staff and over 20 chefs. It convinced Tom Meenaghan, formerly of Terence Conran in London, to work with them. 

There were over 3,000 products on sale in Fallon & Byrne, which was dazzling for the customer but difficult to manage from an inventory point-of-view. 

About 60 per cent of its stock was sourced directly from France, Italy, Portugal, and the US. This gave it a unique feel. 

It meant Fallon & Byrne was buying stock for less as it had cut-out the middle-man but this created a greater number of things to stay on top of. 

To maintain its high standards McHugh, Byrne and their core team were putting in 14 hour days up to seven days a week. 

“We took a lot of decisions that some people advised us against,” McHugh admitted. It was certainly a relentless and complex business. As the Celtic Tiger moved onto its final stretch from nowhere, Fallon & Bryne was making a big impression. 

Its well-heeled customers loved it. In its first year trading McHugh said sales hit €5 million. It lost €750,000 that year but that was normal in a business still bedding in. Fallon & Byrne was already being linked with expansion. 

There were rumours it was looking at Cork and it was also linked with revitalising the old Victorian Fruit and Vegetable Market on Mary’s Lane near Dublin’s Four Courts.

Fallon & Byrne was part of a new breed of restaurants like Venu Brasserie and Cocktail Bar backed by Michelin two-starred restaurateur Patrick Guilbaud in Dublin. 

But there was something special about it too, that made it more than other Tiger arrivistes. 

As Ireland’s economy headed into recession it was this quality which kept its customers coming back as others went bust. 

It had a genuine following among professionals and well-to-do city-based dwellers who continued to do well even during the crisis. 

People like the author John Banville could be spotted there too although he fretted in a 2010 interview that: “Some day, the staff of Fallon & Byrne will call the men in the white coats to take me away as I trudge among the aisles of organic veg, muttering and sighing (while thinking of sentences for his latest novel).”

As Ireland’s economy headed into recession it was this quality which kept its customers coming back as others went bust. 

Trouble of a different kind however was brewing.

*****

A bullet, dodged

Fiona McHugh was Ireland’s first ever female editor of a national newspaper. She was only 32 when she got the job in March 2000. 

The Sunday Times UK and Ireland editor John Witherow said on her appointment that while others had gone for the role: “In this case, the best man for the job was a woman.” 

The daughter of  a diplomat, McHugh was born in Nicosia, Cyprus and she grew up between Ireland and the Middle East. She did a degree in English and Philosophy in UCD and had worked for Bloomberg in Brussels prior to joining The Sunday Times in early 1998. The Sunday Times had started covering the Republic of Ireland consistently in 1993 under eclectic and intelligent journalist Alan Ruddock. 

Ruddock, who died in 2010, left the paper to edit The Scotsman in January 1996. Rory Godson, today chief executive of communications consultancy Powerscourt, took over. 

Godson was a talented editor. He knew how to secure more resources from London to allow him combine Irish content with The Sunday Times’ world-class international correspondents and range of magazines.  

Rupert Murdoch’s News International opened its pursestrings allowing Godson move his team from a basement on Merrion Street to a larger office in Huguenot House overlooking St Stephen’s Green. 

The Sunday Independent still comfortably dominated the Irish Sunday market, but The Sunday Times found its own audience. 

Fiona McHugh joined the paper as a business reporter. After John McManus, now opinion editor with The Irish Times, moved to become political editor of the paper, McHugh was promoted to business editor. With McHugh in situ as business editor, Godson delivered a huge scoop for The Sunday Times in 1999 when he convinced gossip columnist Terry Keane to divulge the story of her 27-year affair with former Taoiseach Charlie Haughey. 

Sales of The Sunday Times surged as a result of the story to the dismay of its rivals in The Sunday Tribune and The Sunday Independent. 

Afterwards Godson was made business editor in Britain, a promotion which required him to move to London. 

This freed up the position of Irish editor. In Dublin, McHugh was respected but not favourite for the role. She had however impressed London both as a business editor and for her skill in editing a series of special magazines targeting younger Irish readers.  

“Fiona was very determined, energetic, smart and ambitious,” a former colleague said. “Crucially, she also made an impression in London.”

Maeve Sheehan from Kinsale, Co Cork was made deputy editor having spent five years with the paper in Dublin and London. 

Sheehan was only 33, but a brilliant news and crime story-getter. Her interests complemented McHugh, and the two women formed a unique partnership in an industry dominated at the top by men.

“Fiona was hard-working, tough,” a contemporary said. “She didn’t seek the limelight personally, and wanted her paper and journalists to make the news not herself. There was one exception to this rule, which I am sure she would have rather not had to experience.”

That exception came in November 2003, and involved the broadcaster Eamon Dunphy. 

He was a neighbour of McHugh at the time on Mount Pleasant Square in Ranelagh, Dublin 6. 

McHugh was at home with her month old daughter and husband Paul Byrne, when Dunphy came calling. 

Dunphy engaged in a verbal fracca in relation to a mild jibe made about him by a columnist in The Sunday Times. 

Word got out, and The Sunday Independent covered it all in lurid detail. 

McHugh remained calm. She is not someone who is easily rattled. It was a disagreeable incident, but allowed pass into Dunphy lore. 

Colleagues recall McHugh, as always having an interest in food and restaurants, even while putting in long hours as an editor.  

McHugh holidayed in Lucca, a city on the Serchio river in Italy’s Tuscany region. She enjoyed new restaurants in Dublin, and she regularly visited New York and London. She was entrepreneurial, and this interest was encouraged by Byrne, who ran his own building and development business. She began to think about life beyond journalism, her obsession until that point. 

Just prior to her departure, McHugh faced one of her greatest challenges as an editor. The former politician Liam Lawlor had died in October 2005 along with a woman in a car crash in Moscow, Russia. 

Wild rumours were circulating in newsrooms about this woman, and whether she was a prostitute. The Sunday Independent decided she was, based on hearsay. The Sunday Tribune and most other papers followed.

McHugh however did not. The Sunday Times reported the story straight. (The late Paul Drury and Ireland on Sunday was the other paper that got the story right). 

When it emerged soon afterwards that the woman with Lawlor was a respectable translator, The Sunday Times avoided a defamation quagmire. 

Years later, Frank Fitzgibbon, who took over as editor of The Sunday Times not long after Lawlor’s death, would often reference this prudent decision, when weighing up publishing legally dicey stories. 

The lesson he said was try to stick only to verifiable facts, and avoid being swept up by rumour mills. “We dodged a bullet that day,” he said.

As business editor in the late 1990s McHugh covered what were then the big beasts of Irish business. 

As she headed into business, McHugh was to face some of the very challenges she had once written about, albeit on a lesser scale. She was now on the pitch.

Correctly, she criticised the tycoon Tony O’Reilly for making the vanity purchase of the Independent titles in London. 

This business, which Independent News & Media sold for £1 to a Russian oligarch in 2010, was, she warned, a  “financial black hole.” 

McHugh also reported during that time on Powerscreen, Northern Ireland’s biggest industrial company, which was facing various accounting issues. 

As she headed into business, McHugh was to face some of the very challenges she had once written about, albeit on a lesser scale. She was now on the pitch.

*****

Missing funds, examinership – and a rescue plan

In January 2012 the High Court appointed Neil Hughes as examiner to Fallon & Byrne. 

The restaurant and gourmet food hall had sought the protection of the courts because it was insolvent and unable to pay a €1.4 million tax bill. 

Two scenarios were presented: one were the business was wound up leaving a deficit of €2 million and the other where it continued as a going concern and that deficit could be reduced to €390,000. 

The court heard that a family member of Paul Byrne, who was formerly the financial administrator of the business, had misappropriated at least €223,000. This money had been spent on funding an extravagant lifestyle in secret. The fallout from this misappropriation was unpleasant, but criminal charges were not pursued.  

This did not account for all of its losses – not every management decision was the right one. Tax bills were allowed mount and the business was also hit by consumer spending falling during the financial crisis. 

Nonetheless, an independent accountants report by Cormac Mohan concluded the business had a reasonable prospect of survival if restructured. 

Two scenarios were presented: one were the business was wound up leaving a deficit of €2 million and the other where it continued as a going concern and that deficit could be reduced to €390,000. 

The court heard 18 expressions of interest had been received from potential new investors. 

Among the names rumoured to want to invest in the business were Insomnia cofounder Bobby Kerr and Four Star Pizza franchise owner Michael Holland. 

Crucially for the success of the examinership the Revenue Commissioners, perhaps conscious of the number of employees in the venue, said it was taking “a guarded but neutral” stance in relation to the examinership. 

A rescue plan was agreed in April 2012. Unsecured creditors, which included dozens of small businesses, faced an 81.6 per cent write-off on the nearly €2.4 million owed to them. “This was really tough at that time,” a former supplier said. “We supported that business and were badly burned by it. After that we stopped dealing with them.”

In total about €975,000 was loaned to the business for five years by undisclosed investors and another €100,000 was pumped into it in return for for 99,950 shares.

As time went on John Delaney would emerge as one of the most important decision-makers in the future of the business.

Banks and new investors insisted on greater oversight of the business. Cormac Tobin, a veteran retailer who worked for Feargal Quinn’s Superquinn who led a large pharmacy chain at the time, went in as a consultant to the business. 

Frank Murphy, a former financial director of Superquinn, Brian Fallon, an original investor, and Shane Harte, an accountant, all participated in a deal that kept McHugh and Byrne on board. 

Delaney, Locke & Thorpe, the firm’s auditors, who had spotted financial discrepancies, were listed as being owed €311,000. 

The Delaney in this firm was an accountant called John Delaney (no relation to the former FAI boss). He had helped put the Beacon Medical Group together in Sandyford and was a very experienced businessman. 

As time went on John Delaney would emerge as one of the most important decision-makers in the future of the business.

*****

Parting ways

By April 2014, Fallon & Byrne was back on its feet. It won a tender to set up a new venue in the old Victorian pavilion in Dun Laoghaire’s People’s Park. The building was originally designed by John Loftus Robinson in the late 19th century. It had fallen into disrepair before being restored and modernised by Howley Hayes architects working for the local council.

The restaurant held about 60 people, and included a coffee shop and outdoor seating areas. In an interview around that time McHugh said: “We’ve been growing year on year by 10 per cent, for 14 to 15 months.”

In 2016 Fallon & Byrne began working on building a new flagship food hall and casual eatery in the Swan shopping centre in Rathmines. It took 10,000 sq ft in the centre whose other tenants included Dunnes Stores and a the Omniplex cinema. About €2 million was invested. Problems however rapidly emerged. 

Dunnes Stores revamped its store in the Swan shopping centre, bringing in specialist butchers and fine food offerings. It began to match Fallon & Byrne on quality, and beat it on price. Dunnes, when it sets its mind to it, is a teak tough retail competitor. 

As this was happening, Fallon & Byrne appointed stockbroker Goodbody to raise €6 million from its private clients. 

There was again talk of expansion into Dundrum, but also rumours that the business might be for sale. “It is also believed that major supermarket chains, including Dunnes Stores and SuperValu owner Musgrave, harbour an interest in taking a stake in the business, or even buying it in its entirety,” The Irish Times reported. 

None of these things happened. Time was now running out for McHugh and Byrne. After the examinership they were vulnerable, and needed everything to go right.

McHugh and Byrne owned 45 per cent of the Fallon & Byrne holding company Sarzala Ltd, but the other shareholders controlled the business and had access to more money. 

Vitally, however, Fallon & Byrne agreed around this time a new 25-year lease on the Exchequer Street property with Eir, which was due to run out in 2021. This secured the businesses’ mothership. A decision was taken to stem losses, and a move started to buyout McHugh and Byrne. 

By January 24, it was all over for McHugh and Byrne. A press release was issued by Fallon & Byrne that said existing investors had negotiated a deal with Byrne and McHugh “which has put the business on a strong financial and management footing for the future.”

On New Year’s Day this year, an email was sent to Fallon & Byrne staff in Rathmines calling them to an urgent meeting. Staff were told that Rathmines was closing with “immediate effect,” and that the firm had no choice but to act “decisively” to protect the rest of the business. Fallon & Byrne said the rest of the business was trading profitably, and that it had total sales of €15 million annually and 350 staff.

By January 24, it was all over for McHugh and Byrne. A press release was issued by Fallon & Byrne that said existing investors had negotiated a deal with Byrne and McHugh “which has put the business on a strong financial and management footing for the future.”

“The deal involves the departure of Mr Byrne and Ms McHugh from involvement in the business and from the board of directors,” the statement continued. An investor group led by Frank Murphy and Brian Fallon was it said committed to further investment in the business.

Fallon & Byrne had that week secured planning permission to expand across three floors of the building adding 5,000 sq feet. Its plan included a new outdoor terrace on the second floor, as well as other improvements. Murphy said: “The new structure and investment allows us to restore certainty about the future of this respected business and brand.”

“Fallon & Byrne developed from the innovative offering at Exchequer Street and that is where we see the most potential for growth in the short to medium term,” he added. 

Cofounder Fallon added: “Fallon and Byrne has become an institution, nurtured into a brand synonymous with quality products and service offering. We are focused on continuing to protect and build the unique offering that originated at the Exchequer Street location.”

Fallon & Byrne is set to continue to run its business with its existing executive team including Michael Buggy, chief financial officer. McHugh declined to comment when contacted by The Currency. “I’m not allowed to speak to anyone,” she said in a text. Various advisers to the business, both past and present, also declined to comment. 

A spokesperson for Fallon & Byrne said it would be premature to comment further beyond its statement last month. 

“There are lots of exciting plans for the building but the level of investment and funding planned for the building is not something that we’ll be talking about at this time,” she said.

*****

Unlocking a jewel in Dublin

Fallon & Byrne is part of a much bigger jigsaw that is best seen from above. Behind Fallon & Byrne is a large surface level car-park, owned by Eir, which is also Fallon & Byrne’s landlord. Eir owns various buildings overlooking this car-park on Dame Court, St Andrew’s Lane and Dame Lane as well as Exchequer Street. 

It is a part of Dublin that is run-down and covered with graffiti. Developer Gerry Conlan saw this potential for many years as the owner of the Central Hotel which sits on Exchequer Street and Dame Court. 

He watched Fallon & Byrne’s success and realised the area had huge potential as a high-end new quarter of the city. During the financial crash however Conlan was in Nama so he could do nothing. Eir meanwhile was changing ownership, chief executive and much more. It was not a priority for it to do anything with the car park in a city stagnant in the crash. 

Conlan was now determined to get back into development and in his sight was the area surrounding his hotel and Fallon & Byrne.

In July 2014 Nama sold €427 million of debts associated with Conlan to Deutsche Bank for €145 million. The deal did not include Conlan’s flagship asset Mount Carmel hospital but it included assets in Ireland and the United States. Deutsche Bank offered Conlan the opportunity to buy back some of his portfolio if he could raise the funds. Conlan got funding from Garrison Earlsfort in Dublin to allow him buy back the Central Hotel in Dublin 2 and a few smaller assets. 

As the market rose in value he refinanced with Fairfield Real Estate Finance, which is backed by Oaktree. Conlan was now determined to get back into development and in his sight was the area surrounding his hotel and Fallon & Byrne. In December 2017 he acquired Trinity Street car park, on the North East of the Eir land, for €18 million. He asked Fairfield to back him in this deal but they were happy with their existing exposure to him. Conlan turned instead to Michael Breslin, an Irish-American businessman who owns the Mercantile Group, which owns bars near Fallon & Byrne. 

Breslin agreed to back him but he wanted security on Conlan’s equity in the Central Hotel, a site he owned in Jigginstown, Naas and other assets. Conlan agreed to this deal because he was convinced he could get his site rezoned in Naas unlocking tens of millions in value. This rezoning however failed to come through and suddenly Conlan was unable to repay Breslin. 

Breslin thought about pulling the plug but eventually he agreed with Conlan to sell Trinity Street car park and the Central Hotel. In July last year Dublin-based BCP Capital teamed up with Deutsche Finance International to buy the two assets. Breslin was repaid. Conlan was now out. BCP and its partner finds itself with two prime assets on either side of one of the great property plays in Dublin. 

Another project

Reflecting in late 2006 on the first year of Fallon & Byrne, McHugh confided to The Sunday Business Post that she was not sure that she would do it all again. 

“Had I known at the outset how difficult it was going to be and how frightening it would be in the early months, I would say no. At the same time, I don’t regret it. It is really exciting. I love coming to work, but it definitely wasn’t easy,” she said. She said she was looking at opening a second venue in Cork. 

“I’m not sure I want to embark on another project. Paul is more open to that than I am.” With both McHugh and Byrne now out of the business they co-founded, they have little choice but to begin again. 

They recently opened Lenehans Bar & Grill in Rathmines, Dublin 6, on the site of an old hardware store. “A nice place to be, by people who love what they do,” is their new ventures new motto. 

*****

Endnote

In April 2016 David Drumm, the former chief executive of Anglo Irish Bank, was a few weeks back in Ireland after spending years in Boston. Drumm had been locked up for months prior to that in a prison in the United States. 

Eventually he had bowed to the inevitable and agreed to fly home to face criminal trial. I reached out to Drumm by email to see if he fancied a coffee. I had suggested a discreet venue where we were unlikely to meet anyone, but Drumm suggested we meet in the open in Fallon & Byrne. 

Nobody recognised Drumm. As we sat on two stools in the coffee area of Fallon & Byrne we ordered coffee and a cake. The former banker had last visited the venue during the Celtic Tiger when Anglo was flying high. 

“This place is great isn’t it? It really hasn’t changed,” Drumm said. For Drumm more hard times lay ahead – a criminal conviction and years in prison – but in that moment he was content. 

The bigger question is, what do Eir, BCP Capital and other small property owners do next to unlock what is a land jewel in the heart of our capital. Fallon & Byrne is a vital part of that. 

Fallon & Byrne has had its own ups and downs. Mistakes were made along the way but it has retained its focus on quality. 

It has undoubtedly added to the city and all three of its co-founders can take credit for that, as can Delaney. Its current owners have a great opportunity and challenge on their hands.    

As the entire quarter gears up to be regenerated around it the Fallon & Byrne story still has a long way to run. Fallon & Byrne we know is going to be redeveloped. 

The bigger question is, what do Eir, BCP Capital and other small property owners do next to unlock what is a land jewel in the heart of our capital. Fallon & Byrne is a vital part of that.