Another one bites the dust. Despite being Rookery’s best-performing outlet, the casual western dining restaurant will be shuttering its Capital Tower branch when its three-year lease ends next month in June. Former DJ Daniel Ong, who runs the brand’s three outlets with two partners, says the decision wasn’t a sudden one. When the dine-in ban on eateries was announced early April along with the Circuit Breaker measures, they knew they would have to close it, says the newly-wedded entrepreneur. Rookery Capital Tower is closing.
Rookery Capital Tower is closing
“Our original plan was to continue with Capital Tower ’cos we put in so much money into its infrastructure. The kitchen cost hundreds of thousands of dollars to construct, we also pumped in a lot of money into the renovation,” Daniel tells 8days.sg over the phone. “But now, even though it’s our best-performing outlet, we cannot run it anymore. We’re just lucky we’re hitting the end of our three-year lease [come June].”
According to Daniel, monthly rental at each of his CBD outlets is around $25,000. He declined to reveal the exact figure of the biz losses incurred so far after the emergence of COVID-19, but shares that it’s somewhere around a “couple hundred thousand [dollars], inclusive of capital expenditure losses when we close [the Capital Tower outlet].”
The fate of Rookery’s China Square and Hong Leong Building outlets, which leases expire in 2021, will depend on whether they can “get a new rental scheme in place”. “We need to talk to the landlords to come up with an amicable solution. We can either work on a GTO (Gross Turnover Rent) basis where [rental is based on a percentage of gross revenue], or it can be reduced in however our capacity is reduced.
For example, if dine-in capacity is 30 per cent, then we pay 30 per cent rent,” explains Daniel. The 44-year-old reckons that even after the dine-in ban is lifted, restaurants will have to run at a 50 per cent capacity thanks to safe-distancing measures. “So if landlords are going to charge normal rental rates, then we are 100 per cent dead.”
According to Daniel, revenue at the three restaurants plummeted 85 per cent since February. And while Rookery managed to “break even” in the last two months, it wouldn’t have been possible without rental waivers and wage support by the government.
“The landlords really helped us out very much. We paid next to nothing in rent in April and May, and there was also the 75 per cent government wage subsidy. But the moment the government help stops, or even if it drops by 50 per cent, we will be back in the red again,” laments Daniel. He is pinning his hopes on the fourth round of COVID-19-related measures to help businesses, which will be announced on May 26: “If there is going be more help for certain industries that are not allowed to open, then there’s still a fighting chance.”
Like most F&B businesses, Rookery is relying on its takeout and delivery business, which is generating only 15 per cent of pre-pandemic revenue, to stay afloat. And while response has been encouraging, Daniel is realistic that the volume cannot replace the revenue lost from dine-in business. Nevertheless, he and his team are channelling all their energy into marketing and ramping up its online business: “We are changing our menu entirely to suit a takeaway business.
We are only serving food that can take the travel well and have had to give up some of our popular menu items, mostly the fried items ’cos they will become soggy. We also have to think of different packaging to package our meals so that the sauces won’t combine together.”
Some of the new menu items include crab meat linguine, grilled Cajun chicken, and bangers and mash, and more will be launched in June. Hopefully the new additions will help boost orders, which seem to have “plateaued”. “Maybe when we started the delivery service in April, people thought Rookery was a good choice. Customers are still buying a lot and they keep coming back, but I think we need to do more marketing ’cos it’s a war out there. Businesses are throwing [freebies and discounts], and people are spoilt for choice. It’s super competitive now,” says Daniel.
“It’s a huge battle to get any form of market share ’cos of where we are located. We are in the CBD and we can’t go to the food delivery platforms, simply because there’s no residential estates around us. It’s all about proximity, so it’s a little different for us.” To streamline the business, Rookery is only operating from its China Square outlet and has let go of half of its 57 staff force.
But it is not just Rookery that’s keeping Daniel up all night. The entrepreneur also runs an art school, events and design agency, as well as a construction business, and “a lot of things are in limbo right now”. Daniel says: “We have a lot of projects and are just waiting to go again. The moment restrictions are lifted, [we will resume work]. My events and design agency has some work now, but all the events are cancelled, so we’ve basically lost everything. It’s also a wait-and-see approach. After June we will reassess again on whether we can start or not.
“As for the art school, we are doing online lessons, and I am personally delivering all the packages,” he laughs. “Response is okay, but earnings are nowhere near what it can be like when the school is open. I am pretty sure nobody’s making any money now. It’s all about survival, giving your team things to do, and trying to earn whatever you can to pay for expenses. The art school has been told to close, but the landlord is still asking us to pay rental. It is very tough to pay rent and staff with very low revenue.”