MILLION dollar views they might have but it seems even Perth’s riverside restaurants are susceptible to the effects of a decline in tourist numbers with two prominent restaurateurs falling to economic pressure.
MILLION dollar views they might have but it seems even Perth’s riverside restaurants are susceptible to the effects of a decline in tourist numbers with two prominent restaurateurs falling to economic pressure.
Shane King, the proprietor of Nedlands Jetty-based Jo Jo’s River Restaurant and Cafe said he was surprised to find receivers appointed to his business by the bank to which $500,000 is owed.
And further upstream, Heinrich Chok, the operator of Moorings Restaurant at Barrack Square, closed his doors nearly a fortnight ago and is in desperate talks with his leasing agent, Colliers International, to try and renegotiate the current $13,000 per month rent.
According to Mr King the news that his bank had appointed receivers to immediately sell his restaurant last week came as a shock.
“The ad on the weekend that has our business for sale came as a big surprise to us,” he said.
Mr King has operated Jo Jo’s for more than nine years and while business has been tough he said he and his business partners (father George and mother Margaret) had never defaulted on a loan repayment and suggested that the BNZA was calling in all of its WA hospitality business loans.
However BNZA state manager Daniel Donovan said he could not comment on specific clients but denied any speculation that the bank was withdrawing from the hospitality sector in WA.
“Absolutely not, we review industries all the time but it is not the case here,” he said.
Mr King said the receivership was the culmination of several months of negotiations with the bank that began when BNZA sent him a letter at the end of last year that called for a full payment of the outstanding loan of about $500,000.
Efforts to restructure the operation’s financial affairs had been complicated by a serious illness suffered by his father.
Mr King said he was negotiating with the appointed receivers KPMG to pay back the loan.
“We were going to seek expressions of interests from selling agents. We wanted to pay the bank out so they could go away but it means restructuring my father’s businesses in Exmouth and that is taking longer than we thought,” Mr King said.
His father George owns a backpackers hostel, charter boat operation, and property in Exmouth.
Mr King said that the past two years operating the river front restaurant had been difficult, however, signs of recovery in the market were evident.
“We are trying our hardest,” he said.
“The last two years have been disastrous for restaurants. It has been tough but it has got back to profitability. The second half of this financial year has gotten better again.”
Moorings Restaurant has also suffered the effects of declining trade over the past two years and, according to Mr Chok, the recent SARS outbreak has added the final blow.
“It has been very difficult. The business has not been doing very well especially with the SARS epidemic and the Iraq war. It has affected us dramatically,” he said.
Mr Chok said his rent had continued to increase while external factors continued to decrease his revenue earning capacity.
“I pay $13,000 a month on rent and it has always increased since I started about three years ago,” he said.
“At the end of the day 65 per cent of my market is tourists and if I don’t get that, well things get hard.
“I am still negotiating with the landlord [about reducing the rent] but I am not confident.”
