The historic Bewley's cafe on Grafton Street is to close permanently with the loss of 110 jobs. Staff were informed of the decision by the operator of the cafe, Bewley's Ltd, which is owned by artist Paddy Campbell.
The closure has been blamed on the impact of the Covid-19 pandemic on the economy, which has been in lockdown since March, and the €1.5 million annual rental cost on the protected structure.
In a note to staff, the cafe's managing director Cól Campbell, a son of Paddy Campbell, outlined the impact of the lockdown on the business and highlighted the added costs of social distancing measures, once cafes and restaurants are allowed to reopen on June 29th.
He also cited its €1.5 million annual rent as a reason behind the decision, saying that a request for a rent reduction had not been granted. The building is leased from RGRE Grafton Limited, which is controlled by property developer Johnny Ronan. The rent amounts to about 30 per cent of the cafe's sales.
“Taking into consideration all of the information currently available to us, there is a real likelihood that the cafe will generate substantial and unsustainable losses into the future, and we need to take urgent steps to address that situation,” Mr Campbell’s note to staff, seen by The Irish Times, states.
“It is with profound regret that . . . in this situation it is likely to be necessary to permanently close the cafe in the coming weeks.”
It is understood that Bewley’s withheld its rent for the second quarter of this year, which resulted in it receiving a 21-day statutory demand from the landlord threatening to wind up the company for non-payment.
Bewley’s has told staff that it will enter into a statutory consultation process with employee representatives about the proposed redundancies. Its last day of trading before the lockdown was March 16th.
In a statement issued Wednesday night, the Ronan Group said: “We are saddened and surprised by the news that the iconic Bewley's Café on Grafton Street is to close, especially as we had attempted to engage with the Campbell family over the past few weeks to reach a mutually acceptable outcome after the company had declared that it was taking a “rent holiday”. Our preferred solution has always been for Bewley's, as a Dublin institution which belongs on Grafton Street, to re-open its doors as soon as it can.
“However, Ronan Group has made it clear to Bewley's on numerous occasions that we were not in a position to subsidise its business when its shareholders are perfectly capable of doing so. Bewley's is a successful and profitable company and has generated significant earnings for its shareholders over a period of many years.
“We call on the Campbell family to enter into meaningful dialogue with Ronan Group to see if this unfortunate outcome can be avoided.”
Blow to sector
Bewley's Oriental Cafes Ltd opened on Grafton Street in 1927 and is probably the best-known coffee shop in Dublin, even though it has struggled to be profitable in recent times due to its annual rent.
Its closure is a major blow to Dublin’s hospitality sector and throws into question the future use of the building.
The cafe has served tens of millions of Dubliners and visitors to the city over the decades, and the building includes a Harry Clarke stained glass window, distinctive banquettes, 10 open fireplaces and an art deco mosaic tiled facade.
In November 2019, Bewley's chief executive John Cahill told The Irish Times that the losses at the Grafton Street cafe were due to its near €1.5 million rent, which he described as "excessive" and a legacy from the Celtic Tiger boom.
Following the 2008 financial crash, Bewley’s fought an unsuccessful campaign with its landlord to have its annual rent reduced to €728,000, a figure suggested by a third-party arbitrator in January 2012. Its lease is due for renewal in 2022.
The cafe has been subsidised in recent years by the wider Bewley's group, which manufactures tea and coffee and has operations in Ireland, the UK and the United States.
However, the wider group has been hit by the Covid-19 lockdown, with many of its customers in the hospitality trade either closing during the lockdown or having to restrict their service levels.
The cafe has had a chequered history this century. It closed in 2004, reopening the following year after Bewley's teamed up with entrepreneur Jay Bourke, who opened two restaurants, Café Bar Deli and Mackerel.
Those businesses closed post the crash, with the cafe reverting to the Bewley’s brand. It shut again in early 2016, reopening in November of the following year following a €12 million head-to-toe refurbishment.
More than 600,000 customers pass through the cafe on Grafton Street each year.