Robbie Fox's Renards is the latest and most high-profile casualty within the nightclub industry, which is under threat from stubbornly high rents and licensing law changes, writes PAUL CULLEN, Consumer Affairs Correspondent
IF THE CELTIC TIGER had a spiritual playground, it was probably to be found behind the bland exterior of an equally bland office block on Dublin’s South Frederick Street.
Throughout the boom, Renards nightclub was the venue of choice for many of the capital’s young cubs on their nights out. Cramped and sweaty at the best of times, it nevertheless acted as a magnet for the “work hard, play hard” crew trying to make the party last all night.
Visiting bands would nip down to Renards after their gigs in the Point. Star footballers back from England would call in on their way home to see the mammy. The club was the venue for a thousand product launches and celeb parties, with the familiar face of its owner, businessman Robbie Fox, at the door every night to meet and greet.
Today, though, the party is well and truly over. The money has run out and the credit has dried up. For years, it seemed that the clubbers ordering late-night bottles of plonk were living beyond their means; now it is apparent that so too was Fox.
This week, the liquidators of Engleson Ltd, the company behind Renards, called in all 68 creditors to tell them the bad news. In total, they are owed over €1.2 million, but all that remains in the kitty are assets of €200,000. Or even less; liquidator Gerry Murray reckons he’ll be lucky to get anything near the €150,000 value assigned to the leasehold, which has just a couple of years to run.
Tipperary Water will probably survive without the €80.16 it is owed and even NTL will manage without the €958.65 it is due, but for many small suppliers attending the meeting this was yet another nail in the coffin of their struggling enterprises.
“I’m in serious trouble already and this only makes it worse,” said one supplier. “Six grand down and I still have to pay my own suppliers,” another remarked. A third man wished he’d sold his food business when his oncologist advised him to do so on health grounds a few years ago; at the time, he couldn’t think what else he would do.
Three restaurants run by Fox – Tante Zoe’s in Temple Bar, Brown’s Barn in Citywest and Barracuda in Bray – are also in the hands of the liquidator. Between them, the four businesses owe at least €6.6 million more than they can stump up to pay creditors.
No one who knows the industry thinks this is the end of its problems. Some of Fox’s creditors say that he isn’t the only one around town who has been slow about paying bills recently. Suppliers, fearful of losing out, are demanding cash on delivery, even from long-standing customers.
The writing was on the wall for Renards and Fox’s restaurants for some time. The in-crowd, fickle as ever, had long since decamped to greener, trendier slopes. The smoking ban and increased controls on drink-driving were further blows. Looser licensing laws worked to the benefit of late bars, and the detriment of nightclubs, by allowing patrons to stay longer in their first port of call.
Yet, Renards was busier than ever at the start of last year, Fox says. “Between January and July, I had the best six months I ever had,” he says. “Then business fell off a cliff.”
THE REASONnightclubs and the general late-night entertainment industry were making hay until recently is explained by the complexities of the State's arcane alcohol licensing laws. The clubs found a way out of the hole created by the smoking ban and drink-driving controls by exploiting a loophole in the licensing regime. Venues with live music or a DJ found they could apply for an annual theatre licence for €270 a year, which allowed them to serve alcohol until 3.30am seven nights a week. With drinking-up time, punters could stay put in a club until 4am.
But with concern growing in society about the effects of problem drinking, and clear evidence of a rise in late-night anti-social behaviour in towns and cities, the Government closed the loophole. Minister for Justice Dermot Ahern, through the Intoxicating Liquor Act 2008, brought back closing times to 2.30am, and 1am on Sunday. Each individual extension to 2.30am requires an application for a special exemption order costing €410 a night.
The industry organised a quixotic but unsuccessful campaign against the changes, which included a midday “rave” by clubbers in front of the bemused suits in Leinster House. Fox and others stopped opening on Sundays, and many venues confined their openings to Fridays and Saturdays. The Gaiety said its business fell by 40 per cent.
The Irish Nightclub Industry Association (INIA) points out that the annual cost of applying for special exemption orders is up to €150,000, plus about €150,000 in legal fees. One club near the Border actually closed in the South and re-opened in the North, where the equivalent fees amount to £2,000 (about €2,350) a year.
“The loss of the extra hour undoubtedly contributed hugely to Robbie’s difficulties,” says Constance Cassidy, a barrister and expert on licensing law. “I don’t think gardaí were looking for this change and there is no evidence it has had any impact on the level of public order offences.” Court Service figures show the fall-off in late openings started to take effect once the changes were made and the cost of a special exemption order was doubled. In 2007, more than 90,000 such orders were issued by the district courts; last year, this fell to fewer than 79,000 and the first full-year set of figures for 2009 since the changes is expected to show a further steep decline.
Jay Bourke, who owns the Odessa and Cafe Bar Deli restaurants and has a long track record in the club business, says the industry’s legal problems go beyond mere late-drinking rules. “Since 2001, the Government has been working on a consolidation of our drink laws, which date back to the Dark Ages. There have been hundreds of submissions, four reports and a raft of civil servants working on this. Yet today, in 2009, we still have no law – it’s an utter disgrace, as big a waste of money as the e-voting machines. How can you invest in a business when you can’t be sure what the laws governing the business will be in a few years’ time?”
Yet, as Cassidy points out, consolidating alcohol laws won’t actually change them, unless there is a conscious decision by Government to do so. “We’ve been trying to sort out these laws since 1833. Michael McDowell came closest to it, but even he didn’t succeed.” The fate of McDowell’s plans for cafe-bar licences, which were torpedoed by publicans’ lobbying, demonstrates the range of conflicting interests at stake. While there is widespread sympathy for Fox’s plight within the industry, that’s probably where it stops, and politicians currently have little appetite for liberalising the drink laws.
BESIDES, THEproblems facing nightclubs and the wider hospitality industry are wider than a few legislative changes. Like so many others in retail, the clubs are staggering under weighty rent bills. Bourke says the rent for one of his premises has gone up from €35,000 to €200,000 a year in less than a decade, but the landlord is refusing to entertain a reduction in the current economic environment. He says he is on the verge of closing another of his restaurants, Eden, because the landlord, Temple Bar Properties, won't agree to reduce the current annual rent of €122,000.
He also claims minimum wage legislation is “wrecking” the industry because it requires employers to pay inexperienced staff almost as much as seasoned workers behind the bar or in the kitchen. Total employment in his various enterprises has dropped from 1,000 to 500 over the past few years, he says.
Socio-cultural changes are having an effect, too. People are drinking less, and more of their drinking is done at home. “Clubs are finding that more and more of their customers have arrived straight from home,” says Barry O’Sullivan, chief executive of the INIA. “We accept that people are going out less, for a variety of reasons; what we have difficulty with is the Government trying to squash our business.”
Clubbed: Other Casualties
The collapse of Robbie Fox’s mini-empire comes on top of the difficulties at the capital’s largest pub chain, Thomas Read Group, which has been in receivership since last March.
Thomas Read, which employs 400 people, includes such well-known hostelries as the Bailey, the Globe, Rí Rá, Ron Black’s, Pravda and the Winding Stair restaurant. The companies in the group have an excess of €26.7 million in liabilities over assets and, if wound up, there would be a debt of €38 million, the High Court has heard.
Nine of the 13 companies under examinership are said to be operating profitably. Three have been wound up: Thomas Read in Smithfield, Life bar on Abbey Street and Bodega in Dún Laoghaire.
As in the case of Fox's companies, the largest bank creditor is ACC Bank.
The Irish Nightclub Industry Association estimates that its members suffered a 20-30 per cent fall in business last year, with some reporting "catastrophic" drops of up to 90 per cent.
A number of clubs, including Tram Co in Rathmines and Pal Joey in Temple Bar, shut their doors completely, while many others opted to open only at the weekends.