Living with Lockdown - Vinoteca

By Andrew Catchpole

Published: 07 May, 2020

Hybrid wine bar co-owner Charlie Young talks to Andrew Catchpole about the massive challenges facing the on-trade and what is to come.

Where are you at business-wise, how are you operating?

Well, like everybody the wine bars and restaurants are closed. We did that fairly quickly. What happened was that business tanked even before we were ordered to shut - it just wasn't viable at all. The wine shop take out parts of each wine bar were open for around about a week, but it soon became apparent that for safety reasons that also wasn't really viable.

Then we kind of regrouped. Obviously we have an ecommerce site and we looked at how we were going to manage the web shop, which has been open. We’ve been running this out of Vinoteca City [branch], because we have more space to put together the orders, safely and with protection, then we use Parcel Force – they do a next day delivery and it works really well.

We also have our Vinoteca Club, a wine subscription club, which has been building really nicely.

In terms of business, like most others we furloughed the majority of our staff and we have a core of myself, our financial director and operations director in place, and one or two others including David Pineda, our retail and online manager, at City, because that’s where we've got the wine.

You've had a 400% increase in your online wine shop sales, but presumably that’s still a drop in the ocean against lost revenue?

It's a good question, because it really depends on how you look at it. We've got five sites, we have the rents that go with that, and obviously when we're operating normally we have to do a lot of normal sit down business. The wine retail element is always a bit of a bolt on, although it's good to have, but it doesn't really need any extra traffic though online sales. That's never been a huge part of our business, particularly if you compare it against the business that we do with all of the sites combined.

We don't really assign that business to any one particular site, because we can pretty much manage it within the fixed costs and the operating costs that we have already. Our online wine sales as a percentage of our overall business was quite a bit less than 5%, not big. It's much better now and that 400% probably equates to the same turnover that a small site might make.

It's certainly not bad and the great thing about it is that with our brand, our business, you get a lot of engagement - it’s a very positive and interactive thing. But it's not going to save the business by itself.

Will you continue to build online sales after the on-trade reopens?

We think so, and hope so. We do genuinely think that this kind of trend might continue because it's getting people comfortable with ordering things like wine from different places than they normally do, and when they see how easy it is and also enjoy what we offer and the quality, we think that will continue. We are going to push that more and engage and communicate more.

On to the bigger picture – how will the on-trade find its way out of this daunting situation?

This is obviously monumental and it's become clear to everybody that the real challenge begins when lockdown ends. Businesses of all sizes have been able to take advantage of government grants and hibernate, to the extent that they’ve given themselves a fighting chance. But then the landscape is likely to look very, very different. Not only a long and slow and painful easing of lockdown, but then beyond…how long it will take for business to get back to normal?

Based now on what's happening in other countries, we're being very cautious. We were modelling on 40% against the previous year when we reopen, slowly growing to 90% by spring next year. And now we're changing that again, to 30%, and who knows how long that 30% will be. Because, for as long as you have to have a certain amount of tables with a certain distance apart, you have fewer customers - that has to be the reality.

We have touched on online and click and collect, and I think our model will incorporate some of that and we're trialling now a mini-market with click and collect cook-at-home meals as well - that's on our website at the moment.

Have you had any relief on rent?

The grimmest situation is that 30% [of normal takings] will be the number, and the rents will have to come down to support that. Now, I know that restaurants are very fond of bashing landlords, and it’s a difficult time for them too, they've got businesses which they need to run. But if that can be managed to a degree, then there's a way that we might be able to just literally survive those levels of business. But that's tough. I mean, we're talking about a massive reduction for businesses to survive, otherwise staff will have to be laid off.

Jonathan Downey came up with [the #NationalTimeOut campaign] trying to push rents back by nine months and I think that's an extremely good idea. People have to talk to their landlords about turnover, linking turnover to rent, everyone's completely aware of the kind of margins that the on-trade operates on and even if you are 10%, or just 5% down in the business it is make or break for many.

I think that whatever the solution is, it's going to require tenants and landlords to work together, and for them to spread the risk, and if there are gains, to share the gains. They have to understand the mess they will go through of losing a tenant and trying to get a new tenant under these conditions, understand that if the market is absolutely ravaged, then they're not going to get much rent. On the flip side, tenants will have to not try and take too much advantage of landlords and we'll have to understand that, if the business comes back, then rent has to come up, and the landlord has to be getting something back too.

What on-trade businesses are most likely to survive?

It’s a really difficult question to answer, to be honest, but when we're trying to have some vision of what the future will be I think perhaps it will really just be a different version of what happens naturally anyway. Which is those businesses that are the most engaging - I don't know how to say this without it sounding awful – and have soul, high standards and are the kind of businesses that care, perhaps they're the most able to survive. Customers understand which businesses are like that and when customers are starting to return to their old habits, a return to more normal business, they'll want to get involved with places that care.

How are you bearing up?

There are days when you just think ‘what, really, is this real?’ It's very hard to get your head around and for your colleagues and things change all the time. That's what we learnt in the first few weeks, that we’d make a set of priorities and tasks each day and then we'd meet the next day and it was changing all the time. It’s the uncertainty that is most difficult. But otherwise I'm fine.

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