An interview with Adam Ringer, the founder and owner of the Green Caffè Nero cafe chain.
Krystyna Naszkowska: Are you in despair?
Adam Ringer: I have already come to the gallows humor stage of coping with the whole situation. You build a company, invest, work, really make an effort for 20 years, and then two weeks is enough to put these 20 years in question. You watch the whole economy, the whole "normal" environment break down and sink, and your company is pulled into the vortex.
We started from one cafe, now we have 70. In mid-March we were to open another two premises, they are ready and fully equipped, but of course we are not opening them. Nonetheless, we have bills to pay to contractors - construction workers, carpenters, blacksmiths, the company that supplied the equipment. And you have to pay employees and the rent for all our locations.
17.03.2020, Warszawa, kawiarnia sieci Green Caffe Nero zamknięta z powodu epidemii koronawirusa. Fot. Sławomir Kamiński / Agencja Gazeta
This blow came unexpectedly.
- It is true. We closed all premises on March 14, in accordance with a government regulation. It was Saturday. But throughout the week preceding the closing, from Monday onwards, there were fewer and fewer people coming every day.
In addition, the government did not give us any prior warning - it announced the closing on Friday afternoon, and the cafes were fully stocked for the weekend. Everything was then thrown away. It is easy to forget about such details, but they add up to a lot.
What does closing the cafes mean to you?
- Same costs and no revenues. Our monthly costs are normally around PLN 10 million - these are rents, wages (we employ 1,100 people), utilities, fees for using music, coffee, milk, cakes, etc.
Now some of the costs are dropped since the premises do not work, but millions remain to be paid each month.
Did you fire anyone?
- No. People are on idle time pay, we will pay them. We do not know yet how much, because the loudly touted government anti-crisis shield announced 10 days ago does not contain any details to this day.
In the long run, costs will have to be reduced, nobody can stand it. No one was dismissed, because employees are the company's main strength. We have invested a lot in their training, we do not exist without them. We do not want to lose them, we are in touch all the time.
How long can you last? A month?
- I think that in a month or two we will lose liquidity.
We are a member of the HoReCa Employers' Association, there are restaurateurs, cafes, ice cream parlors - chains such as Grycan, Pizza Hut and McDonald’s. We talk to each other twice a week on the phone, everyone is in a similar situation, the entire industry has been thoroughly shaken from day to day and is in shock.
If we will not get the financial support in April, in May the latest, we will all go down. We all live from day to day.
The premises are closed and there is no income.
Are there any residual services still providing income for you?
We have a bakery which supplies our chain and other cafes with baked goods and sells catered breakfast to offices. It usually made about PLN 1.5 million turnover a month, and now it will provide around PLN 80 thousand. So for all purposes it is close to non-existing, 60 people from the bakery are on idle time pay.
But the government is supposedly offering lifeboats to companies like yours through the anti-crisis shield bill.
It is a big unknown, we still don't know the details. But one thing I know: there is better protection in other countries.
In Great Britain, the state pays 80 percent payroll to employees, our government proposes 40% in the shield, and only for a short time. Governments have also opened up wide opportunities for cheap credits everywhere.
My mood improves thanks to the awareness that this is not just our problem, but instead one concerning the whole global economy.
Today's crisis is a problem for the entire Polish state, the entire European Union, we are a small cog in all this. The 2008 crisis taught everyone that governments must inflate the market with money so that companies do not lose liquidity. Otherwise we will land directly back in the 1930s.
Our government promises PLN 212 billion. Is this not enough?
- This is 5 percent of the Polish GDP, the British government’s stimulus amounts to 15 percent of their GDP, and the US government and the EU announced they are willing to give as much as needed.
These countries are much richer than Poland.
- It does not matter. A poorer country will require less money, the rich must donate hundreds of billions of euros, thousands of billions of dollars. The Polish government has hundreds of billions of zlotys. But the mechanism is the same. Governments release bonds and sell them, they simply "print money".
The European Union has already announced that it will buy these national bonds without any restrictions. So the government can give PLN 212 billion to mitigate the effects of the crisis, but it may well give PLN 400 billion. Our state will not solve the crisis with a support mechanism amounting to 5 percent of our GDP. In my opinion it is too little.
What is the most indispensable means of support for your company right now? What would you expect?
- Discounts on rents. They constitute up to 25 percent of all our costs and remain fixed even when you don't run a business. Another support that would help us a lot would be cheap bridging loans to maintain payment capacity.
You have most of your premises in Warsaw, and President Rafał Trzaskowski has already announced rent discounts.
- First, he only announced a delay in time to September, when the full amount will have to be repaid.
And secondly, only 8 of our premises are municipal, all the rest is private rental. Nobody will force the private owner to ease up on us, and he or she also generally has a bank loan, which pays off thanks to our rent.
The government is proposing that shopping centers now reduce our rent by 90%, but lawyers say this is illegal.
But the owner of the property is in big trouble. We can simply stop paying. Then the owner of the premises can throw us out. What comes next? Everything is idle, not just restaurants, cafes, hotels. We are already stagnating in construction. Investments and car factories have stopped. Who will rent this place after us? No one. If we don't pay, these shopping malls will collapse quickly. And with them the banks that gave them huge investment loans.
We are idle, and with us those who supplied us with coffee machines, flowers to premises, cleaning companies, etc. Lack of payments from one company drags the next down to collapse because we all form a certain chain. Nobody knows where it starts and where it ends. And everyone is crying today.
In a way, it fascinates me. I look at how the modern state, this great machine, is in complete disarray after a bit more than a week. As if someone threw grains of sand into the machine's gears and the engine stopped working.
Let us imagine that you are reopening your cafes again in two months. What happens then?
The truth is that not only do we not know how long this condition will last, but we also do not know how people will behave when we open the premises. Will they come in crowds as before? Someone has to pay for this crisis, and it will almost certainly be the taxpayers. So there will be higher taxes, lower wages, more people out of work. I am very afraid of how much time it will take to recover from this crisis.
We can handle it, we will take a loan for wages and rents. And then we will repay this loan for 10 years. There will probably be no great development in the next few years, no big investments. We will all pay the price. On the other hand, there will probably be new opportunities, there will be plenty of available premises with much lower rents.
But above all else, I fear the political consequences of this crisis. The previous one, from 2008, led to the flourishing of populism. And that crisis was just a breeze compared to the current one.
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