Chain restaurants are asking to skip paying rent in April because of coronavirus closures
- Restaurant chains including the Cheesecake Factory, Wendy's, and Subway are trying to help their store locations with rent costs amid the novel coronavirus outbreak.
- Some chains are calling for rent reductions from landlords, while others are covering the bills for their franchisees.
- Many companies cited declines in business for the rent issues, saying closures from the novel coronavirus outbreak have affected their sales.
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The Cheesecake Factory, Wendy's, and other chains are helping their stores seek rent relief as the coronavirus forces their doors to close.According to multiple reports, some chains are calling for rent reductions from landlords and telling their stores to stop paying rent entirely, while others are covering payments for their franchisees.Advertisement
Many companies say the decline in sales makes it difficult or impossible for them to pay rent for their restaurants.
Restaurant and retail workers across the US and worldwide have struggled with closures in areas impacted by the coronavirus outbreak, and many are trying to figure out what to do next.The rent arrangement differs between restaurant companies. Some, like The Cheesecake Factory and Subway, pay rent to local landlords. While others, like McDonald's, act as the landlord that collects rent from local franchises.
At The Cheesecake Factory, which operates nearly 300 locations across the US and Canada, CEO David Overton wrote a letter to landlords saying that the "severe decrease in restaurant traffic has severely decreased our cash flow and inflicted a tremendous financial blow to our business."He told landlords that stores would not pay rent for April because of the losses, according to the letter obtained by Eater."Due to these extraordinary events, I am asking for your patience and, frankly, your help," he wrote.Advertisement
CFO Mathew Clark told People magazine that he hopes the company and landlords "will be able to work together to weather this storm in the appropriate manner."
Many people on Twitter praised The Cheesecake Factory over its decision to hold off paying rent.Advertisement
Subway, too, sent a letter to landlords last week, saying rent payments for its 20,000 US locations might be cut or postponed, according to Bloomberg.
Franchise-based restaurants are deferring rent payments
Meanwhile, places that collect rent from franchisees, like Wendy's, McDonald's, and Yum! Brands - which owns KFC, Taco Bell, and Pizza Hut - have deferred rent payments to help through the shutdown.Yum! borrowed $525 million from its revolving credit line to help franchisees cover their bills, according to Restaurant Business.Advertisement
"We are also working with franchisees who need more access to capital and are in good standing with the company to provide assistance, including grace periods for certain near-term payments where necessary," the company said.
Wendy's Chief Executive Officer Todd Penegor told Reuters it would defer rent payments on properties owned by the company by 50% over the next three months."This is an unprecedented time, and we are focused on the actions where we can make a positive difference," he said.Advertisement
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Who had money on Cheesecake Factory starting the revolution? https://t.co/JiSwEJ31Wx- Jemele Hill (@jemelehill) March 25, 2020
If the Cheesecake Factory said "nah" then I also will be participating in this "nah" movement on April 1. https://t.co/vBaZogf69f- Edgar (@LifeOfEdgar) March 25, 2020
in solidarity with the Cheesecake Factory I will not be paying rent either https://t.co/ZF9BIethKU- JP (@jpbrammer) March 25, 2020