High George St rent 'killed business'

Black Rabbit Bakery owner Shane Ross stands outside his artisan bakery, in George St, before he leaves on its final day on Saturday. Photo by Peter McIntosh.
Black Rabbit Bakery owner Shane Ross stands outside his artisan bakery, in George St, before he leaves on its final day on Saturday. Photo by Peter McIntosh.
A well-travelled artisan baker says it is too hard to make a crust in Dunedin, so he closed his shop on Saturday, making four staff redundant.

Black Rabbit Bakery owner Shane Ross said he opened his European-themed artisan bakery in George St in November last year but was now considering trying his luck in Africa.

He decided to close the bakery because the $90,000 annual rent, excluding GST, was too high and the customer base in Dunedin was too small.

''It's just not sustainable.''

He had opened bakeries in other New Zealand cities, including Wellington and Timaru, and budgeted between 10% and 12% of his business costs to cover rent.

In Dunedin, he had to budget 25% to cover rent.

Since his shop opened in November, he knew of 11 shops in the George St area closing, and ''that's not good''.

The bakery had employed three fulltime staff and one part-time staff member.

Dunedin was a difficult place to run a business, because most students and many residents ''evacuated'' the city during the Christmas holidays, he said.

Most tourists visiting Dunedin were cruise ship passengers and they usually ate on board and spent little on food in the city, he said.

He kept his prices down to remain competitive but too many food businesses in the area were competing for too few customers.

He doubted the bakery would have been more prosperous if he had opened in a nearby mall.

If he had to start again in the city, he would open in South Dunedin, where rents were cheaper, he said.

After the shop doors closed on Saturday afternoon, he planned to take a few weeks off to ''clear his head'' but would definitely move out of Dunedin.

Mr Ross said he was contemplating taking up a job offer of setting up bakeries in Zimbabwe.

-shawn.mcavinue@odt.co.nz

Move out of the central city

$90,000  is ridiculous. I would consider moving away from the central city and heading to Mosgiel, Green Island or South Dunedin. I am sure the rents are a lot less out there.  Maybe the other businesses closing on George St should consider this to. It would be good for the Taieri/Green Island area. Such a shame.

Competition

with all due respect GW, a retailer nearby told me [one of] the main reason(s) this bakery is lacklustre is the NW bakery not too far away.

Not sure that freindly staff, gold plated advertising, and the other frilly bits would have made any difference. if you want to go in there [to the bakery] you will (calorie counting stopped me in my tracks).[Abridged]

 

 

 

Sympathy for Shane Ross

I have sympathy for Shane Ross. The 90k pa rental does seem rather steep. I understand there are certain wealthy landlords in the George St area of town who are renowned for charging high rents... and don't care. Why having vacant tenancies is better than having someone in your building beats me.

I have a small, part time business in a country town, more as a hobby business than as a liveable wage business. If I didn't own the building, and had to pay a lease, it wouldn't be worth it. The same thing would apply to many more marginal businesses in Dunedin. Retail is hard for many despite the protestations of the Government that the economy is doing well. People are watching their money these days. The impulse buyer is a rarefied species.

Why are buildings left empty?

I also sympathise. I find it surprising that so many places stay empty but rents are still high. How can this be profitable?

Are the buildings themselves overvalued?

 

Parking meters

Parker meters were the final blow.  I know many many people that simply don't care to stroll through the streets looking through stores anymore because the parking is too expensive and too much hassle.  

Commercial rents

The enormous rents charged by Dunedin landlords for city business premises are unfathomed by those of us who have never experienced the pain of paying those rents. I do believe that the premises' rental contracts are so worded that the tenant has to pay for just about everything that requires attention to maintain the store eg tap washers, painting, floorcovering, door-locks and all the other matters pertaining to the operation of the business. Of course landlords and lawyers will say those rental contracts are normal business practice.I hope their buildings remain empty long enough for them to make a loss - serves them right.

Rents should reflect the market

I sympathise with him. I have the same experience. My business was in existence for 13 years and I have done all I could to improve everything in all the aspect of my business. As a small business we make do with what we can financially afford but when most of our income go to pay the rent, it becomes impossible to survive. There is not enough population to support businesses in Dunedin. It is easy for a big box business to say that they are successful but for small businesses like mine and this guy, it is a pitiful existence. There is no consultation with businesses whatsoever when the DCC does something. Beautiful city to live in but not a city to start a retail business in. Very tough out there.

Good question

Snozzman6, I have a friend who has been looking to shift his business for the last couple of years and has now all but given up.

Many of the places he has looked at remain untenanted and and the agents/owners, for the most part, won't negotiate the rent.

Seems to us that if the cannot extort huge amounts of rent, they prefer to leave the place empty.

O yes they have ideas!

"There is no economic development in Dunedin as Council is laden with record debt and bereft of ideas as to how we should get out of it." Stevensone57, how unfair! They have an idea - put up charges! Rates, landfill fees, feel free to add your favourite council money-raisers. Selling a regularly used property for peanuts, relative to the millions bleeding out to keep a poorly used one on life support, yes, that is another complaint about the Fubar Stadium. We are cursed with a monstrous error of judgement with ongoing "intensive care" staff costs on top of interest and repayments. Until the costs of keeping that alive are addressed, all other money earning or saving efforts are window dressing, generally lowering further the quality of life in Dunedin for large numbers of us.

If it's time to cut our losses by selling the bowling club's property, just think how much more effective it would be to close the Stadium, and sell it for whatever it's possible to recover. Yes, the debt would still exist but it would not increase. The ground on which it stands is the right size for playing rugby on. In time, when money came available to spend on rugby facilities (remembering that rugby has had a disproportionate amount in the last few years, so it's fair that either professional rugby creates its own facilities, or there's waiting time because this is not a necessity) it could be brought up to the standard of Carisbrook.

Bringing business costs down would be somewhat helpful. Leaving more spending money in ratepayers' pockets would help too. Meanwhile what can be done to get past this "dead centre" look? I suggest vacant shops make their windows available for "creatives" to display interesting things to look at, so that walking through town is full of surprises. Christchurch's creative people, freed from both official venues and constrictions on innovation, responded by making art, music, food and community activities in the most unlikely places, making vitality in the midst of destruction. Surely we can do likewise, despite our city's disaster being man-made, specifically council-made.

Which is better?

Interesting article. I am left with a question:

Is it better in the interests of this city to be collecting $90,000 rent from one business for a short period of time and then have an empty shop for an extended period?

Or,

Is it better to slash rentals, encourage businesses and customers into the area. Having less income but future rewards spread over longer period of time?

I know where I would rather place my bet, but perhaps some more enlightened ODT submitters, an economist or even a DCC councillor could enlighen me?

 

Not listening

Rogernz: I think the idea of a retail store is that it is open all year round, the point the baker made is that Dunedin is not currently a good place to do business. We have just read about Rings and Things the jeweller closing after 13 years and the owner saying he could now fire a cruise missile down George Street and not hit anyone. The bakery owner talked of the 11 shops in George Street closing since November.

South Dunedin precinct is a ghost town for retail. With the closure of the likes of Hillside coupled with many businesses of all kinds closing daily, one can see clearly what debt and Council mis-management have done to this City. There is no economic development in Dunedin as Council is laden with record debt and bereft of ideas as to how we should get out of it. Arguments over the Stadium and Cycleways seem to be always on the agenda whilst Rome slowly burns. Council must sell down some significant assets and clear this debt before Dunedin can begin to move forward again.

The heart of the city has lost its vibrancy, our population is stagnant and there is no money in Councils coffers to do a single thing about it. There is not a day goes by when we don't read about another closure, another revelation about Stadium cost blow outs, or DVML losing yet another bucket of rate payer money. The knock on effect is that each one of these many closures represents the loss of local jobs and destroys business confidence.

As an owner of a business myself I speak to local suppliers who tell me trading has never been this difficult, many are pouring their own savings into their businesses hoping thing will improve. I have done the same thing over the past twelve months and wonder if it is just good money after bad. Watching whilst millions of rate payer dollars are squandered by a succession of Councils is depressing to say the least.

With all due respect

I viisted this bakery about three times. The food was fairly good, as were the prices.

But... overall it was unappealing. The staff werent very friendly, it had poor lighting, and the signage was amateurish for a main st setup.

If the owner had put more thought and money into the ambience, staff training, marketing etc - he would have had a successful business (in my opinion). Just because you open the door, it doesnt mean you will get good sales - as seems to have been his expectation.

Oh, my experience? Many years back I managed some of the largest, and the most profitable retail stoes in NZ. Great service, great ambience = customers returning and telling many others to visit.

Enjoy your big wages DCC

With the likes of Bell Tea leaving only their hazardous earthquake prone buildings lying vacant for eternity. Now there are a few more "Landlords" having to stump up the $90 grand themselves. Ask them if it's sustainable.

Why open in November?

Dunedin was a difficult place to run a business, because most students and many residents ''evacuated'' the city during the Christmas holidays, he said.

Exactly, so why would you start a business in November? Some research would have helped this guy.

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