It started with a few rumblings but now the discussion around Turnover Rents is both loud and frequent.
This week saw the announcement that Wasabi had appointed KPMG to assist with discussions with Landlords around converting lease arrangements to one based on turnover. This follows on the back of Pret taking a similar stance and a number of retailers in the past few weeks and whilst KPMG have recently been writing about collaboration between landlord and tenant to get through this current pandemic crisis it will be a case of wait and see to establish whether this is a short term "fix" or will we see more long term deals being done in the future on a turnover (plus base rent) or pure turnover basis.
For now the message across both retail and F&B sectors is consistent in that turnover rent must be part of the discussion in the current climate.
The advantages of the turnover arrangement are well documented so the question might be whether valuers and banks can get to grips with the number crunching down the road without the historical certainty of a fixed base rent each month / quarter and offer flexibility in the meantime.... and it seems clear that transparency of data and refreshed relationships between Landlord and Tenant could help bridge that gap.
Wasabi is not the only hospitality business hoping to move to a turnover-based rent arrangement, with the model seen as an effective way for payments to track the reduction in revenue social distancing will cause.
