January 2020 was supposed to be a positive turning point in my life – I had just invested in a small commercial space with multiple units and was looking forward to being a landlord to some up-and-coming small businesses. But we all know what happened next. By the time we were at 50% capacity, the pandemic struck and we were stuck between a rock and a hard place. Our tenants had just moved in but lockdown meant they weren’t able to open. We decided amicably to cancel the agreement and my partners and I would figure out alternative options. We felt that in the long-run we could still make it work, the issue was would we be able to survive until then?
Being a landlord is difficult. Not all of us earn incredible amounts of money from our tenants unless it’s done on a huge scale. If our tenants don’t pay up then we’ll likely find ourselves in hot water with the banks with whom we have loans with and our property is at stake. It’s a tough job but can be ultimately rewarding, and it rewards those who can look ahead and pivot before others.
While we initially planned to rent out multiple units to small businesses, we quickly realised this would not be viable as the lockdown put everyone into an uncertain situation. We did a strategic analysis of our business and looked at what businesses would be allowed to open and what was needed, coming to the conclusion that we could refit our units to become virtual kitchens. These are essentially restaurants only available online through delivery providers like Deliveroo, and seeing as the lockdown was only allowing takeaways or deliveries, this seemed like the best option.
The other option was to create co-working spaces and install a meeting room booking system in our units, but while this would have been a good idea, it just wouldn’t have provided steady income like renting out a kitchen would. Having a co-working space would require much less renovation and investment, however the longevity was also questionable, especially after seeing Wework’s fall from grace.
Pivoting to provide virtual kitchens was a great move also because it gave opportunities to aspiring restaurateurs who otherwise may not have been able to get together the funds to start up a dine-in restaurant alone. By starting off as a virtual kitchen, they started off with a much simpler business model that was built around the current popular delivery system and providers.
As of the first quarter of 2021, things are really looking up for us and our tenants as the lockdown restrictions ease. Looking back, while the pandemic has caused many business casualties, it has almost been a survival of the fittest (or in this case, quickest to adapt). Had we not moved so quickly to change our strategy, we would have certainly suffered more than we did, and possibly those who rented from us may not have got the opportunity they did.