In an open letter, Murdoch said the situation was no one’s fault, but that the leases signed before the Coronavirus pandemic took hold of the UK did not consider the current reality facing occupiers and landlords.
He said it had been necessary for Burger King UK to stop paying rent during the enforced shutdown to protect the long-term future of the business.
With restaurants unlikely to return to 100% of trade immediately, he also said it was imperative landlords and occupiers worked together to agree a solution.
"As we rebuild our operations, we would like to engage with you in relation to what the recovery will mean for landlords and tenants and how we can work together to ensure that we build for the long term," he said.
"High streets, shopping centres and out of town retail have all been hit hard in the current crisis and how we rebuild will be extremely important. We want to ensure that landlords in the future are fairly compensated in a way that secures the long term occupation of property.
In the letter, Murdoch suggested stepped rents, turnover related rents or other innovative solutions as providing the best chance of keeping the most sites open.
“The point is we cannot go back to the old ways of working, we must work directly with you and your teams,” he wrote.
Alasdair Murdoch's letter to landlords:
Dear Landlords,
I am writing to you during this unprecedented time to initiate a conversation about our relationship now and into the future as we emerge from the current shutdown in the UK.
As you may be aware we at Burger King UK have been working alongside our industry colleagues and bodies such as UK Hospitality and Jonathan Downey’s #NationalTimeOut campaign to get the appropriate support for both occupiers and landlords at this very difficult time for the UK economy.
The current shutdown in the UK is neither the fault of landlords nor occupiers. Existing leases do not consider the circumstances that we currently find ourselves in. We do recognise that closures were a necessary step to protect both the public and the NHS.
Unless we are open and trading we cannot generate revenue and without ongoing revenue we have to concentrate on protecting our businesses for the long term. One of the measures we have had to take, like our industry and retail colleagues has been not to pay rent for property we are not benefiting from during the period of enforced shutdown.
The non-payment of rent is an issue that goes beyond the leisure sector with all commercial businesses that normally operate from rented property subject to closure affected in a similar way and those businesses are having to take a similar stance. It is extremely unlikely that any traditional lease written will have had the ability or clauses to reflect the current situation that we find ourselves in. This is why we need to work together to find a solution for all and one that promotes a stable recovery and a long-term future.
This crisis affects the whole UK economy which will take time to recover. The hospitality industry is especially important to the UK economy, it is the third largest private sector employer, employs 3.2 million people and is an industry that is two times larger than the financial services sector.
We recognise and understand that landlords are affected by this crisis and the non-payment of rent, which is why we have asked government for support for landlords as well during this period.
In relation to the restaurant sector specifically, we understand that as we emerge from the current crisis ours is one of the areas that may be subject to a number of restrictions that will prevent us from returning to normal operations for a considerable period of time. This means that we will not return to 100% of normal operations on our first day of trade. We are likely to have to operate in a different way with increased costs for equipment such as PPE, we may also have to adopt changed ways of working or trade with reduced cover numbers as we accommodate Social Distancing and safe operation.
As we rebuild our operations, we would like to engage with you in relation to what the recovery will mean for landlords and tenants and how we can work together to ensure that we build for the long term. High streets, shopping centres and out of town retail have all been hit hard in the current crisis and how we rebuild will be extremely important. We want to ensure that landlords in the future are fairly compensated in a way that secures the long term occupation of property.
We want to work with you to establish how we and as many other operators (including all BK franchisees) as possible can reopen and re-establish their businesses. It is these businesses that have driven one in every eight jobs in the UK since 2009 and which play an important part in driving footfall to all locations where they operate.
I believe that if we work together, be that through stepped rents, turnover related rents or other innovative solutions, we have the best chance of keeping the most outlets open. I am happy to discuss all ideas. The point is we cannot go back to the old ways of working, we must work directly with you and your teams.
If you want to engage, please do come back to me, as we can move fast.
Yours sincerely
Alasdair Murdoch
CEO BKUK Group