KFC owner withholds rent in SA amid lockdown
The US firm says it will not be paying rent at 48 company-owned outlets in SA
KFC-owner Yum! Brands has told landlords in SA that the US firm will not be paying rent while outlets are closed during a three-week government-enforced lockdown to contain the coronavirus pandemic.
The decision relates to 48 company-owned outlets in the continent’s most industrialised country, a spokesperson for KFC SA said in e-mailed comments.
The remainder of the 1,145 KFC fried-chicken restaurants across Africa are operated by franchisees who are making their own arrangements, she said.
One owner of more than 40 KFC shops across four Sub-Saharan Africa countries, Grant Wheatley, said he is in talks with landlords, banks and suppliers about arrangements to cope with the shutdown.
SA has ordered all restaurants to close during the period, including delivery services, with reopening scheduled for April 17. Botswana and Lesotho, where Wheatley has outlets, have also imposed shutdowns.
Yum! and Wheatley join retailers about the world in asking landlords for leniency during a period where they will generate little or no revenue, creating a nightmare for banks and real- estate firms. Swedish fashion chain Hennes & Mauritz and the UK’s Primark are among others to have withheld rent.
SA clothing retailer TFG said it is stopping payments during the lockdown.
This has led to negotiations between local property funds and landlords with large retail tenants to convince them to pay rent for the lockdown period, after TFG and Pepkor said they were within their legal rights to withhold it.
On March 24 trade & industry minister Ebrahim Patel gazetted exemptions that allow competing landlords, property companies and tenants to work together to reduce rentals or permit rental holidays in response to the lockdown.
The exemptions are designed to relax restrictions on joint agreements that would usually be considered anticompetitive, unlawful and collusive. They include a clause that allows tenants to take “reasonable measures” to protect their viability during the lockdown even if in breach of contract.
Pepkor, the owner of Ackermans, Incredible Connection, HiFi Corp, Bradlows and Pep, along with TFG, which owns more than 2,500 Markham, Foschini and @Home stores, have interpreted this gazette as allowing them to lawfully not pay rent.
But commercial property industry bodies such as the SA Property Owners Association (Sapoa) maintain it is illegal to withhold all pay, especially as store assets remain in the malls. Landlords also have to keep shopping centres open so consumers can buy groceries and medicine, and this requires paying rates, electricity and security companies.
Bloomberg and Staff Writer