Strenuously against turnover-based rent: Perky's owner Max Perkins

The co-owner of a Queenstown Bay floating bar believes the ‘‘extreme’’ rent the council is charging puts his business in peril.

Max Perkins says the council, which owns his wharf, forced him to agree to pay 7.5% of their annual turnover — ‘‘well over $100,000’’ — to keep Perky’s afloat.

‘‘I’d be paying probably in line with the [nearby] Steamer Wharf and some of the real-high rental places, but I’ve only got a very small square metreage [60sqm] in which to make money.’’

Council boss Mike Theelen, however, doesn’t believe 7.5% is over the top (see below).

Perkins’ site is beside the berth utilised by his dad Wayne and Betty Perkins’ Million Dollar Cruise.

Wayne won’t comment, but it’s understood he and Betty signed the new 7.5% licence-to-occupy under duress when they were threatened with immediate removal from their site last December.

It’s believed their dismay over what they considered council greed propelled them to recently sell up.

Max says he’s taken a six-year lease with one-year rights of renewal ‘‘because I’m not 100% sure we’ll be able to survive’’.

‘‘I don’t want to be on the hook for six years if I’m broke,’’ he says.

He’s ‘‘very strenuously objected to this turnover-based rent thing, because we are slightly different to a lot of other operators as we sell on margin’’ — as against other boat operators whose profitability’s more closely aligned with turnover.

‘‘And our margins are very tight, especially hospitality at the moment.’’

He’s had ‘‘no end of sleepless nights’’, he says.

‘‘It provides us with a lot of stress at the moment.’’

Max says there’s no point in raising beer costs, for example — ‘‘I just pay more in rent because it’s based on top-line turnover, so I can’t ever get ahead’’.

Adding the 7.5% to 30% in wage costs and 30% to buy beer and other product, ‘‘and you’re almost up to 70%’’.

As he told a council property manager last year, ‘‘with almost 70% of our gross turnover gone in the form of overheads [it] puts our business in a very difficult position’’.

‘More expensive than Darling Harbour’

He explains the remaining 32.5% has to go on other overheads like marketing, power and rates.

‘‘I’m also my own landlord, like if the toilet breaks or the electrical system is all buggered I can’t go to council and be like, ‘hey, listen, the toilet is not working’.’’

Max believes council should charge him market rental, instead — which according to an appraisal would be $42,000 a year, which he’d be happy to have inflation-indexed.

Concerned: Queenstown councillor Nikki Gladding

Councillor Niki Gladding also queries whether Max shouldn’t be charged a market rental rather than 7.5% turnover, according to the council’s community facility funding policy.

‘‘I’m not sure the 7.5% applies to the commercial leases on the wharf. I can’t understand we’re complying with policy, I’m really concerned
we’re not.

‘‘I’m really concerned we’re trying to recover the over-spend on the [$3.1million] purchase of that wharf [in 2019], which was well over market value — and that’s not what our policy attempts to do.’’

Meanwhile, Hydro Attack co-owner Lee Exell, whose operation occupies three berths, says they’re weighing up whether to get a new lease in view of the new rent level.

‘‘Effectively it makes it the most expensive wharf in New Zealand, and as far as I can ascertain, more expensive than Sydney’s Darling

Potentially, they could also be paying more than $100,000 a year, he says.

That’s about double what the landlord of the neighbouring Queenstown Bay wharf is charging, he adds.

‘‘It doubles our rent, and we’ve obviously had huge cost increases since Covid, from wages to fuel.

Yet we’re not charging the same prices we were pre-Covid.’’

‘Not a particularly shocking cost’

‘Defencing position: Queenstown council CEO Mike Theelen

Council boss Mike Theelen — who’s wary of parties discussing commercial agreements with council through the media — maintains ‘‘7.5% of turnover isn’t a particularly egregious cost, is it?’’

‘‘[That] is what we endeavour to achieve in all our community-based leases.’’

He clarifies the terms of the Perky’s lease are the tenant pays whichever is higher — a minimum base rental of $20,000 or 7.5% of their turnover.

‘‘The lease probably reflects the amount of money they’re actually making, and the community gets the return on that.’’

Told Hydro Attack co-owner Lee Exell believes council’s rental makes it the country’s dearest wharf, Theelen says ‘‘this possibly also reflects how popular having a wharf space in Queenstown is’’.

‘‘I can’t tell you whether it’s more or less expensive than [Auckland]’’ — however, he points out council’s in planning dispute with Hydro Attack over the latter’s plan for a new Queenstown Bay wharf.

He admits the community facility funding policy, dating back to 2019, is due to be reviewed — the ‘next review’ was due two years ago — and while he doesn’t think they’ll step back from that rate, that’s for council to decide.

Meantime, Theelen refutes council’s trying through its leases to recoup the cost of buying the wharf.

‘‘We bought it on a competitive market.

“We didn’t pay over the odds, and we didn’t pay over the odds with the view to covering that.’’

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