Case Study - The Archivist
The Archivist is an arts venue launched in East London. The site was located by a canal within a residential area. It had no direct competition and was surrounded by walking/ biking commuter lanes. Recently refurbished to high quality FF&E, the space was inviting and open weekdays from midday and from 9 a.m. on weekends. The F&B offer included breakfast, lunch and a dinner menu with a price point set at fine dinning level. This was unrealistic for the location but driven by cash-flow. Customer perception was low value for money, poor quality food and service, thus numbers had slowly decreased from the hype of the opening month and they rarely had any return customers despite being within a residential building.
The events space had an unique and interesting arts program drawing in the majority of post work drinkers, but was not being fully promoted. The customer perception of the arts and food space was somewhat confused as a product. The business was facing serious financial and operational issues since launch.
The Challenges: Invited by the owner and board of directors to turnaround the business, the following concerns were identified:
Operating capital to cover next 6 weeks with current trading performance.
Cash-flow projections forecasting a £375K cash shortfall risking HMRC liabilities.
Daily cash short-falls in banking reconciliation.
Business underperforming by 65% vs original business plan.
Staffing costs 35% above industry norm.
Food and beverage margins (GP) averaging 45% with high % of wastage.
Majority of age payables over 90 days were unsettled with some suppliers black listing the business.
Supplier product pricing was not market competitive with same type items being priced differently week on week.
Original bank overdraft was in the process of being reduced.
Lack of good overall staff management, procedures, controls, training and service standards.
The overall space as a concept lacked focus and identity.
A new hospitality accountancy firm was appointed in order support the financial change and to provide daily and weekly reports. This gave us a clear financial picture, allowing me to create a on-going 12 week cash-flow plan, bringing age payables and HMRC under control.
Implemented a payment plan with suppliers stopping any service interruptions.
Product prices were re-negotiated resulting in considerate improved margins.
Operational and cash-handling procedures were implemented, stopping variances.
New management team was introduced, leading on-going daily training sessions improving customer service and bringing staffing costs under-control.
All food and drink menus were overhauled. A new brunch menu was introduced with focus on fresh food, becoming a hit with the local community.
The bar was refurbished to accommodate a home-made Deli counter. Offering fresh coffee, sandwiches, natural juices and pastries aimed at the commuter consumers, resulting in 17% increase in turnover.
We introduced venue hire packages, bringing private hire revenue stream to the business when there was none. Confirmed bookings with 12 month projections indicated £120k of extra business.
Venue programming was redesigned showcasing a cultural agenda more in-tune with the local residents and community.
The Outcome: The priority from the outset, was to introduce the correct financial controls, in order to ensure that the company could continue to trade and meet its liabilities. With the company finances under control, a cash-flow plan devised and implemented, we then focused on product and operations. We changed key personnel, introduced structure, training, systems, new revenue streams and with a much improved F&B menu, we were able to bring the business back to profit. This turnaround project was completed within 140 days.
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