Protect the Powerless by Ann Elliott

16th March 2018

Protect the powerless by Ann Elliott

It is dispiriting and disappointing to read about CVAs and site closures in our sector. I feel sorry for those team members who are losing their jobs and having to find new ones with everything that entails.

I feel for the general managers and BDMs who may have just taken their first step on the managerial ladder and are now worrying about where, and what, they do next. It’s not easy for those who are left either – are they next in line? Morale suffers and it becomes much harder to recruit great people. It’s a vicious circle.

I also feel for those who launched those brands with optimism, positivity and enthusiasm. It’s an amazing feeling to start a brand and see it fly. To see sales climb week-on-week, to see consumers and team members really happy, and to feel all that hard work and determination has paid off is simply brilliant. It’s what we all live for so it’s hard if it all comes crashing down.

Suppliers will also suffer, particularly if the distressed company constitutes a high percentage of its sales or it is owed money by the “old” business. The supplier, in turn, could go under with a subsequent loss of jobs, money and opportunities.

When a business has to close – or shutter sites – it can be devastating from a personal and business perspective. It has significant ramifications for all involved. Potentially, everyone who feels the impact of these decisions will be slightly more anxious in the future about some of the career and business decisions they make. Losing a job, your investment or money (if you are a supplier) can be distressing in the long and short term. It’s a horrible feeling.

But do those businesses going through CVAs deserve what has happened to them? Should they have taken action earlier to get their brand in order? Are they to blame? Is poor management to blame?

Of course experts will say they saw it coming and no doubt many did. I didn’t. The Brexit vote was a surprise to me and, although I’m no economist, it does seem to have led to a raft of unexpected negative outcomes for this sector. Some cost increases were foreseen and planned for but a number (for example, food price increases) probably couldn’t have been predicted.

Certainly some of the blame for the current situation seems to lie in the rapid over-expansion of sites at a time of static consumer expenditure. Let’s face it, that’s a management call. Growth is king, though. Investors and shareholders want to see sales, Ebitda and ROI growth – from existing sites and new site expansion. Standing still hasn’t been an option.

There are brands everyone knows that have continued to expand and perform well in these tricky market conditions – Pret, Nando’s, McDonalds, Greggs, Wagamama, Living Ventures, Arc Inspirations, NWTC – we could all name them. They seem to expand and grow regardless of what is happening around them. At the same time, new brands continue to appear in the market led by enthusiastic, brilliant entrepreneurs who also feel they can buck the trend and make a difference. There is still hope.

I pray no-one else has to face the nightmare of losing their business, money, teams, and hopes and dreams this year. Those who are thriving today say success comes from starting a brand you truly believe in, keeping your original values alive, evolving with your customer’s needs and recruiting people you believe in, listening to them and training them well. They nurture their brands and respect their heritage and roots. Staying on track is vital because it’s really hard to get back on track if you fall off.

I’m in no position to judge or blame anyone for business failure – it’s all easy with hindsight. It’s the people who are powerless in these situations I feel for – and these are the people we need to protect and care about if we can.

Ann Elliott is chief executive of Elliotts, the leading integrated marketing agency in the hospitality and leisure sector

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