A thirty-four store grocery chain was experiencing negative EBITDA due to decreasing same store sales and relatively fixed expenses.
Focus Scope:
Pricing strategies initially implemented during the economic downturn had underscored the market’s perception of the business, and as a result, profitability was declining. The Company hired an investment banker to implement a sale of the business; however, purchase prices were below overall debt when real estate debt was also considered.
Tasks Performed:
Developed a cash flow forecast to determine the extent of cash flow needs during a turn around
Analyzed the performance of each store against the chain’s overall performance, the industry’s overall performance, and various industry specific benchmarks
Worked with management to develop a plan to improve operations, by combining a store closing strategy with improved store level performance
Met with the various lenders, including real estate lenders, to explain performance and cash flow
Results:
Focus worked with the Company to develop a forbearance agreement that allowed the Company to implement its restructuring plan.
Focus worked with the Company in restructuring the leasing arrangements with external parties.
Focus worked with the real estate lenders to develop a strategy to move forward with reduced rents from the operating entity to the real estate ownership entity.
