October 9, 2020
Dear Boloco Shareholders,
September was relatively uneventful. We remain open in 2 of the 7 locations (unchanged from last report) and have been working on securing agreements with all landlords to either re-open at reduced rents or to close permanently.
We have now received forgiveness of some or all of monies owed to 3 landlords, which is still far short of where we need to be to remain viable. That said, it is certainly progress.
Boston Children’s Hospital is led by Ana Lopez and continues to log relatively strong sales on the weekdays ($3500-4500) and just starting to see signs of life on Saturdays again. The restaurant remains closed on Sundays. With COGS now consistently at 28-29% and labor in control, the $20-23K per week in sales is working.
Lynnfield, MA has softened a bit since Labor Day, dropping from $20K per week in August to about $18K per week. Led by Natalia Sonora they are controlling expenses well and with landlord relief are dropping helpful profit to the bottom line each week.
Overhead in September was approximately $32,000 (pre-covid it was between $90-100K per month)… About 1/3 of that is labor, some marketing, insurance, legal, and general and administrative. Not including rents from the closed restaurants, we did a little better than break-even for the month. It’s a fragile existence but with support from Paulina Gonzalez in HR/Admin and Rachel Parkhurst in Catering/Delivery/Customer Service, I’m constantly amazed at how this diminished team rises to the occasion every week and does so much with so little.
At the moment, with near certainty we will not re-open 2 of the locations of the 7. The landlords either want to control the space or terminate us and replace Boloco with a national credit tenant, and since they are forgiving all debts, that is sadly what I believe is best. I hope to have better news on the other locations in the coming weeks and will share details as I can.
Our cash position remains right around zero at the end of every week (today we were at $1,400, last week $1,100, etc.). That said, we have approvals for 2 loans… the first is the 30-year EIDL loan from the SBA for $150,000, and the second is a private 12-month loan from Ascentium Capital, also for $150,000 at a reasonable (not great) interest rate. We have not accepted either yet and we won’t until we have a clear path to reopening and viability which fully depends on coming to agreement with our landlord partners. I had hoped for another round of PPP in September, but those hopes were decimated a few days ago when both sides of the aisle hit an impasse and walked away from discussing relief packages for individuals and businesses until after the Election.
Finally, we continue to have meaningful discussions with potential acquirers and partners. I honestly have no idea if one of these will come to fruition, so in the meantime we spend most of our time watching our pennies and holding a very steady line trying not to let a rogue wave put our bow under water and thereby ending this recovery effort. A few of you have asked what valuation we might expect in the event of a transaction… unfortunately, but not surprisingly, I would not expect much value to be remaining for any shareholders. As a reminder, when I repurchased control of the company in 2015 with help from a handful of supporters, nearly $3M was invested to buy out the Preferred shares in the company. None of those shares have seen dividends or returns, let alone the Common shares of which I was and still am the largest holder. I’ve had over 6 months to come to peace with the likelihood that this won’t end well, but I know most of you haven’t. I realize that for some of you this is a significant disappointment and loss, and for that I am deeply sorry. All that said, this company did many extraordinary things in its nearly 24 years in business and I’m grateful every day to have had the opportunity to work with so many committed people on our important mission and the honor of serving millions of New Englanders for nearly a quarter of a century.
Feel free to call or email with any questions.
Co-Founder and Chief Worker Advocate