In order to cut costs as its revenues dwindles because of COVID-19, restaurant and entertainment group KLE is restructuring its management to better align with the new revenue realities facing the company.
This new reality has to do with the impact of the coronavirus pandemic, where the actions taken by the Government to protect the Jamaican population from COVID-19 has had an extreme impact on the company's ability to conduct business.
KLE, which operates Usain Bolt Tracks and Records restaurant franchise, is now forced to adjust the cost side of the business in order to survive. The restructuring was decided and agreed on at the company's last board meeting held recently.
Arising from the restructuring, the post of chief executive officer (CEO), held by founding member Gary Matalon, has been suspended. However, he will continue to oversee franchise opportunities and other opportunities for growth on behalf of the group, which also operates Sumfest Acoustic Cafe, Bessa and Forever Beach/SPF brands.
As a result of the restructuring, a new group structure is being put in place, which will entail the implementation of two separate subcommittees of the board with responsibility for overseeing the operations of the restaurant division and another for the real estate division. These two news subcommittees will take over the day-to-day operation of the group, which was previously carried out by Matalon as CEO.
RESPONSIBILITIES OF THE NEW SUBCOMMITTEES
The restaurant division subcommittee will be chaired by Matalon himself. He will be joined by fellow directors David Shirley, who chairs the board, as well as Normal Peart, Joe Bogdanovich and Marlon Hill.
The real estate division subcommittee will be chaired by Shirley with the other members being Matalon, Zuar Jarrett, Stephen Shirley and Joe Bogdanovich.
The group has advised the Jamaica Stock Exchange, where its shares are traded, that the changes were effective on Monday, November 23, 2020, noting that these changes “will allow the company to alleviate the burden of the executive costs of a CEO until the external environment stabilises and more reasonable predictions can be made on the way forward.”
“The newly implemented structure is subject to revision in the coming months for appropriateness as things evolve,” advised KLE.
MOUNTING COSTS STEMMING AND DECLINING REVENUES
The company has been bleeding since the onset of the pandemic in Jamaica reporting losses of $20.1 million for the March quarter compared to a profit of $332,000 for the corresponding quarter of 2019. Though revenues climbed to $72.67 million, up from $49.72 million, KLE still tracked behind expectations after the addition of a Usain Bolt's Tracks and Records restaurant in Montego Bay.
Cost of sales and administrative and other costs climbed. The financial bleeding continued in the June quarter, where the losses climbed to $28.1 million coming from a profit of $10.1 million for the June quarter of 2019.
The company recorded its worst revenue figures since inception due to the impact of the pandemic in the June quarter earning a mere $7,777. By extension, revenues year-to-date have been impacted tremendously with total revenues for January to June 2020 amounting to $80 million compared to $102 million in the prior period.
The total comprehensive loss for the period totalled to $44 million compared to $632 thousand in the prior period. For the first half of the year their cost of sales amounted to $25 million compared to $29 million for the first quarter of 2019.