Glasgow based foodservice wholesaler Lomond – The Wholesale Food Company has made 30% of its workforce redundant in the past two months.
Husband-and-wife owners Sam and Barbara Henderson told The Grocer they had no choice but to cut 43 jobs for the business to survive.
The £25m turnover company employed 113 members of staff before the crisis. It supplied food and drink into a mix of foodservice customers including cafés, restaurants, universities and bars, all of which ceased trading overnight. The company retained 45% of its customers by continuing to supply meat into butchers and goods to retail customers Scotmed and the Co-op.
The Hendersons were struck down with coronavirus as lockdown began in March, leaving them isolating at home and unwell for five weeks.
Despite this, they felt forced to make big decisions very early on, in a move they said had helped to safeguard their business.
Redundancies
“The first thing we did was to make anyone that had been with us for under two years redundant,” said Sam Henderson. “It was a very painful experience. We reacted quickly because we knew the market was not going to recover very soon. We are anticipating business to be back to 70% of usual sales by the end of the year. We made the decision to shrink our businesses based on that assumption.”
Sixteen members of staff left in that first wave of redundancies in March.
The Hendersons have received a Coronavirus Business Interruption Loan of £1.2m, as well as a portion of the Scottish government’s £45m Pivotal Enterprise Resilience Fund, which has given some wholesalers in Scotland grants of up to £100,000.
Nevertheless, in early May the decision was made to streamline the business further.
“The situation was so fluid, it was evolving and changing every 24 hours,” said Barbara Henderson. “Our decision-making had to keep changing depending on what the government was announcing next.”
Barbara Henderson, who has experience in HR, began a four-day redundancy consultation process.
“We felt it was important to make this process as swift as possible, we managed to do it in under a week,” she said. ”It was a terrible process: we are a close team. We have managed as well as we could and cut our costs accordingly so we would have a profitable model.”
By late May, the family-owned company had made a further 27 redundancies.
The wholesaler is now trading at 60% of its usual turnover with 70 members of staff, the majority of which are still furloughed.
The owners said that if business rates relief had been extended to wholesalers in the same way it has been to its customers, the £90,000 annual saving would have saved some some livelihoods.
“Knowing we had that business rate relief would have made us feel comfortable enough to keep some extra staff on, but that isn’t something that has been done,” said Sam Henderson.
The future
The Hendersons said they did not foresee business returning to anything above 75% of pre-coronavirus turnover levels before Christmas 2020. Their focus was now on productivity, and streamlining historical inefficiencies within the business.
One of the ways they hoped to do this was by encouraging customers to order online, rather than visit the depot, in order to keep staffing levels low.
The Federation of Wholesale Distributors is lobbying the government to extend business rates relief to a sector it said had been left to “fall through the cracks”.
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