As at 28th February 2020 –
Dunns Food and Drinks Ltd, celebrating its 145th year was on track for £40 million turnover through aggressive investment and growth plans. Staff numbers topped 140, having at the end of 2019, acquired a small Aberdeen Food Service depot. Plans were afoot for acquiring a further depot in the north west to allow for full Scottish coverage, with further plans to move south.
A family business, traditionally in the manufacture of soft drinks, over the years Dunns has developed in an award winning supplier of food and drinks into the independent free trade, restaurants, pubs, clubs and hotels.
This is a profitable, prudent company with strong reserves planning its future for a fifth generation and beyond – targeting £50million by 150 years.
We were aware of coronavirus impacts – supplies from the continent had been interrupted and we had taken steps from early March with our management team to instil safe working practices – social distancing, plenty of hygiene stations and a homeworking plan. But nothing prepared us for the shock of the Government ordering 95% of our customer base to close overnight. We had to stay open. We also supply a number of care homes, small retailers and cash and carries.
The whole industry paused. Customers stopped their direct debits. We had to come to arrangements with suppliers, not just of stock but also of all the overheads attached to supporting a £40 million infrastructure. The cash stopped flowing throughout the supply chain.
Our stock holding, like most wholesalers, was high in readiness for the Easter start of the season. We were told by Government initially that the furlough would be funded for 12 weeks and therefore arrangements amongst all the parties have been loosely based on these timings. However as it becomes apparent that the hospitality sector will be amongst the last to return to any semblance of the new normal we now have real concerns about how long the pause can last.
Many of our customers, having cancelled their direct debits, immediately contacted us to set up payment plans, as we have done with our suppliers. When their grant monies came in payments were forthcoming. No conditionality was attached to the grants therefore it hasn’t been possible to secure agreements with some of our customers and we have grave concerns over looming bad debt. We have already experienced a couple of flipped companies and insolvencies.
Literally from one Monday to the next, in March our turnover dropped by 75%. As the enormity of what was happening hit and with such confusion over what businesses could open and what was non essential through April our turnover was tracking at 20% year on year. The furlough has helped greatly but the details remain a bit unclear. The fixed costs are still those of a 100% business – the insurances, the vehicles, the utilities, the rates and whilst they may be on pause for the time being the charges are racking up with no clear view from Government as to where in the phasing the hospitality trade sits.
Throughout April we undertook a number of charitable, community based enterprises and set up a home delivery service overnight. This proved tricky initially given that a food service pack of pasta is generally 3kg. We also took advantage of an offer from TLT Solicitors, through the Scottish Wholesale Association which got us a licence to sell alcohol business to consumer. In 3 weeks we achieved technologically what might have taken us 3 years in normal circumstances.
With the supermarkets struggling to deliver in April and May and some of our own customers getting to grips with the dark kitchen/home delivery concept we saw an increase and by the end of May we will have recouped 26% of our original turnover year on year. Happily every day throughout the month has seen small numbers of customers coming back. Our turnover, normally, is split just about 50/50 food and drinks. All indications suggest that the pub trade will remain in lock down longer than the rest of hospitality. However we have seen some real ingenuity from our customers in terms of signature cocktail home deliveries and beers and spirits offerings.
Much of our time is spent reading – looking at the countries ahead of us in this journey and what their restaurants are doing, and as much as possible we share everything we can with our customers and online. The new normal is going to be a very different proposition indeed.
Like so many businesses in this situation we are having to adapt in order to survive. As Scotland’s largest independent soft drinks draft dispense company we have used our knowledge and skills to create a bag in box sanitizer dispense system as well as a bag in box, under sink hand soap and mixer tap system.
We appreciate that, as much as possible, our customers will want to reduce the number of deliveries into their premises for safety and social distancing reasons so we have tried to anticipate as much as possible their requirements and expand our range accordingly including fruit and veg, butcher meat and PPE. We’ve got a container of masks arriving later this month as we fully expect masks to be as commonplace in a restaurant as napkins (disposable obviously).
Foodservice/ontrade wholesale as the wheels of Scotland’s food and drinks industry is pivotal but not widely recognized as part of Scotland’s hospitality and tourism sector. Through efforts of the Scottish Wholesale Association we have received some recognition of our role from Scottish Government and grants have been made available but still we lobby for similar rates relief and VAT on duty relief.
Throughout this we have been amazed by the resilience of our staff and our customers and it has energized us personally. Every day presents a new challenge and opportunity although as you can imagine there are also real lows when we ponder what we had and what we have lost not just in terms of turnover but also in terms of people.