Reggie’s Set to Recover After 6-Figure Loss
Higher Sales Posted to Start the Year
Optimism was high as Reggie’s entered its first year as a solidarity cooperative. The campus bar had seen some success last year, and was set to have another great year. So a net loss of $131,006 at the end of their 2016-2017 fiscal year left its staff surprised.
“Nobody expected that big of a loss,” said the Concordia Student Union’s Internal Affairs Coordinator, and President of the Reggie’s Board, Veronika Rydzewski.
By the time the year ended, Reggie’s had a gross profit of nearly $250,000. Its operating expenses were $385,289.
One of the main issues that affected the bar’s finances had been its overspending on stock, according to current Reggie’s General Manager Justin Mclellan.
“We were wasting a lot of food, throwing a lot of stuff,” he said. “We had a lot of menu items that weren’t selling so it was a lot of inventory we were just sitting [on].”
While its base revenue increased from $414,746 in 2016 to $541,599 in 2017, the cost of the goods also increased significantly. In 2016, Reggie’s had to spend $141,237 on goods. That number more than doubled to $291,677 the year after. It helped to reduce their gross profit.
To fix the problem, Mclellan adapted the food menu to get the most out of kitchen ingredients. Pizza was one of the items that has been cut. With the new menu, kitchen service has also been faster, according to Mclellan.
While raising prices might be possible at some point, it’s something they haven’t discussed yet, according Rydzewski. She added that Reggie’s wants to keep its prices affordable for students.
On top of streamlining the kitchen’s service, the bar’s management did the same for the service staff. Rydzewski said that fewer servers are working on a given shift to reduce costs.
“We want to make sure that we still have great service but also break even,” she said.
Like inventory costs, Reggie’s salaries went up. Last year, they spent $139,723 on pay. This year, they spent $233,928, or an increase of 67 per cent.
Mclellan said that Reggie’s has another issue that he’d like to fix sooner rather than later: visibility.
“We’re kind of in a weird spot in the building,” Mclellan said. Reggie’s is located in the mezzanine of Concordia’s Hall building, past the Hive Café Solidarity Co-op.
“A lot of people will come and say this is the first time they’ve heard of us, or found us,” he said, adding that he wants to look into buying ad space or banners to show students where the bar is.
CSU to the Rescue
Since it first opened in 1977, Reggie’s had been run by CUSAcorp, the CSU’s for-profit subsidiary. When the bar reopened in November 2015, it took Reggie’s three months to become profitable, but it was not nearly close enough to erase the $1.4 million debt that it and CUSAcorp had accumulated to the CSU since 1984.
Then-CSU General Coordinator, Terry Wilkings, said the best way to give Reggie’s a fresh start was to forgive the debt, and turn Reggie’s into what it is now, a solidarity co-operative.
That fresh start was almost squandered this year.
With the six-figure loss, Reggie’s management didn’t have enough money to open the bar this semester.
Once again, in came the CSU. For its second time in less than two years Reggie’s needed a hand. The CSU council approved a loan of about $34.5 thousand to help jumpstart Reggie’s this year.
The loan came from the CSU activity income expense, from which Reggie’s was usually allocated $3 thousand a month, which Reggie’s then pays back to the CSU. It’s how the CSU subsidizes Reggie’s rent.
When Mclellan took the position in August, he realized that Reggie’s couldn’t afford to buy inventory, and train the staff. Reggie’s was only able to open properly because of the loan from the CSU he added.
Since Reggie’s got the money is one lump sum, they will need to pay the CSU back $8 thousand per month until the debt is paid. According to Rydzewski, Reggie’s has agreed to show the CSU their budget in order to make sure that they’re on track.
A New Hope
It’s not all doom and gloom though for the bar. This fiscal year, Reggie’s is projecting a $6,882 loss, much less than last year’s actual deficit, and their actual sales so far this year have been over their expectations.
“We had a really strong reopening, [and] October was also really strong,” Mclellan said.
With strong numbers to bring in the new fiscal year, Mclellan believes that Reggie’s is well on its way to getting back on track.
“It takes three to five years for businesses to get on its feet, and Reggie’s is no exception,” he said. “It’s going to take time but I think with marketing, [and] getting the word out, we have the possibility to not even have that loss this year.”