At the beginning of 2020, David Maxwell was hatching an ambitious expansion strategy for Boojum, the fast-growing Mexican burrito restaurant business. Backed by Renatus, a private equity firm, Maxwell had acquired the brand through a management buy-in in 2015, and the company had scaled rapidly since then across the island of Ireland – from five outlets at the time of the deal to a group of 17 at the start of 2020.
Having posted a strong first quarter, the target for 2020 was an assault on the British market. However, when the economy went into lockdown in March, Maxwell knew that the restaurant industry was facing an existential threat to its survival.
With operations on both sides of the border, the public health advice was different across the two jurisdictions. This ambiguity posed operational problems for Boojum, but Maxwell knew that without radical and decisive action, the business was facing a cash flow problem.
Sales collapsed as the lockdowns were imposed. Even as the business tried to trade in a limited way, customers were afraid and stayed away. The company knew it was impossible to predict the full impact of the crisis – of even its duration.
The large brands in the sector such as McDonald’s and KFC had set the tone by closing, but Boojum was determined to create a safe and efficient model that protected staff and gave the business the best chance of survival.
As the lockdowns were imposed, sales collapsed. Even as the business tried to trade in a limited way, customers were afraid and stayed away.
With both its 450 staff members and its board nervous, the immediate priority was to take action to prevent a looming cash crunch. Maxwell and his executive team remained calm and communicated a clear message to its stakeholders, “this is what we are going to do, and we are asking you to come with us.”
Maxwell and his team then began implementing a business survival plan. Key actions included:
During the crisis, the company launched a free meals programme for the homeless, which has now delivered more than 12,000 free meals. This led the team to realise that it might be possible to sell meals to new customers.
Having collapsed to 25 per cent of pre-crisis levels by end of March, sales recovered over the next 2 months to 70 per cent of pre COVID-19 levels. This was achieved despite Boojum operating from only eight sites. The business was operating an entirely digital model with the new click & collect / delivery model functioning well.
Meanwhile, with many rivals opting to remain closed, Boojum was able to command a large share of the available demand. This was in part driven by the launch of a new app which peaked at number 2 in the Irish app charts and entered the UK top ten during May.
Overall, Maxwell says the feared cash crunch that most hospitality businesses experienced (fatal for some) was largely avoided due to a well managed creditor base, government supports in the form of grants or wage subsidies and the impact of a creative, digital first, but most importantly resilient business model.
During the crisis, the company partnered with Fare Share and donated more than 15,000 free meals to local charities. This helped the team identify a new commercial opportunity and following a few additional months of product development, Boojum expects to launch a range of retail products with two leading supermarkets in NI.
Having faced an existential crisis, Boojum now expects to survive and prosper in the new normal. There will be structural changes in the restaurant industry primarily in the acceleration of delivery/digital and a likely resizing of the market stemming from the COVID-19 crisis. Boojum remain confident that they have the tools and products to perform well in the future.
Maxwell and his team know that the months ahead will be very challenging as Government supports are eased, while it is unclear what the impact on customer behaviour will be.
There is likely to be a reduction in the number of restaurants in the UK and Ireland. For Maxwell and his backers, this will present an opportunity which is much greater than was expected in 2019.