flexible financing

Finding success through flexible financing

Calgary’s Blowers & Grafton has thrived during the pandemic thanks to painstaking planning and Merchant Growth’s solutions

By Tom Nightingale

Foodservice and hospitality is often a fine-margin business even at the best of times. There’s so much to juggle financially, from day-to-day product and operational expenses to salaries, from rent and insurance to health and safety measures. But for some operators, flexible financing can be a blessing.

During COVID-19, the struggle to maintain an operational revenue has been exacerbated. For many small and medium-sized businesses, thoughts of turning a profit have been pushed out of mind and replaced with the sheer desperation to stay afloat.

To say that Canadian foodservice has been a tough world in the last 12 months would be to understate. Many operators have had to resort to layoffs and other drastic measures to stave off the fear of closure with dining rooms shut for large portions of the last year.

When it comes to financing solutions, at times like these, it’s important that the industry know that options are available. Short-term financing is often regarded warily by business owners and it can pose pitfalls. But there are success stories out there of profitable partnerships between foodservice operators and companies offering flexible financing solutions.

Blowers & Grafton’s positive pivot

Blowers & Grafton is a Halifax-flavoured restaurant and bar that looks to bring the experience of East Coast Canadian dining to Alberta. After first opening four years ago in Calgary, they now have three locations in Calgary and Edmonton. Their mandate, as they put it, is to share the East Coast with Western Canada.

COVID-19, of course, was a speedbump on the road and Blowers & Grafton felt the pinch of the pandemic. To have not been impacted, as a relatively small restaurant business, would have been near impossible.

Co-owner Josh Robinson notes that there were difficulties. The business prides itself on authentic East Coast ingredients, and they had trouble getting their hands on some of their less-common seafood offerings. There were also some understandable supply shortages and price increases to offset the impact of COVID-19.

In short, though, Robinson stresses that Blowers & Grafton have been “pretty lucky”. Part of that, he says, is that they had an easier time pivoting than some restaurants. “We were already doing a solid amount of takeout and delivery on different platforms,” Robinson tells RestoBiz. “So we were set up for that not only operationally but also because our customers were educated on that fact. They knew we’ve been set up since the beginning to allow them to come and grab a bite.”

Robinson, owner Samim Aminzadah, and co. saw the opportunity to pivot quickly. They met to come up with a game plan operationally and financially and felt good about their forecast. “We didn’t know exactly what was coming up but we did a pretty good job of mitigating every risk,” continues Robinson. “We were able to pivot into the delivery and takeout game quickly and people appreciated it. We knew what we were doing in that pivot.”

In fact, they were doing so well that in July 2020, they were presented with the opportunity to expand their business to a third location. As a company, from their own viewpoint, it was the perfect move.

The hunt for flexible financing

However, as Aminzadah and Robinson explain, the real sticking point was financing. They quickly found that traditional banks had little appetite for funding a new venture, even though Blowers & Grafton was already well-established with two restaurants and were well-positioned fiscally. Due to the extensive uncertainty caused by the pandemic, there was a big reluctance from banks to lend to restaurateurs.

That was a potentially devastating setback.

Noting that Blowers & Grafton found a location space and a deal that made “a lot of sense” for them, Robinson said the team were hugely frustrated by the banks.

“Traditional banking basically closed the door right in our face. Nobody was really looking into finding options for us. We talked for a while only to discover that there was a zero per cent chance they were willing to do anything. When people are losing their jobs and we’re standing there with a track record of success, creating more jobs and more revenue, it just seems strange to get such a complete no. So what do we do?”

The answer: they found the flexibility they were looking for.

Aminzadah and his company approached Merchant Growth, a small business financing company that places great emphasis on offering flexible financing solutions to foodservice and restaurants.

Kevin Clark, Chief Revenue Officer at Merchant Growth, explains that since the company’s founding in 2009, it has prioritized developing its business as a leader in restaurant financing. Its offerings to restaurants “of all shapes and sizes” include its traditional “Flex” financing product: a lending program that offers flexibility in its repayment structure based on its sales through the merchant’s card processing platform.

These days, Merchant Growth also offers a fixed prepayment product and a Line of Credit. These, Clark tells RestoBiz, are all focused on operators’ need for capital to support that long list of necessary financing requirements that restaurants need to survive and thrive. The company is now a leader in the financial technology lender class for commercial borrowers, with a prominent focus on foodservice. “We never stopped lending, providing capital to existing borrowers as well as new business that frankly had nowhere to go,” says Clark.

Aminzadah puts it succinctly. “We approached Merchant Growth and very quickly we were able to establish our financial health,” he says. “They agreed to provide us the necessary capital to grow our business. They were able to see the opportunity that we were seeing that traditional banks would not fund.”

RELATED: Bringing foodservice operations into the 2020s

Utilizing Merchant Growth’s solutions

It has been a hugely profitable partnership for Blowers & Grafton, allowing them to follow through on their plans for expansion and open a third location. Aminzadah, Robinson, and co. had planned so carefully that they were confident they would be able to quickly pay back Merchant Growth’s financing, and that proved to be correct.

Robinson is effusive in expressing his appreciation for what Merchant Growth’s solutions offered his company.

“There was a good synergy: they’re there for companies like us that are looking to grow, especially small short-term growth. It was a quick process overall and it helped us immensely, not only for things we required straight away but also making sure we had enough working capital because things get expensive very quickly. We met the debt obligations relatively quickly and because of that we probably spent significantly less than we would have had we gone the route of traditional banking.”

Blowers & Grafton opened their new third location in late August 2020 in downtown Calgary. They took over an old restaurant in the area and performed a quick turnaround on construction and renovations, thanks again to their preparation and Merchant Growth’s support. They installed a ‘COVID-19 patio’ which allowed the restaurant to expand onto sidewalks and transitioned into entirely takeout and delivery when the lockdown came back around.

“Even when we were contemplating this restaurant, we were prepared for that to be the case,” adds Robinson. “We knew what we had, we saw we were able to pivot with the other locations. There’s certain things we planned ahead for, including shutdown, as we’d been around the block with our first two stores. We knew we were a restaurant capable of dealing with a lockdown.”

It’s vital that restaurants and foodservice businesses know the extent of the options that are available to them, particularly in times like these. All in all, this is a veritable case study in the kind of short-term flexible financing solutions that are out there for restaurants, and in how they can be effectively and efficiently leveraged. All this, of course, comes with the proviso that you will be able to pay back the financing predictably and sufficiently. For Blowers & Grafton, denied execution of their well-laid plan by the reluctance of traditional banks, it was a no-brainer.

“For a small company like us, it was a life-saver,” Robinson says. “We wouldn’t have been able to pull off this newest restaurant without that support. I absolutely think that businesses should explore going down the road of options like Merchant Growth, not only for starting a new business but for other things like an operational shift.”

The tale of Blowers & Grafton is just one of the success stories that are out there. Built on the dual pillars of painstaking preparation and flexible financing, the sky is the limit.