The Tribune

* Revenues off 50% due to COVID measures

* Warns union of site closings, 'even shutdown'

* Rejects BHMA claims on Christmas bonus

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Kentucky Fried Chicken (KFC) franchise warned trade unions over one month ago it was "in absolute survival mode" and may have to close locations or "even shutdown" with revenues off 50 percent.

The fast food outlet and its operating parent, Restaurant (Bahamas) Ltd, cited COVID-19's "devastating effect" and the urgent need to make adjustments that cut expenses and conserved cash as it rejected assertions by Obie Ferguson, the Trades Union Congress (TUC) president, that it was acting in bad faith over plans to alter the staff's Christmas bonus.

Documents seen by Tribune Business reveal that the KFC franchise, a staple for many Bahamians, first reached out to Mr Ferguson, also the president for the Bahamas Hotel Managerial Association (BHMA), on October 29, 2020, seeking co-operation over a proposal to pay middle management Christmas bonuses in "installments" starting in 2021.

David Wenn, Restaurants Bahamas chief financial officer, wrote: "The unprecedented impact of the COVID-19 pandemic on the economy of The Bahamas is having a devastating effect on the financial stability of Restaurants Bahamas. To date, total sales are down and we see no positive movements in these numbers.

"This has necessitated the need for us to do a concentrated and intense review of every facet of the business including all financial commitments. The serious financial concerns resulting from government lockdowns and restrictions have not only inflicted unsustainable conditions on the company but also bring the continued existence of KFC into question."

As a result, Mr Wenn sought Mr Ferguson and the BHMA's agreement to pay Christmas bonuses to the Association's 42 middle management members "in installments beginning in 2021 when we return to some normalcy".

Yet he further warned: "The commencement of such instalments can only be considered if revenues have returned to normal levels pre-COVID-19 outbreak and our cash position is positive. We are in absolute survival mode. If we are not able to make the required adjustments, store closures and even shutdown of the entire brand are imminent possibilities."

These sentiments were reinforced, albeit with some modifications, by Nina Maynard, Restaurant (Bahamas) director of human resources, in a December 1, 2020, letter to Mr Ferguson on the same subject.

"The ongoing emergency restrictions continue to substantially challenge the operations of Restaurant Bahamas Ltd," she said. "We have experienced a 50 percent decrease in revenue from last year resulting in persistent, substantial operating losses since April 2020.

"Further to the mid-November discussions regarding Christmas payment deferral, we have given critical deliberation to all the aspects, elements and impacts that would mitigate those losses. Our highest priority is the survival of the business and the sustained livelihoods of our team."

Ms Maynard said the KFC franchise, after assessing "the seriousness of our negative cash position", was prepared to pay a one-week bonus to all staff this Wednesday plus a $40 voucher for ham and turkey. The balance of what is normally a bonus equivalent to two-and-a-half weeks' salary would be paid in installments, including another voucher, "as soon as it is financially viable in 2021".

Restaurant (Bahamas) in a statement told Tribune Business the company was "disappointed" by Mr Ferguson's suggestion that it was not negotiating in good faith, and had failed to notify and/or discuss the matter with the union ahead of informing its staff.

"Due to the present condition of the economy and the reduction in available hours of operation due to the COVID-19 pandemic over the past nine months, including an unprecedented industry shutdown in August, KFC Nassau has seen a 40 percent contraction in business," the company, which is owned by George Myers, said.

"In order to survive this extraordinarily challenging economic environment, KFC Nassau has implemented a number of cost-cutting measures, as well as other strategies, to ensure that the business can survive.

"Both our managerial union, the BHMA, and our line staff union, the Bahamas Hotel Catering & Allied Workers Union (BHCAWU), have been made aware of our financial challenges throughout the course of 2020 as we are in regular communication with both unions. Additionally, our managers have full access to the sales information for their restaurants and are fully aware of the economic difficulties that we face."

Mr Ferguson had blasted that it was "pure disrespect" for employers not to consult over cutting contractually-agreed Christmas bonuses, arguing that this amounted to "unilaterally varying" valid industrial agreements that included their payment among its terms.

He warned that it would be "an interesting holiday" if employers failed to discuss with unions in advance any plans to not pay bonuses that are included as part of industrial agreements, with the issue first emerging at the Water & Sewerage Corporation, where the line and management unions are now threatening industrial action.

Restaurant (Bahamas), meanwhile, said it had also informed the Department of Labour of its need to restructure and reschedule Christmas bonus payments. "We reached an agreement with the BHCAWU to pay one week’s Christmas bonus on December 16, along with a ham or turkey voucher valued at $40, with the balance to be paid as soon as possible but no later than the end of the first quarter 2021," it added.

"It is our hope that we can continue to meet with the BHMA to come to the same agreement. The country and our business is struggling and we are not alone. Our competitors across the industry are facing similarly difficult circumstances. Some, like our affiliated restaurant Luciano’s, have gone out of business.

"In short, KFC Nassau rejects Mr Ferguson’s suggestion that we are negotiating in bad faith at the last minute, and we hope to come to a resolution with the BHMA as quickly as possible, as we have done amicably with the BHCAWU," the KFC franchise continued.

"These are unprecedented and difficult times for us all. We are working at every level to ensure the survival of the company and the continued employment of our managers and team members. While we will not shirk our responsibilities, it is not realistic to pay a full bonus payment at a time when we are struggling to keep our teams employed and our doors open."

Mr Ferguson said KFC's 42 middle-managers, who are part of the Bahamas Hotel and Managerial Association's (BHMA) bargaining unit, would typically receive a collective $61,000 Christmas bonus and around $4,000 to cover hams and turkeys.

He added that the BHMA, and unions in general, were not opposed to Christmas bonus cuts given the financial realities imposed on their employers by the pandemic, but argued that the issue needed to be discussed with the recognised bargaining agent first prior to a unilateral decision being taken and the members informed.

Some in the private sector last night voiced surprise at the extent of KFC's struggles, with one saying: "I find it hard to believe. They're busy all the time." However, fast food industry margins are not the widest, and the sector has received its fair share of blows from COVID-19 lockdowns, curfews and restrictions on indoor dining and the number of persons allowed in a restaurant at once.

Restaurant (Bahamas) issues are also likely top be representative of the challenges faced by much of the wider Bahamian private sector amid the COVID-19 pandemic. Atlantis, too, has reduced this year's Christmas bonuses beyond what it is obligated to pay under the industrial agreement with the BHCAWU, although the union has said its main priority is to preserve jobs.

The Paradise Island mega resort, as well as providing a ham and turkey voucher, is this year paying a holiday bonus of $500. Dave Beckford, a now former Atlantis employee (see article on Page 3B), said the industrial agreement calls for this bonus to be two-and-a-half weeks for workers who have been there five or more years, and two weeks for those there five years or less.

Many Bahamian workers rely on their annual Christmas bonus to finance present and gift shopping, and purchases of holiday food. However, many employers will likely not be in a position to afford them, or at least the normal amount, this year due to the financial blows inflicted by COVID-19 and the associated lockdowns, curfews and other restrictions.