HPP Recap Nov 2022

F&L kicked off a strong holiday season with a large number of early holiday events. In addition to parties, management has integrated QR code ordering capability in the patio! Ordering is now at your fingertips and more convenient than ever.

Foundry & Lux’s largest and most important event was Healthpeak’s Investor meeting on Monday, 11/14. It was a full buyout of the space. Approximately 75 attendees came for the event, and the restaurant was completely reconfigured for a unique layout to impress the investors, showcase the beautiful space, and optimize presentations. An event of this scale would typically cost ~$40k, but F&L executed the event at cost for ~$15.7k!

The team kept the tenants engaged in November by introducing seasonal and festive menu items. Although November had a great start, the holiday closures impacted sales in week 3 & 4.

THE COVE FARMER’S MARKET

During this month's Farmer's Market, F&L was able to introduce its seasonal cocktail kits! Each kit includes all the ingredients and instructions to make the perfect holiday drink. These make for a perfect gift for cocktail lovers or for people who want to mix cocktails like the professionals!

Winter Margarita

Mistletoe Mule

THE REVIEWS ARE IN!

FOUNDRY & LUX

Sales: Sales for the four-week period totaled ~$186.8k with a weekly average of ~$46.7. Monday, 11/14, was the HPP investor meeting (at-cost buyout). Typical revenue on a Monday would have added approximately $15k to overall sales. Additionally, F&L has been producing catering two days every week to ROBLOX, totaling an estimated $6k to weekly revenue. ROBLOX has reduced services from 3 days to 2 days due to an encouraged hybrid work model.

COGS: Cost of goods is at 24.5% against budgeted 29%. Cost of goods continues to be a moving target due to distribution and vendor challenges. The team has been actively targeting to reduce cost of goods to make up for the rising cost of labor.

Labor: Management monitored labor closely and made as many reductions as possible without impacting service levels. November labor is at 74% against revenue. There have been several resignations and employees out on leave, which has increased the need for temporary labor. Temp labor from an agency has become the industry ‘norm’ for food services and typically have a higher hourly rate to account for fees and the absence of taxes and benefits.

Other Expenses: Total other expenses were at ~34.7%, which is higher than budgeted due to the HPP event. Expenses included services for the furniture and stage rentals, culinary garden, computer expenses, catering vehicle expenses, insurance, bank and armored car services, computer and POS costs, and safety equipment. Total costs for HPP event, not including labor, was ~$17.6k.

Total Losses: Total losses were ~$62k against budgeted losses of ~$27.8k, largely because of the successful HPP investor event that was executed at cost and did not generate revenue. An event of this magnitude would typically generate ~$40K in top-line revenue. While the event contributed ~$15.7k in top line revenue, that amount was immediately deducted in the “other expense” line, essentially deleting any profit margin for that event. YTD total losses are ~$319.3k against budgeted losses of ~$278.4k.

FOUNDRY & LUX ROLLING 3

ASSUMPTIONS FOR FOUNDRY & LUX:

DECEMBER– Five-week period and business is expected to ramp up week 1 – week 3. Tenant population at the Cove will reduce significantly the last two weeks of the period , F&L will abbreviate services for those two weeks to minimize operating costs. Management is considering to close completely W5 as CBRE has provided intel regarding reports of closures campus wide. Additionally, there will be a large tenant event for December which will most likely result in higher percentage for “other expenses” to pay for vendors. ROBLOX will not have any catering delivered after December 16.

JANUARY: Four–week period and business is expected to be slow and currently has no major events for P1. Week 1 will be extremely slow coming back from the holidays. Management is considering abbreviated services the Friday before MLK day and closing for MLK day.

FEBRUARY: Four–week period and business is expected to be slow and currently has no major events for P2. Management is considering closing February 20 and running abbreviated services February 17 to mitigate losses.

November maintained consistent business from the tenant community at The Shore. Chef Santos has continued to expand the menu offerings and has included new weekly lunch specials and happy hour snacks. These specials have been well received; we have begun to incorporate several specials onto the lunch menu as static menu options, which is even easier now that online ordering has gone live!

Additionally, Chandlery has expanded happy hour services to every Tuesday and Wednesday! Thursday happy hours are still proving to be the biggest day for revenue. Chandlery is actively marketing to the campus to increase participation to all three days.

While November allowed the team to expand offerings, we did see higher losses in weeks 3 & 4 due to the Thanksgiving holiday and reduced tenant population on campus. We closed for a week to reduce losses and allow for construction on the BMS floors.

Chandlery partnered with CBRE to plan The Shore holiday event for added engagement from the tenants. These specially curated events will be a unique experience for the tenants to see what Chandlery can host for larger groups and all the value they receive as tenants of an HPP campus. We look forward to expanding services in December when we roll out formal dine-in services with the help of QR code ordering to tables.

CHANDLERY

Sales: Sales for the five-week period totaled ~$51.7k with a weekly average of ~$12.9. W5 was closed to accommodate BMS construction on the restaurant.

COGS: Cost of goods is at 29.9% against budgeted 27%. Cost of goods continues to be a moving target due to distribution challenges and the rising cost of goods. Paper goods are higher than anticipated due to the new law that requires all single use options to be certified compostable. Additionally, J&J tenants have a $15 stipend and are asking Chandlery for lower priced menu items. Management is diligently working on integrating this request on to the menu to increase tenant satisfaction.

Labor: Labor is high because of the hourly temp labor. Finding qualified employees for the budgeted payrates is more challenging than ever with additional competing businesses in the area. Currently, Chandlery has one chef and one manager dedicated to the unit to minimize cost. Because this unit is lacking salaried labor, management has activated F&L’s management to help move the program forward.

Other Expenses: Total other expenses were at 41.5% against revenue. Other expenses include POS equipment, software, licenses, insurance, and culinary garden maintenance. Other expenses are higher than budgeted due to the HPP buyout on 11/14, this was closed to client expense and accounts for ($7539.99) and was the bulk of the extra expenses. Additional high expenses this period are the POS IT/Equipment charge ($1,805).

Total Losses: Total losses were ~$46.2 k against budgeted losses of ~$38.3k. Total losses YTD is at ~$308.6k against budgeted losses of ~$295.7k.

CHANDLERY ROLLING 3

ASSUMPTIONS FOR CHANDLERY:

DECEMBER– Five-week period and business is expected to ramp up. Tenant population at the Shore will significantly reduce occupancy weeks 4 and 5, Chandlery will be running an abbreviated services week of 12/19 and 12/26. Chandlery will be closed 2 days in week 4 and closed 2 days week 5, resulting is a 3 day work week, to minimize operating losses. Bon Appetit and CBRE will be hosting the Shore’s first tenant event!

JANUARY– Four-week period and beginning of Q1. Business is expected to be slow but management is actively targeting marketing opportunities to increase revenue for the anticipated slow season, and is expecting to produce better results than budgeted. W1 will be slow ramping back up from the holidays. Additionally, Friday 1/13 and Monday 1/16 is expected to be slow due to MLK day.

FEBRUARY – Four–week period and business is expected to be slow and currently has no major events for P2. Management is considering closing February 20 and running abbreviated services February 17 to mitigate losses