Executing a Successful Financial and Operational Turnaround for a Food Manufacturer
One of the largest producers of baked goods in North America had grown exponentially over its 30-year history and was serving the food service, quick-serve restaurant, and retail sectors, operating two manufacturing facilities, and approaching a projected $100 million in net annual sales. With the onset of the COVID-19 pandemic, demand for the company’s food service business declined by 50 percent. The abrupt shift in demand, along with pandemic-related opening restrictions and residual operating challenges from a prior labor shortage issue, culminated in the company failing to meet its minimum liquidity requirements.
“Despite the company’s topline being negatively impacted by the pandemic, the gross margin improved by 600 basis points over the prior year and is expected to continue to improve.”
How we helped
Engaged to serve as the Chief Restructuring Officer, our team quickly assessed the short-term liquidity forecast, revised the operating forecast, and built an integrated 13-week cash flow forecast to provide enhanced visibility to stakeholders of the situation. We then took the lead on treasury management, which included creating and maintaining a weekly cash flow model, implementing cash management and disbursement approval processes, and monitoring liquidity and restructuring activities. With these more day-to-day tasks under control, we were better able to plan for the future: we re-forecasted the two-year financial and operational outlook due to impacts of the pandemic and the loss of key customer accounts; and, we conducted a comprehensive operational assessment of the people, products, processes, and plant, and provided improvement strategies and recommendations.
Despite the company’s topline being negatively impacted by the pandemic, the gross margin improved by 600 basis points over the prior year and is expected to continue to improve. The improvement was a direct result of implementing recommended operational changes, including continued material cost savings, optimization of direct labor, optimized demand and procurement processes, and enhanced reporting and analytics.