Tomahawk - to avoid after lockdown

[Andy_W]

Andy W you put forward some insightful and well argued points to try to understand the issue from the perspective of the business.

There was a guy on the radio who owned a small pub bistro who had overheads of £900 p month so this company will have very heavy fixed costs.

What nobody seems to have picked up on is that the 'loan' is to cover the employees NI and pension. So as well as helping the company they are also ensuring the continuity of their stamp and pension contributions. An alternative is redundancy.

Is it morally correct? I don't know because all the facts are not available but the underlying theme that it's an example of an employer exploiting the workers
just reveals the inherent bias on the forum.

Cheers, I'm really not trying to back them up, but there's a lack of balance here, which is why I've argued so much.

People are trying to defend the guy on the least wage, which is great, and I totally get that. The thing is, I am too, and I even do it in my own businesses. But I'm trying to do it by giving examples how an additional temporary sacrifice (which I acknowledge is $hit) could pay off massively in the long term.

I don't think it should need to be this way, but on an individual level, this may be the only way to distribute the risk, and ensure that the risk is at the lowest level it can be as a whole. Maybe paying 70% furlough and 10% to hospitality/ struggling businesses might have kept more jobs, which is basically what I'm saying should be priority number 1.

I'm just saying there's probably a lot more to it, there always is, and then even when you think you've got it covered, something else crops up.

 

[Andy_W]

The irony here is that every time you post Andy_W the headline goes to the top of the board -

Tomahawk - to avoid after lockdown​

Just like it did when you posted, and anyone else posts

I feel there's value in adding some balance, rather than the judge, jury and executioners all agreeing it's murder, before any evidence has been presented.

If people avoid it they're going to affect the workers at the bottom the most, just they know that, which is a point I've made a few times.

 

[Ingleby_Flash]

Cheers, I'm really not trying to back them up, but there's a lack of balance here, which is why I've argued so much.

People are trying to defend the guy on the least wage, which is great, and I totally get that. The thing is, I am too, and I even do it in my own businesses. But I'm trying to do it by giving examples how an additional temporary sacrifice (which I acknowledge is $hit) could pay off massively in the long term.

I don't think it should need to be this way, but on an individual level, this may be the only way to distribute the risk, and ensure that the risk is at the lowest level it can be as a whole. Maybe paying 70% furlough and 10% to hospitality/ struggling businesses might have kept more jobs, which is basically what I'm saying should be priority number 1.

I'm just saying there's probably a lot more to it, there always is, and then even when you think you've got it covered, something else crops up.

If it does pay out massively in the long term do you think the company will be handing out massive bonuses as a thank you, or just directors dividends?

 

[Randy]

I love a steak, so until you can go out and dine at your favourite restaurant do yourself a favour and nip into Aldi and pick up one of their Aberdeen Angus Steaks. £3.25. Tenderise it and if it's cooked right they just melt into your mouth. Enjoy.
I've always considered steak as a treat, and still do.

I always use Aldi's steaks in our house.
They are delightful, any cut is.

Having a decent cut of meat is only half the job to a perfect steak. The other half is how you cook it. Tomahawk don't cook steaks any differently to other restaurants around here.

 

[Lefty]

And none of any of the apologists have remotely come close to excusing the fact that they're putting people on very low incomes in an impossible position, a position from which many will have to turn to loans themselves, loans which will not be interest free.

Loan us some money or lose your job is not appropriate, no matter what way you spin it it will never be appropriate.

We hear regularly from the same voices about business owners being entitled to their spoils and the fruits of their labours - even on this thread when addressing the owner has multiple Ferraris. It works both ways.

I wouldn't dream of ever visiting one of their establishments now.

'apologists'

FFS!

 

[Andy_W]

If it does pay out massively in the long term do you think the company will be handing out massive bonuses as a thank you, or just directors dividends?

The bonus is having a job in a year, as opposed to not having a job, that's how I would be looking at it. It's not a great bonus, but it's better than the guy working for the company that folded.

There won't be many dividends I bet, you need profits for those. The directors have probably lost 10 times more equity than these loans are worth.

The loan is probably about 1/8th of what the company is loaning to the employees each month before they get the furlough payments from the government.

 

[Ingleby_Flash]

But just to answer my question, and I know it’s hypothetical, IF they do return to decent profits do you personally think they’ll be sharing these out as a thank you. Or just paying a directors dividend.

For context I ran my own business for 30 years so do understand The presentation of the arguments.

 

[JackG]

I think most people would have been sympathetic to the company's dilemma, but for

'Staff who refuse have been told their "suitability for the role will have to be reviewed", it is claimed'

I'm generally OK with Andy W's 'desperate times - desperate measures' POV. It's the barely concealed threat that's beyond the pale.

 

[Andy_W]

But just to answer my question, and I know it’s hypothetical, IF they do return to decent profits do you personally think they’ll be sharing these out as a thank you. Or just paying a directors dividend.

For context I ran my own business for 30 years so do understand The presentation of the arguments.

I doubt it, in all honesty. But my reason isn't greed, it's more that I would expect a reward to be in line with the level of the risk taken, I basically see this as low risk for the employee (especially compared to the alternative), so would be low reward.
Although the inconvenience is much greater than the risk, as the employees are poorly paid (like the sector is), so there should be compensation for this. I would have offered a 10% interest but openly I also realise that 10% is actually nothing in reality, but it would have looked a lot better on paper, saved a lot of bad press, and had a better "feel".

I do think those that helped out would definitely get better promotion prospects though, especially against new employees, although I probably expect that would be discriminatory! I also think a lot of those that lent money wouldn't be happy about it, so may seek alternate employment, so those who stayed would have less competition for promotion.

 

[Andy_W]

I think most people would have been sympathetic to the company's dilemma, but for

'Staff who refuse have been told their "suitability for the role will have to be reviewed", it is claimed'

I'm generally OK with Andy W's 'desperate times - desperate measures' POV. It's the barely concealed threat that's beyond the pale.

Yeah, I really don't like that either, if it happened, but I'm not saying it didn't happen.

If it did happen, then it's truthful I suppose, although brutal, the company maybe just could not keep footing a bill 10% higher than it could be (temporarily).

But they didn't need to say or do it like that, they could have been more upfront and open about it, with more information, maybe they actually did this, I wasn't there. The problem is when detail is hidden, those that know least assume the worst, especially when it comes to money.

 

[Billy69_uk]

Personally, I think the whole thing stinks.

Why should employees bankroll the company under threat of losing their jobs?

Why dont they offer the employees a 10% stake in the business in the form of shares? that way they all benefit if the business is a success.

 

[Ingleby_Flash]

I doubt it, in all honesty. But my reason isn't greed, it's more that I would expect a reward to be in line with the level of the risk taken, I basically see this as low risk for the employee (especially compared to the alternative), so would be low reward.
Although the inconvenience is much greater than the risk, as the employees are poorly paid (like the sector is), so there should be compensation for this. I would have offered a 10% interest but openly I also realise that 10% is actually nothing in reality, but it would have looked a lot better on paper, saved a lot of bad press, and had a better "feel".

I do think those that helped out would definitely get better promotion prospects though, especially against new employees, although I probably expect that would be discriminatory! I also think a lot of those that lent money wouldn't be happy about it, so may seek alternate employment, so those who stayed would have less competition for promotion.

Thanks for the response, I understand the position you’re trying to take, I think you are very generous of spirit. What they have done may have been well intended, but was very badly executed. Coupled with reports of threats I have doubts.

I think a share option scheme offering might have been better, even if it was class B shares.

I‘ll never use them again, but as a 35 year veggie I never used them before anyway

 

[Andy_W]

Personally, I think the whole thing stinks.

Why should employees bankroll the company under threat of losing their jobs?

Why dont they offer the employees a 10% stake in the business in the form of shares? that way they all benefit if the business is a success.

You don't know enough to say it stinks, not many do, other than the directors and the accountants.

Maybe make that comment after 20/21 is showing in the accounts at the end of the year/ early next year?

The company has bankrolled (short term loaned) the staff's furlough for a year, on behalf of the government, they didn't need to do this of course, they could have just laid everyone off or folded (like loads of others have). This furlough also has additional accountancy and admin fees, which from my experience has been about £30-50 per person, per month, plus any additional time.

It's not a threat of losing jobs, if the company can't sustain itself, there are no jobs.

The stake in the business seems like a fair idea initially but the percentage would be calculated against what the loan is worth, against what the business was worth pre-pandemic (before all the loans and finance). Or do you expect the staff to get a massive discount now all cash and credit has been depleted?
The loan is probably closer to 1-5% of total worth or risk, split over 500 staff it's not going to be a lot.
Then what if the staff want to cash up, who do they sell to? Who administrates this, and at what cost? Their money (which they will need) would be locked in worse than if they got it back in 6 months.

 

[Andy_W]

Thanks for the response, I understand the position you’re trying to take, I think you are very generous of spirit. What they have done may have been well intended, but was very badly executed. Coupled with reports of threats I have doubts.

I think a share option scheme offering might have been better, even if it was class B shares.

I‘ll never use them again, but as a 35 year veggie I never used them before anyway

Thanks I think most businessmen have good intentions as a whole, or at least want the company to be as successful as possible which will trickle down to the staff, and they should benefit too, hopefully. This was poorly executed though, or the "leaker" misunderstood, probably a bit of both. Even those that have separate money and decent cars can be alright people.

Obviously, the staff will never get is as good as the guy at the top, but he's taking the most risk and doing the most hours (or at least did one day, I expect). I value my staff and treat them as well as I can, but every now and then I have to ask them to do things I wouldn't want to do in their position, but equally I would never ask anyone to do something I would not do in their position, if I thought it was the best/ only viable way, with the least risk.

I think the value would be too little for shares, the admin would make it worthless and it would lock in investments that people probably shouldn't be making/ keeping. They would be better doing the loan, getting it back and then and investing in the S&P 500!
I would be going mental if I had a forced investment in a hospitality business, that I couldn't cash out of.

 

[Soutra]

A share option is a feasible solution. Pay some money for an option to buy shares at a discount if the company goes public. In the short term Tomahawk gets a small cash flow boost, and in the event that the company is successful and goes public, then the employees get a chance to cash in. The employees would get a profit share in the form of a dividend if it stays a ltd co.

It's a tough call if the company is that close to the edge. Some of the employees might see a 10% withholding on the their furlough as a price worth paying to save their job. I wouldn't be too happy if I paid it and others didn't though.

 

[JustTheGent]

I've just spoken to a person who runs a restaurant in Harrogate and they had heard in November that the Tomahawk group were in financial trouble. Employees are saying they believed they would not retain their job if they did not agree to the terms offered. Most of the employees are younger people which obviously makes it easier to get away with underhand tactics. Also, many employees are recruited through friends of friends and word of mouth so much of the workforce is probably formed across friendship and acquaintance circles. This will make it very easy for strings to be pulled, etc.

I think most people realised something wasn't right about these steak places a long time ago. But why an earth would you bust a fortune on opening a new restaurant in London if you've got no money?

 

[Andy_W]

Most of the employees are younger people which obviously makes it easier to get away with underhand tactics. Also, many employees are recruited through friends of friends and word of mouth so much of the workforce is probably formed across friendship and acquaintance circles. This will make it very easy for strings to be pulled, etc.

I think most people realised something wasn't right about these steak places a long time ago. But why an earth would you bust a fortune on opening a new restaurant in London if you've got no money?

I can't imagine it's easy just employing younger people, but you pay for what you get I suppose, to a degree. You can't get away with more, with youngsters though (not that most would try), a lot of them are like lawyers (or their parents are), they know more about employment law than business owners. The young lot have historically caused me more bother than the older lot, by tenfold, but I don't need them, restaurants do.

Can't be that bad working for them though, if people think it's a good idea to get their mates in. Would someone recommend something crap to their mate? I wouldn't.

We have a problem in my company, one of the other guys likes recruiting mates and old acquaintances, it makes things more difficult I think and some really try and take the pi$$. It's even worse with family, and I bet it's even worse than that with the missus!

I've been to two of them, I think, maybe once each, thought the Potto one was good, and the Yarm one crap.
Maybe the London thing was based on outside investment, or a loan secured against some other asset, didn't seem like the thing to do to me, but I've no idea where that funding came from or when this was agreed or what the lease terms are.

 

[JustTheGent]

I suppose one could go around in circles forever covering all circumstances and speculating what the situation may or may not be. The fact is the overwhelming majority of people see this business as having totally messed up. They'll lose major custom because of this. Lets stick to things we know

 

[Lefty]

If you look at the 2019 Accounts, there is a large Share Premium Account. Someone has bought 30 ordinary shares at £18,666.67 ie pumped in £560k. The directors were owed money also (£42k). The group was relatively cash rich at that point (31/3/19), having circa £300k left after taxes and trade creditors were paid off. That was at 31/3/19. That cash will probably have gone by now and it may be tricky to arrange a share issue now. Each share is worth £400 a pop as of 31/3/19. How do you dilute fairly? Is it the directors or the shareholders (who may not be the same people) that are the problem? There appear to be two connected companies, so which one should issue shares, which one has the employees, or does each company own different premises and have different employees and therefore different share values and owners?

None of you know, so Andy_W's charitable approach is the right one, because he is not saying that coercing an employee to loan the company money is right, if that is what has happened, just that asking employees to do so may be the only reasonable option left to the directors, after a rapid expansion policy has caught them out more than most with the timing of the pandemic.

 

[Primus84]

If you look at the 2019 Accounts, there is a large Share Premium Account. Someone has bought 30 ordinary shares at £18,666.67 ie pumped in £560k. The directors were owed money also (£42k). The group was relatively cash rich at that point (31/3/19), having circa £300k left after taxes and trade creditors were paid off. That was at 31/3/19. That cash will probably have gone by now and it may be tricky to arrange a share issue now. Each share is worth £400 a pop as of 31/3/19. How do you dilute fairly? Is it the directors or the shareholders (who may not be the same people) that are the problem? There appear to be two connected companies, so which one should issue shares, which one has the employees, or does each company own different premises and have different employees and therefore different share values and owners?

None of you know, so Andy_W's charitable approach is the right one, because he is not saying that coercing an employee to loan the company money is right, if that is what has happened, just that asking employees to do so may be the only reasonable option left to the directors, after a rapid expansion policy has caught them out more than most with the timing of the pandemic.

The reasonable and fair thing to do is to provide some reward for the risk - not to ask for something for nothing. I am staggered anyone thinks this is acceptable.