KLE restaurant business hangs tough, but company continues to bleed
KLE group's nightclub revenue was down by half at midyear, resulting from the disposal of Fiction Marketplace, but the company's restaurant business increased sales in the same period.
The entertainment company's turnover dipped from $116 million to $98 million, but the Usain Bolt's Tracks & Records eatery delivered five per cent more to account for $79 million of revenue at half-year June 2015, up from $75 million the previous year.
Sales in the second quarter, $51m, was 11 per cent better than the first quarter's $47m showing, but three per cent below the comparative April-June 2014 quarter.
The sale of Fiction Nightclub reduced the book value of KLE's company's nightclub assets from $100 million to $72 million. Total assets are down from $214 million to $173 million.
KLE sold Fiction Nightclub at the close of 2014 to David Annakie's Linkup Media Group, which has rebranded the operation as Fiction Fantasy. Additionally, the entertainment company lost business when partner Supreme Ventures Limited closed down its Odyssey Gaming Lounge at Marketplace in December.
Lower operating costs
While this translated to lower revenue, it also meant a reduction in operating costs, which fell from $11 million to $5.2 million for the year to June. However, the savings on operations fell short of what KLE needed to improve its midline and bottom line profit.
Its loss on operations at half-year tripled to $19 million, while its losses after tax grew from $21 million, or 21 cents per share, to $35 million, or 35 cents per share.
The restaurant segment contributed $7 million of losses, while the nightclub operation bled $16 million. The rest of the losses came from the company's corporate segment.
KLE continues to bank on plans to launch a franchising programme, which has been four years in the making for Tracks & Records, to expand and turn around the business.
Meantime, KLE says it remains focused on driving revenues through new menu offerings and online ordering, for example, and reducing costs.
The summer period has seen some price
"It's not a blanket adjustment across the board. We just had to move certain items in areas that we were hit the worst," said KLE Group CEO Gary Matalon.
"Our objective is still to maintain our position of offering value for money, recognising that there is a full, competitive landscape...," he said.
Regarding the launch of the franchising programme, Matalon said the company was "coming with a major announcement soon that will significantly change the landscape", but did not say how soon that would happen.
The KLE Group also operates Famous Nightclub in Portmore, and is an investor in the Bessa Villa development in St Mary.