Beating the corporate competition

Thanks to funding from Santander, a Lincoln restaurant succeeded in fending off a major corporate competitor

In brief

  • Company turnover: £400,000
  • Sector: Food retail
  • Alexanders is a small restaurant based in Lincoln. It is eight years old and has experienced ups and downs in demand throughout its lifetime.
  • The main challenge was sudden competition from a large chain, when it opened a café nearby and drew away morning coffee drinkers. Alexanders had to adapt to survive and needed finance to do so.
  • Santander approved a £10,000 overdraft, a £10,000 term loan, everyday banking, and merchant services from credit card transaction company Elavon.
  • The speed at which the finance was arranged was important: Alexanders needed money fast as it was losing profits to the new rival.
  • Further improvements included a refit of the restaurant plus a new product line of local produce to takeaway. Customers are now returning.
  • Santander fuelled Alexanders’ business ambitions by moving quickly to provide the finance needed to help this struggling business recover its market share – the business would have potentially floundered under the terms of its incumbent bank.

Serial entrepreneur Sandy McFarlane founded Alexanders restaurant eight years ago and has been battling the vagaries of global and local economies since then. Sandy ventured into uncharted territory by setting up in a new estate in Lincoln and this meant that trade was initially slow. However, the gamble paid off, as successive phases of the development created an increasing local market for the business.

“I set up Alexanders with money from a previous business and it was supposed to be a retirement project,” says Sandy. “Demand was slow in the early days and during really bad weeks we’d struggle to take £2,500, which meant I invested more time and energy into it than planned.

All-day dining

Open from 9am until late, the business focuses on serving a comprehensive menu, from cooked breakfasts and light lunches to the full evening dining experience. “I ploughed a lot of money into the business to keep it going and things gradually improved. We had a really buzzy morning service with a range of customers. Takings soared to about £8,000 a week, which was great for us.”

Alexanders became a focus for the local community and customers ranged from retirees to groups of young mums. The lengthy opening hours and versatile set-up was a formula that promised to create a notable success story in the town, until disaster struck.

Rival ambitions

One of the biggest coffee chains in Britain identified an opportunity for a new café in the area and –despite Sandy’s objections during the consultation phase – it quickly won the right to set up, opening its doors to customers within six weeks.

“That had a massive impact on our morning takings,” explains Sandy. “They have a huge brand and lots of resources and they drew away lots of custom from us. It decimated our bright, buzzy coffee trade and takings dropped to the tune of £1,500 a week.”

Chain reaction

Rather than compete directly with his corporate rival, Sandy decided to invest further in differentiating his business, offering products, services and an overall experience that customers could not get elsewhere. With just a £5,000 overdraft to work with, Sandy turned to his incumbent bank for additional support. When this was declined, he again dipped into savings and started looking for a new banking partner that was prepared to finance the changes. “He walked into a branch of Santander and spoke to the manager, who put him in touch with me,” says David Jackson, Santander Relationship Director for Lincolnshire. “We spoke straight away and arranged to meet within a week. 

“Sandy was really impressed with the speed at which we were able to act. He needed support quickly because cashflow was drying up and he was frustrated with the lack of support from his bank. I visited the business and saw there was footfall: it’s based at the centre of a new housing estate and there was lots of potential. Sandy has plenty of experience in the industry and what he wanted to do wasn’t complicated.”

Quick turnaround

With the clock ticking and Sandy spending his own money on the business’ revamp, Santander arranged a £10,000 business loan and doubled the overdraft facility to £10,000. 

Sandy switched his business banking account to Santander who introduced him to credit card transaction company Elavon, who paid money into Sandy’s bank account far more quickly than his old provider, alleviating pressure on cashflow. “The new credit card transaction service is really good,” says Sandy. “It means money is in the bank the next day instead of four or five days.”

Delivering excellence

The finance package has already helped Alexanders deliver a fresh outlook. Changes include a colourful restaurant refit, with new furniture, a new selection of local products that customers can buy and take away, and a marketing campaign featuring leaflet drops and advertising in the local press.

The changes are making a difference already. “It’s been successful in terms of the new look. We’re gradually clawing customers back and the estate continues to develop so there are new customers arriving too,” says Sandy. “In terms of the service provided by Santander I really couldn’t have asked for more. It’s not an exaggeration to say that they saved my business and now I’m ready for the next phase.”

All lending is subject to status.

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