Good afternoon Team Donohoe,
It has now been almost seven weeks since the coronavirus pandemic was declared, and our lives have been forever changed. None of us have ever experienced a continuous catastrophic event like COVID-19. However, over the past 136 years, our company has made it through many difficult times, including the 1918 Flu Pandemic, the Great Depression of the 1930s, World Wars I & II, and most recently 9/11 and the Great Recession.
Fortunately, we have a lot going for us:
- Balance Sheet. We began the year with a strong balance sheet with historically high cash reserves. Cash is being used to maintain payroll and to sustain our businesses.
- Conservative Philosophy. Our conservative, risk-averse business philosophy, which has guided our investment and business strategies over the company’s history, has minimized our downside exposure.
- Business Diversification. The diversification of our five businesses, plus well-capitalized real estate interests, provide distinct income streams. All our income streams have been impacted somewhat by COVID-19, with our hospitality group bearing the brunt of the impact. However, a principal reason for diversified business lines is to prevent devastating losses on one division from imperiling the company as a whole, and currently, that strategy is proving sound.
- Investment in Technology. Since our HQ move in the summer of 2016, we have invested over $3 Million in technology upgrades with new server rooms, hardware, software, and significant migration to cloud-based technologies. These investments are paying off as we have successfully transitioned to work-from-home, telecommuting, and physical distancing environments.
Because we did not and still do not know how long the health, social and economic effects of COVID-19 will last, we implemented the first round of cost-cutting measures in mid-March. Those measures included compensation reductions for senior leadership, cancellation of the annual picnic, and other holiday expenditures, as well as temporary elimination of the employer match to the 401(k). In mid-April, a second round of cost-cutting measures were implemented, which included broader compensation reductions affecting most of the workforce, including senior leadership, as well as some layoffs and furloughs, principally in the hardest-hit hospitality group. When making these difficult decisions, our leadership team prioritized keeping people employed to the extent possible, electing to implement broad compensation reductions in lieu of larger numbers of layoffs and furloughs.
The compensation, benefits reductions, and furloughs enacted to date are meant to be temporary. For the benefit of everyone, cost containment measures remain essential for us to weather this storm. While none of us understand the magnitude and duration of this COVID-19 crisis, we do know that these cost-containment measures are essential for our collective survival until “normal” returns to our businesses. We will continue to review the financial health of the company on a weekly basis. Our company has a strong foundation and an incredibly talented, multi-disciplined workforce. We could not be better prepared to ride out this storm.
Until then, please continue to take care of our customers, guests, and partners, and most importantly, take care of yourself, your neighbors, and your loved ones.
