Recovering after a disaster - Mediterranean Food Company

Although the popular pizzeria and delicatessen had stock fall off the shelves in September, and again on Boxing Day, it escaped Canterbury’s first two major shakes in 2010 relatively unscathed. But 22nd February 2011 was a game changer for the Mediterranean Food Company and many other businesses based in Christchurch’s central business district.

They were suddenly directly and personally affected by a large-scale natural disaster that wrecked buildings and shattered lives. We chat to Nik Mavromatis, co-owner of the Mediterranean Food Company with Gerald Crotty, to find how they’ve managed to get their business back up and running, and what they’ve learnt in hindsight.

On this page

• Assessing the damage
• Dealing with frustrations
• Re-opening and getting customers back
• Top tips
• Business drill-down

Assessing the damage

The Mediterranean Food Company effectively combines two businesses, a retail deli selling tasty Mediterranean foods and ingredients, and a café selling thin-crust pizzas, Italian ice creams and more. Despite stock damage caused by the early Saturday morning earthquake in September 2010, the shop floor was cleaned up with the help of staff and customers and the Tuam Street deli opened for business on Monday morning.

“The café was a lot more difficult to re-open. We had to get clarity on water contamination issues… September wasn’t a small event, but compared with February, it was,” says Nik Mavromatis.

“We came back and did record numbers. October, November and December were all record months for us.”

The Boxing Day shake caused more stock loss, but February was a disaster. “It wasn’t the shaking that caused all the problems. If we’d just dealt with an earthquake it would have been the same as September, we would’ve been open in a couple of weeks, maybe.”

“There’s no structural damage to our building whatsoever; the liquefaction is what did us in. Probably 80% of our insurance claim for stock loss was caused by liquefaction,” says Nik.

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Dealing with frustrations

“I wasn’t prepared for how tough it would be to deal with the authorities.” Despite having paid for a structural engineer to assess and clear the premises, Nik – like many other business owners – wasn’t allowed in to get items out of chillers or access payroll records to pay staff.

“From a business perspective it was very, very frustrating. I wasn’t going to put a deck chair under the Grand Chancellor, I just wanted to get certain items out,” says Nik, explaining the frustrations of having no access to any business records.

“We have another warehouse in Montreal Street that does the wholesale side of the business. That’s our head office and I keep a back-up of all our payroll and things like that there in case of fire. You don’t expect to have nothing accessible, and no power at home. We didn’t even have the information we needed to pay wages.”

“BNZ was very supportive. They worked with us and helped by repeating the payroll from the previous week. It wasn’t accurate but as a stopgap it was good enough – people needed money to survive.

“We made the call, fairly early, to make people redundant. I knew this wasn’t going to be a quick fix, and the Government support package was the same whether people were employed or not. It was a tough decision but it seemed pointless to drag it out,” says Nik.

“The mess was pretty horrific. It took us six weeks to get the place accessible and clean again. It was not the things thrown off shelves, it was the liquefaction – we took 30 tonnes of silt off the site.”

Security was also an issue. “Urban Search and Rescue cut a hole in our garage door and we had to secure it with pieces of wood, bolted in. We didn’t have power so I couldn’t install a new garage door. We had to undo the bolts everyday – it took about half an hour to open and close the garage but I didn’t have a choice. Otherwise, you weren’t secure – and there was heaps of looting,” says Nik.

“Our insurers, Vero, have been good to us. I wouldn’t say they’ve been speedy, but they’ve been pretty fair and straight up in how they’ve dealt with us. Having an established broker who actually carries some weight with the insurance company has made it much easier – they know the path that you need to take to get certain things going.”

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Re-opening and getting customers back

“I wanted to open and start trading as soon as possible. We just had to find solutions and do what we could each day. Re-opening versus claiming business interruption insurance isn’t going to bring us any extra income but in terms of keeping customers happy, it’s very important. Plus, it’s what I want to be doing – it’s why I’m in business,” says Nik.

“When we re-opened, I had to make sure there wasn’t any possibility of staff or customers getting hurt. Staff want to be safe, I want to be safe… you’ve got to provide the security.

“The ability to let customers know that we are open and what days we’re open for business was very important to us. We used our email database and Facebook to contact people directly, rather than rely on adverts in the paper. If we didn’t have a database and the ability to contact customers directly by email and get their attention, our business would’ve really suffered,” says Nik.

Business is down about 50% and Nik is still coming across people who are unaware they’re open for business.

“A good relationship with our landlord has been really important. It’s all those little things you just take for granted – having good relationships with electricians, plumbers…

“You’ve got to be prepared to stand on your own two feet. You can’t expect the Government or anyone else to come running after you. We’ve had some help from Canterbury Recovery and the Chamber of Commerce – they helped us get road signs changed when the sign said the road was closed, even though it was open. Aside from that, we’ve had to look after ourselves, and network with other small businesses, to get things back to normal,” says Nik.

“There are a lot of unexpected expenses that we’ve had to pay for upfront, before we can claim from insurance. We’re very lucky to have a good relationship with our bank. They were prepared to support us to get us through.”

Nik is also dealing with unexpected supply issues. “We lost an awful lot of pasta due to liquefaction damage, and our next shipment is not going to be here until September.”

In addition, ordering is no longer a matter of seeing that sales are tracking slightly higher and repeating orders, plus a certain percentage – it’s now a lot more complicated with business down 50% and the café still closed, explains Nik.

He’d hoped to open the café in September but a bottleneck with getting the engineer’s report has delayed this. It’ll take six weeks from giving the go-ahead for the contractors to re-do the café floor and premises. But before that can start, Nik needs to submit a claim to his insurance company, and to do that, he needs that elusive engineer’s report.

Notwithstanding all these setbacks, the Mediterranean Food Company is rearing to go and plans to re-open the café side of their business just as soon as they can. Hopefully, they’ll be allowed to do this before all their regular customers drift off and forget about them.

Having lived through several earthquakes, Nik, like many other Christchurch business owners, has some good advice and tips to help your business survive a disaster or earthquake.

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Top tips

• “People tell you to back up your information and you go, ‘Yeah, I know’, but you really need to back up. Not the type of back-up you keep in the office in case the computer goes down. You need to store your back-up at a separate site. In an emergency, you need to go at the drop of a hat – there’s no chance to save things, you’ve just got to get out of there.”
• “You need to be prepared. We’d talked to staff about what would happen in the event of a fire, but not an earthquake. How do you deal with injured people? Do you have an evacuation plan? What about contacting staff at home, or next of kin?”
• “Prepare your business for earthquakes. Make sure all your items are secure and safe and can’t fall down on staff or customers. We had a couple of pallet units that collapsed, and we’re very lucky we didn’t have people out there at the time.”
• “Make sure you have adequate insurance. My business partner did a top-notch job of doing that, but a good friend of mine was insured with a company that went bung in Queenstown – they lost everything. If you can’t afford to pay business interruption insurance, you probably can’t afford to be in business.”
• “Have enough ready cash in the bank to carry your business for a while. Getting paid out by insurance isn’t going to be a speedy thing in a disaster. Money isn’t going to pop-up when you need it – you’ve got to be able to look after yourself for a while.”

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Business drill-down