Choco Loco filed for bankruptcy even with cash assistance – E24

“The cash support scheme was called a gift from heaven package,” says president and co-owner Vibeke Schakenda at the Choco Loco café and specialty store in Fredrikstad.

Until bankruptcy, Choco Loco sold chocolates, macaroons, coconut buns, and handmade cakes.

The company received NOK 28,820 in cash for March, but was nonetheless forced to submit an offer.

– We receive money as a gift from the state, but the money only covered ten percent of our costs. Ten percent is not that much. For us who run from week to week it doesn’t help. We still think it is good that we have received support, but that was not enough, says Schakenda.

E24 has encountered several companies in the same situation, including Interiørhuset Stavanger, Modulpluss from Evje in Aust-Agder, Matglede from Bergen, Pinocchio, children’s and youth clothing in Jessheim and Atelier Kakao in Lillehammer.

The E24 crown special shows that Choco Loco in March reported fixed and unavoidable costs of around NOK 80,000.

– The cash support scheme should cover a little more, although I realize that the state cannot simply invest money either. Wage subsidies instead of layoffs could have helped. I do not know. For our part, at least it got too small. We probably couldn’t have opened the ruler about two meters away in such a small room, says President Schakenda.

– Now we want to finish in the best possible way. Motivation is not at the top right now.

– We order many products for Easter

Choco Loco saw the light of day when General Manager Merethe Sten and her husband Jon Sommer started producing chocolate in the neighboring courtyard of Mormors Café in Old Town in Fredrikstad. In 2013, the doors of a retail store opened in Nygaardsgata, in the center of Fredrikstad.

President Schakenda explains that weak Easter sales in 2020 hit the company hard.

– We had ordered many products in advance. Lots of chocolate and equipment for Easter production, which we couldn’t sell. Easter is like a party for us, much like Christmas. Many of those costs fall outside of the cash support scheme, but you have to buy certain things in advance, she says.

The Stavanger Inner House: – Did nothing

Choco Loco is not the only company listed in the bankruptcy registry and on the list of companies that have received cash assistance. So do the companies Interiørhuset Stavanger and Matglede.

Ståle Nøkling Andersen and the co-inhabitant started an interior store three years ago in downtown Stavanger. In an already difficult market for commodity trading, the crown crisis came with an explosion.

– From one week to the next, sales fell 80 percent, Andersen says.

On April 22, the Stavanger Inner House received NOK 11,978 in cash, based on fixed and unavoidable costs of NOK 34,293. Two weeks later, the store filed for bankruptcy.

– Did you think the cash subsidy would be higher?

– I thought it would be double. For our part, it was nothing, it did not cover the unavoidable expenses we had, says Andersen.

He says they have tried to get help from the banks, but to no avail. The farm owners have explained to Andersen, but it was not.

– We have to be alone in this, the big publicly traded companies receive their own crisis packages, but we receive nothing less.

Food delights: – Very refreshing

President Jonny Heggheim at the Matglede company, which produces a prepared dinner, has a similar story.

The food delight received NOK 13,491 in cash for March after reporting fixed and unavoidable costs of NOK 218,763.

“We received so little cash support that I had nothing to say,” says Heggheim.

– Was it the expectation that it would be higher?

– Yes, we thought it would be much higher. Even with an amount ten times greater than what we were paid, it would not have been enough.

Heggheim says he even invested more money in the company in February to simplify production.

– I think the cash support is very encouraging. When our rent is NOK 102,000 and the electric bill is 50,000, the state amount helps very little, says Heggheim.

Already hard

Choco Loco President Schakenda admits that the company did not have much to go on.

Choco Loco’s turnover has increased in recent years to more than 5 million in 2019, but the annual result fell to minus 455,000 last year.

The debtor has stated that the total debt is now just over SEK 1 million, and that there are hardly any securities in the company, according to Fredrikstad Blad.

– We didn’t have a big buffer initially. We were in a somewhat special situation. When we bought a coffee, the renovation took longer than planned, so we lost many months. We also lost a lot of money on major water damage. There has also been construction outside the building, so this past summer it was a construction site that made it difficult to use outdoor seating, Schakenda tells E24.

– But we were on the way to change despite having a deficit last year. We had gains in January and February, but nothing to continue, he summarizes.

Andersen in Stavanger’s inner house also says there was already a hard roof for them, even before the crown crisis.

– There are hardly any shops left in the center of Stavanger, only pubs and restaurants. It’s been difficult from the start, it’s a tough market, but it’s not just the crown crisis that’s why it didn’t work anymore, says the store owner.

Work: – Cash support does not save companies

CEO Ivar Horneland Kristensen of the employers’ organization Virke says the crown crisis is demanding for everyone, and that some companies must have been tough even before the crisis.

He emphasizes that cash aid only covers a proportion of companies’ costs, and that companies cannot receive cash aid if they are already bankrupt.

– The scheme is intended to help companies stay afloat during the crisis, but cash support does not save them. It is not intended to live in dying business. This is why it is so important that more people return to normal operation again. It is only then that one can assess whether the company is viable and can handle its own situation, says Kristensen.

The director of forestry believes bankruptcy figures are still relatively low, but says it will be interesting to follow developments in the fall.

– It should not be avoided that we also see some bankruptcies. Our numbers scare us to that, but more importantly, as many companies as possible return to normal operation, says Kristensen.

– Do you fear that the numbers will increase in the future?

– If we now see a bankruptcy race ahead, we would be very concerned, but we hope it does not happen.

– Does the cash support hit well enough? Or do you want to make changes?

– We have proposed several adjustments so that the cash support scheme reaches more. One suggestion is to drop the remaining NOK 5,000 deductible to affect smaller businesses, while other proposals focus on things like labor costs, inventories, and group restrictions.

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