The management of the Bexhill Colonnade project is to be the subject of a public review, after reports the council-run restaurant lost more than £56,000 in ten weeks.
At a meeting on Monday (November 5), Rother District Council’s Conservative cabinet considered a report updating members on a project to refurbish the seafront landmark, creating four retail units and a council-run restaurant.
First published last week, the report revealed the restaurant had lost £56,785 between July 21 and the end of September, prompting calls for a ‘detailed review’ from Liberal Democrat councillors Kathryn Field and Kevin Dixon.
Introducing the report on Monday, cabinet member for finance Lord Ampthill proposed an amendment be added requesting the council’s overview and scrutiny committee review the project.
He said: “The trouble with the Colonnade is that we were not attracting people to operate the facility. We did not want it to be left unattended during the summer months and the trouble was it was not fitted out.
“These costs should be looked at as an investment in some ways. They are very high but if we look at them as an investment then in due course it should be possible to get something out of it back.”
The amendment was welcomed by Cllr Field, who said: “Before you all accuse me of being negative and unimaginative can I just say that my only concern in this whole matter is the public purse. I think that is increasingly important as we move to the next budget cycle, where we know we will have to make more cuts.
“I think it is indisputable that the town does need an iconic destination restaurant. It would be good for the town and it would be really good for the district.
“But I think the plans we have here for the existing offer don’t even get close to that. I think the implementation also has been shown to be falling short of even the limited plans that we do have.”
Cllr Field also spoke about the details of the report, raising concerns about how much the council could expect to recoup from the sale of furniture and fittings. In the report officers had valued the fittings and furniture at £62,065 , setting it aside from the final fitting out costs of £288,023.
Cllr Field also raised concerns about a recommendation for the council to take on the final net loss of the Colonnade Bexhill Ltd – the council-owned company used for the restaurant trading. This recommendation would be subject to the restaurant building being leased to a private tenant.
Cllr Field said: “When I raised the issue of trading losses in May I was told it would not be appropriate for the public purse to carry any such losses and yet we have a recommendation which talks about writing off losses.
“I don’t quite understand how you square that circle.”
In response, the council’s lead officer for finance and welfare Robin Vennard said: “Previously we thought the restaurant would continue for a number of years before hopefully disposing of it to a tenant, with any losses incurred in the first year to be recovered in future years’ profits.
“The fact we have found a tenant early means we have to crystallize those losses in terms of winding up that company. Those losses will return to this council.”
While officers said it was too early to say for certain, members were told the new tenant is expected to take over the restaurant building ‘before Christmas’.
Officers also attributed much of the trading losses to a delay in connecting gas supply to the building. Members were told the delays were outside of the council’s control and related to a gas pipe being incorrectly registered to an address elsewhere in the town.
Officers said the council is in the process of taking legal advice on a potential compensation claim and has submitted a complaint to the energy ombudsman.
Council leader Carl Maynard said: “If you look at the figures you will see that the bigger part of these costs is the fitting out of the building. We will get the money back from fitting out the building because we will have a building which we are successfully letting out.
“It will see a yearly income of around £35,000. That is the net benefit for this council. That is a return of 10 per cent.
“We are talking about an iconic building in a key site in Bexhill which will increase footfall in a similar way to after the De La Warr Pavillion was refurbished and the seafront works were carried out.
“This is good for Bexhill and this is good our regeneration opportunities across Rother.”