RLH Corp. announced Thursday a series of organizational changes and cost-cutting measures it is taking in light of the COVID-19 pandemic. These measures accelerate cost-cutting measures the company began at the end of 2019 and broaden their scope.
RLH Corp. is reducing its corporate workforce roughly 40 percent to approximately 100 full-time-equivalent employees, building on recent cost-cutting workforce reductions. The company expects to record severance expenses of approximately $600,000 related to this reduction in force.
Additionally, the company is enforcing compensation reductions for virtually all associates. John Russell, the company’s interim CEO, will take a 25 percent reduction in compensation. Most remaining staff, from EVP to more junior staff levels, will be subject to compensation costs between 5 percent and 25 percent. The company’s board members also have agreed to a 25 percent reduction in their base retainer for the second quarter.
The company is closing its Spokane, Wash., office and announced it has successfully subleased its surplus office space in Denver. It estimated cost savings related to these actions will total $300,000 for the remainder of 2020 and $500,000 on an annualized basis.
RLH Corp. is reducing its 2020 capital expenditures to include only essential projects for an estimated savings of $2.9 million. Additional key money commitments for franchisees also will be reduced.
Relief for Franchisees
“The safety of our guests and team members around the country is a top priority,” Russell said in a statement. “We have provided our franchisees guidelines and safety recommendations by the U.S. Centers for Disease Control and Prevention detailing how to identify COVID-19 symptoms and mitigate its transmission. We recognize the pandemic has had a significant financial impact on our franchisees. In response, we have taken a number of measures to alleviate some of the challenges faced by our owners. We have also begun an investigation into the applicability of the CARES Act, and how it might benefit both RLHC and our franchisees.”
Measures taken to support RLH Corp. franchisees include:
- Royalty and marketing fee deferral program for all brands
- Temporary fee reductions for review responses, guest relations fees and certain other fees
- Delaying capital intensive brand standards
- Providing information on new legislative relief that may be available
In response to the pandemic, RLH Corp.’s board of directors suspended the company’s search for a permanent CEO. Russell, interim CEO at the company since December, will continue to lead the organization through its current economic challenges.
Additionally, the company recently made two high level appointments, naming Nate Troup, the company’s former chief accounting officer, CFO; and Paul Moerner, formerly senior director of technical accounting and reporting, chief accounting officer. The company’s now former CFO, Julie Shiflett, has left RLH Corp. “to pursue other interests.”