March 1, 2023 - Update
I’m sure that you’re all very curious as to what is happening with our seemingly elusive kitchen renovation. At our last update in September, we told you the kitchen would be completed by now.
That’s obviously not happened. Yes, the demolition of the old kitchen and asbestos containment did happen on schedule back in late September as we indicated at that time. And, in our report to the Congregation in February 2022, we had recommended that due to the ongoing price increases and long lead times issues in the construction world, that the start of this project be delayed until either late 2022 or spring of 2023. So here we are at the end of February 2023 with Spring around the corner. And here is the current graph of North American construction commodity costs. You can see the cooling and levelling off of . From one year ago March 2022 construction commodity to January 2023 costs are down 23%. Unfortunately this does not mean that our costs are down by that much as we are dealing with construction manufactured products.
You may recall that we had made the decision to proceed with a non-commercial but upgraded residential kitchen and we were hopeful of implementing a phased approach so that something could begin with this renovation.
However, since then our plans have taken a most interesting turn, we can say it’s a development that Anne, Sheila and I are quite excited about. And that is to change to a fully commercial kitchen for significant revenue purposes as well as to serve the churches needs.
Providentially we believe, Anne was introduced in late 2022 to a restaurant and commercial kitchen consultant by the name of Guru, yes, his name ironically is Guru, who has been working in the dramatically changed restaurant environment, changes that happened due to Covid.
He presented several revenue generating options to the renovation team including a ghost kitchen concept, a breakfast only facility concept, and a much simpler and more attractive option where the church, commercial kitchen and annex could be rented out for numerous events on a year-round basis for weddings, funerals and corporate events. This seemed to make sense where a new kitchen could not only serve the churches minimal 2-3 hours per week needs but could become a more active commercial kitchen that could generate significant income the whole year round. Central to this the new concept and its rentability is Hillhurst’s attractive full use facility with a commercial kitchen and its central location.
This new revenue-based approach does not change the phased approach to the overall kitchen and annex renovation.
Sheila will now give us an update of where we now are with the Kitchen and the exterior Lift.
1. Kitchen Update and Next Steps
As John mentioned earlier the kitchen has been demolished and asbestos issued addressed. With this new direction for a commercial grade kitchen – we have identified what changes need to be made and are assembling the associated costs of those changes. There will be changes to some of the appliances and finishes but the overall layout doesn’t change. The cabinets in the Kitchen will be a combination of some closed cupboards for the Church’s storage and open shelves which are more useful for a rental situation. The Project Team will be updating their drawings to address the added mechanical and electrical needs and to apply for a Building Permit for this Phase. With this new direction - the schedule is to obtain final approval of the layout and have the drawings completed by end of March and then obtain the Building Permit by end of April and begin construction in early May. Construction is expected to take approximately 4 months.
3. Washroom Upgrade Schedule
We are also in the early stages of investigation to renovate the washrooms earlier than planned. New washrooms are a key component to making the area desirable for potential rentals. This would involve moving some components from the Phase 2 construction ahead in the timeframe.
4. Exterior Lift Update and Next Steps
The Project Team has been in conversations with the City of Calgary since last October regarding release of the Building Permit for this Lift. Our Architect is working to answer all the City Planner’s questions and is hoping to have the Permit released in the very near future. The construction time frame is approximately 2 ½ month assuming that delivery time for the Lift is 8 weeks. Construction would begin in April 2023 with the excavation and pouring of the concrete pad.
5. Financial Analysis
Jim Wilson is a long-time congregant here and we are so pleased that he has joined our renovation team. He is very familiar with the church’s finances and is most qualified with his CFO background to work on the numbers side of the renovation. He has done a financial analysis of the cost increase required for the commercial kitchen and the anticipated revenue that would result. With the newness of the commercial kitchen concept, we do not yet have the detailed cost estimate, so an assumption was made. In the model that Jim used we assumed an extra cost of 250K to go from the enhanced residential kitchen we priced to a fully commercial one. The payback on this increase would be in the range of 3.7 to 4.7 years based on 35 events and 90 K annually.
Questions that may come
1. A ghost kitchen is a virtual restaurant operating as a digital storefront, with a few back-of-house staff members working on fulfilling online orders the renting of our full facility.