Bmgt 440 Be Our Guest Case Analysis

Blake Hinckley

BMGT 440 Be Our Guest Case Analysis

Due: 9/11/2018

        Be Our Guest, Inc. was founded in 1983 and initially provided temporary wait-staff and other services to catering companies, but the firm later started to rent tables, chairs, and other equipment to the caterers. The main goal of Be Our Guest, Inc., I believe, is to review the borrowing relationship and discuss renewal of the company’s credit line that was set to expire shortly with Anne Granger, Vice President at State Street Bank. At the end of 1997, Be Our Guest had a fully used line of credit of $140,000 and a term loan with an outstanding balance of $318,000 due over the next four years; they were hoping to figure out the best way to pay as well as figure out their future as a company during the meeting. In addition, Be Our Guest wants to be prepared for future growth as they prepare to potentially expand through an acquisition in a nearby community or by expanding their product line.

        Before the meeting, Be Our Guest, based on their current outstanding loan balance and fully used line of credit, was hoping to figure out how large of a line of credit to request for 1998. Along with this, they were debating whether or not some of their borrowing should be shifted from short-term borrowing to the more permanent financing provided by a term loan. Finally, they would investigate requesting adjustments in the covenants imposed by the bank based on their recent success.

        Be Our Guest has a long history of growth and success since their inception in 1983. In 1988, the food industry in Boston sponsored a major fund-raising event at the Boston Garden, where Be Our Guest contributed the equipment for several of the catering firms. Revenues later reached $1 million in 1991, and grew rapidly to $2.7 million in 1997, this growth led along with their active involvement in the community led to The Boston Chamber of Commerce selecting Be Our Guest as the Small Business Firm of the Year in 1997. In addition to strong numbers, Be Our Guest provided good service and had great relationships with not only their customers, but also State Street Bank and Anne Granger. She stated that she was impressed “by the quality of management and the profitable growth of the firm,” (4). In addition, she added that seasonality presented a challenge to Be Our Guest, but Al Lovata openly discussed the risks involved with her, providing an atmosphere of trust between the two.