Furlough scheme hits sweet spot as lifeline for UK businesses

Produced in Partnership with the UK Government

The UK government’s business support during the Coronavirus lockdown is exemplified by the furlough scheme, allowing companies to scale down during a period of reduced demand. An Edinburgh pâtissiere explains how it helped her.

The French macaron is a meringue-based almond confection demanding mastery in the making. It comes in dozens of flavours and exquisite colours – a staple of celebrations, afternoon tea and gifting. In the lockdown, when treats and small pleasures were vital, the macaron simply had to go on.

Rachel Hanretty, of Mademoiselle Macaron, fell in love with macarons while living in Paris. She enrolled at the Alain Ducasse cookery school to learn how to make macarons.

“They’re just so pretty,” she says. “They’re so delicate. And they’re quite hard to make because there’s a lot that can go wrong.”

Once Rachel returned to Edinburgh and noticed a gap in the market, she decided to set up her very own macaron business. “I wanted to have that little bit of Paris with me,” she says. “I focused on taste-bud tourism, so when you eat these macarons you’re transported to the Champs-Élysées.”

She sold from home and food-markets for nine months before taking the plunge with her own storefront. “It had a view of the castle. It was beautiful,” she recalls.

But in 2015 Rachel began to sell her macarons online. Being able to dispatch product across the country, while often taking large bookings from wholesalers and weddings, made Rachel see that a physical shop was unnecessary. “If lockdown has taught us anything, it’s that bricks and mortar make you vulnerable,” she adds.

The company, which employs eight people, lost all their wholesale customers overnight due to Coronavirus. “It was really scary,” she says. “All the weddings, all the wholesale customers, and the bulk of our production disappeared. And then, of course, you have phone calls from people wanting to cancel future orders and refunds. We entered the cash flow situation whereby the wholesale customers stopped paying the invoices. And we’ve now got over £30,000 worth of overdue invoices.”

This did not prove fatal to the business because of the “lockdown effect”: Mademoiselle Macaron began to see online orders shoot up.

“We still have that debt from the large companies, and they don’t seem to be interested in addressing it anytime soon,” Rachel says. “It’s 120 days overdue. But we have an increase in online sales. It’s really interesting.”

What is she afraid of? “The unpaid debt and whether or not they’ll really ever be able to pay it back.”

It was the UK Government’s furlough scheme that kept the operation going. “The furlough scheme has been a real lifeline in this time of crisis,” she says. “I asked people to volunteer for furlough. So the people who wanted to and were happy to, they were the first ones to go. I cried.”

It was difficult, with some staff worried for their jobs and others scared to leave home for work, yet Rachel explains in the end her team came to terms with what being furloughed actually meant, and despite the drop in income, even felt happy about it.

“I just felt like I was stuck in this moral quandary,” she says. “Do we keep going and safeguard the business, so there’s a business for everyone to come back to? Or do I shut down because I can see that this is causing people severe anguish?”

She furloughed three quarters of her staff for six weeks, but running the business with just two employees was tough. It was refrigeration that proved the charm. “We managed to recall stock that was sitting in hospitality clients’ freezers. That is the only reason we survived. What you make, you keep in the freezer and you use when you need to. It’s not like it’s a cupcake, if we were perishable goods we would never have survived or scaled up to where we are.”

“The furlough scheme let us preserve the team, and the business. But now, for me, the big test is: how do we keep this level of orders online?”

No one knows, but the national online surge in demand will not recede quickly. And one thing the lockdown has educated all companies in, is the need to adapt operations quickly if you’re reliant on outside funding – and who isn’t?

The kitchen is full again now at Mademoiselle Macaron, and they have adjusted to social distancing by splitting the staff and adjusting shift patterns. “We have a big kitchen so the space isn’t the issue. It’s more that we wanted to keep the team safe,” adds Rachel.

In many ways the pandemic has been a catastrophe, but it is important to see the cloud’s silver lining: Mademoiselle Macaron’s online business is so healthy that Rachel thinks she will need to hire extra staff on temporary contracts. She is even trying to develop a college training program for the young. “They’ve been so much more affected, and it’s just something close to my heart,” she says. “All the graduate positions I applied to when I finished university basically told us that because of the impact of the financial crash, they would never take on as many graduates than they used to.

“I feel that the business is now emerging from a different global crisis.”

If history names the lockdown “The Great Confinement”, as some believe, then part of its story will be the desire for small pleasures – tastes and sensations that let us roam afar while shut up in our homes. For that, Rachel’s brightly-coloured macarons, with their Parisian ganache fillings, are the magic carpet that carries us away.

To check whether you are eligible for business support, visit: www.gov.uk/business-coronavirus-support-finder

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