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Lavu Inc. abandons Downtown digs

Lavu’s former Downtown Albuquerque office. (Dean Hanson/Journal)

Copyright © 2021 Albuquerque Journal

Lavu Inc. vacated its luxury suite Downtown this week for a much smaller Uptown space after facing financial difficulties in the pandemic.

The company’s new 3,000-square-foot office is nearly six times smaller than the 17,700-square-foot space it previously leased at the U.S. Eagle Building next to Albuquerque’s Central Plaza. It moved into that Downtown space only two years ago, backed by state approval of up to $270,000 in Local Economic Development Act funding and much fanfare by local officials celebrating the success of the homegrown technology startup.

But the pandemic has severely cut into company revenues since March, leading to a major reduction in staff, which conflicts with its LEDA funding, plus difficulties paying its monthly rent Downtown.

‘Tough year’

Lavu, which launched in 2010, offers a subscription-based point-of-sale software system that allows restaurants to manage internal operations online with mobile devices like iPads and smartphones. The software facilitates everything from taking customers’ orders using instantaneous communications with kitchen staff to automatic logging and processing for payment at a tablet-based register.

But the restaurant industry has suffered immensely in the pandemic, and it’s hit Lavu’s bottom line pretty significantly.

“It’s been a tough year for us, and for restaurants in general,” Lavu CEO Saleem Khatri told the Journal.

The company workforce dropped from about 75 in Albuquerque before the coronavirus hit to about 27 now. But Lavu is slowly recovering, and it’s hired back some staff, Khatri said.

“We’ve brought back some people that we laid off in March as a result of the coronavirus,” he said. “We want to continue to grow in Albuquerque, and we remain deeply committed to the city and the people here. We haven’t left the state and we don’t intend to – we just packed up and moved Uptown.”

The move will cut expenses. And, given the reduction in staff, Lavu doesn’t currently need all the space it occupied Downtown, said Jacquelyn Turcich, the company’s Albuquerque general manager and human resources director.

“About 95% of our workforce has operated remotely from home since March, and they’ll continue to do so going forward,” Turcich told the Journal. “Our new space in Uptown has individual offices with windows and glass doors to maintain social distancing to provide a good, safe, flexible environment for employees when they come back. We just moved in this week.”

Landlord suit

The company faced a lawsuit that its landlord, Albuquerque Plaza Office Investment, filed in Bernalillo County’s 2nd Judicial District Court in August to remove Lavu from its leased space Downtown for nonpayment of rent. But both sides have since opened settlement negotiations.

“We reached an agreement for us to leave in an amicable fashion,” Khatri said. “We have a stipulated agreement with the landlord that was filed with the court.”

Negotiations on back payments for the Downtown lease continue and are progressing well, Khatri added.

Albuquerque law firm Rhodes & Salmon, PC, which represented the landlord in the legal complaint, did not return a call from the Journal on Friday.

Clawback waiver?

Lavu is also awaiting official word from the state Economic Development Department on a request it made last May for a waiver from clawback provisions included in its LEDA agreement that could be triggered by failure to achieve agreed-on employment levels as a result of the pandemic. The agreement includes a clause that could allow a waiver if “business climate changes” beyond company control derail progress on employment levels.

Lavu needed to employ 114 people by June 30, 2020, under LEDA targets, but by May, its workforce had fallen to less than one-fifth that level. Under clawback penalties, it could be forced to reimburse $100,000 – the amount Lavu spent to upgrade the Downtown office – from the $270,000 in LEDA funding approved by the state.

The Economic Development Department appears amenable to the waiver request.

“There has not been a formal written response yet from EDD, but we have told them verbally that we are in agreement with their assessment about business climate,” EDD spokesman Bruce Krasnow told the Journal in an email Friday. “… The EDD has accepted that the business climate has changed and does not at this point think it is in the best interest of taxpayers to clawback the $100,000 in LEDA that has been paid to this company. Those dollars have been invested in the tenant property and could very well benefit future economic activity.”

Bernalillo County, the LEDA fiscal agent, is awaiting formal word from the EDD, said county spokesman Tom Thorpe.

“We are aware of the situation with Lavu and we’re waiting for direction from the state on how they want to proceed,” Thorpe told the Journal.

Outlook optimistic

Lavu, meanwhile, is upbeat about prospects for the new year. The company served customers in about 100 countries before the pandemic, and it’s worked to retain many of them through a credit-relief program for point-of-service subscriptions to continue through the coronavirus.

It also pivoted its business strategy to prioritize an online ordering and delivery system it offers through MenuDrive, a Pennsylvania-based company that Lavu acquired in 2019.

The MenuDrive platform allows food establishments to almost instantaneously begin online ordering and delivery free of charge, with only a 4.5% commission that includes delivery service by a partner company. That compares to 35-40% commissions with companies like UberEats.

Lavu installed MenuDrive for nearly 4,000 restaurants last year, pushing MenuDrive transaction volume up 45 times higher than before the pandemic, Turcich said.

“MenuDrive has helped us weather the storm in 2020,” Turcich said. “We’ll continue to focus primarily on that over the next 12 months. We’re enthusiastic about the opportunity to grow the MenuDrive service a lot more this year.”

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