Client
Catering and accommodation operation within an industrial contracting group, $6.5M revenue
Problem
Near-zero margin, no formal commercial structure, and external revenue operating outside permit conditions, creating material regulatory exposure unknown to the parent group
Services
Fractional CFO engagement to resolve regulatory exposure, design a formal SLA and pricing model, build site-level cost and occupancy models, and establish the operation as a standalone, governed business unit
Results
- Identified and resolved regulatory exposure before intervention, with no disruption to active projects
- Rebuilt gross margin from 2% to a budgeted 15% through structured pricing and cost control
- Restructured external revenue into an $5M compliant and scalable program serving remote industrial contractors on a properly authorized basis
- Established the operation as a standalone, financeable business unit with its own P&L and governance
Full Case Study
The situation
The operation had been running for years. It fed the workforce. It housed the crews. It supported active project sites across multiple locations.
From the parent group’s perspective, it worked.
Nobody had evaluated it as a business.
When a Fractional CFO engagement began as part of a wider group restructuring, the first financial review identified three issues. Two were financial. The third kept everyone up at night.
The challenge
The financial model did not exist.
The operation generated $6.5M in revenue against $6.4M in cost. Approximately 2% gross margin. That number was not the result of a pricing strategy. It was whatever remained after costs were pooled and allocated through a process nobody had formally designed.
There was no SLA between the operation and the parent group. No agreed pricing. No documented commercial relationship of any kind.
There was no visibility into breakeven occupancy, no forward model connecting project schedules to camp demand, and no framework for evaluating whether expanding capacity at a given location made financial sense.
Then the third finding.
A portion of the operation’s external revenue came from housing third-party contractor staff at project sites. The land use permits governing those facilities authorized accommodation for the parent group’s own employees only. Leadership had not known. The review found it before anyone else did.
What was at risk
The revenue tied to external accommodation was under $2M. The operational exposure behind it was significantly larger.
If the issue had surfaced through a regulator rather than an internal financial review, the consequences would not have been limited to the catering operation. Operating rights at active project sites could have been affected. The parent group’s ability to perform on live contracts could have been disrupted simultaneously.
The financial underperformance was material. The regulatory exposure was critical.
What Wefinx did
Wefinx led the engagement working alongside operational management and the group’s leadership team.
The first priority was not financial. It was the exposure.
External accommodation arrangements were reviewed immediately against permit conditions. Contracts carrying unauthorized use risk were identified, quantified, and escalated to group leadership within the first weeks. Over the following months the arrangements were restructured. Contracts that could be brought within the permit framework were renegotiated on that basis. Those that could not were wound down in an orderly way before creating a regulatory event. The exposure was closed before it materialized.
With compliance addressed, the financial model was built.
A site-level cost structure was developed covering staffing, food production, accommodation, utilities, and overhead allocation by location. Breakeven occupancy rates were established for each site.
A formal SLA was designed and implemented between the operation and the parent group, setting internal pricing at a level that covered costs and reflected the actual economics of running the facilities.
An occupancy-driven financial model connected project timelines to camp demand at each site, producing forward revenue projections grounded in actual project schedules. The first formal budget was built with defined revenue, cost, and occupancy targets showing the path from 52% average occupancy to a budgeted 66%.
With the permit framework resolved and a formal pricing model in place, the operation was deliberately repositioned to pursue external accommodation and catering contracts serving remote industrial contractors on a properly authorized basis. New contracts were structured with documented pricing, formal agreements, and permit-compliant usage from the outset.
The operation was then structured as a standalone business unit with its own P&L, reporting cycle, and board-level oversight.
What the engagement produced
The regulatory exposure was identified and resolved within four months. No intervention. No disruption to active projects. No client relationship damaged. Resolving it before it surfaced externally was the most consequential outcome the engagement produced.
Gross margin moved from approximately 2% to a budgeted 15% through structured pricing, a formal SLA, and a cost model driving the operation’s financial management for the first time.
Occupancy improved from 52% toward a planned 66% as demand planning was connected to project schedules and capacity was managed against the breakeven model built for each site.
External revenue was restructured into a compliant program, growing to a budgeted $5M through properly authorized arrangements with remote industrial contractors, supported by documented pricing and formal contracts.
The operation now functions as a standalone business with its own financial reporting, governance structure, and strategic plan. It can be presented independently to a lender or acquirer as a financeable, compliant business unit.
The operation had been running for years. Nobody had looked at it properly. An internal review found what a regulator would have found differently.
If there is a part of your business that has never been properly evaluated, the risk is not that it performs poorly. It is that nobody knows what is actually in it.
