The Rotorua Lakes Council has decided to retain ownership of the Rotorua Museum cafe - for at least the next three years.
Councillors voted 10-2 to retain the cafe at a meeting of the operations and monitoring committee yesterday.
The Museum Cafe was bought by the council in May 2013for $255,000. It was owned by a partnership which included former Rotorua Museum director Greg McManus' wife.
Council staff recommended the council retain the cafe for a number of reasons. These included maximising returns for the museum, further developing the cafe business, providing flexibility to charitable and not-for-profit organisations for events and functions, and less reputational risk to the museum.
Councillor Rob Kent opposed the recommendation by council staff to hold on to the cafe due to a dispute over the cafe's financial position, while Peter Bentley voted against it, saying the council should not be competing with other cafes in the city.
In his report to councillors, museum director Stewart Brown said the cafe had made a 24 per cent return on investment in its first year of operation, although it did not achieve the 36 per cent expected in the original business case. "This was due to high staff costs. This financial year, through prudent overtime management, a new team and a number of operational initiatives and improvements means the cafe is on track to deliver 34 per cent return on investment."
Mr Brown said the cafe's profits had continued to improve but it faced a programme of earthquake-strengthening, which would not appeal to any prospective owners, and the council would have to pay compensation for loss of business. He also said any commercial owner would not be able to provide adequate flexibility for community events or organisations, as they would have a much more profit-focused attitude. Councillors resolved to review cafe ownership in three years or after earthquake-strengthening work and changes to layout were completed.
Councillor Mike McVicker congratulated Mr Brown on turning the museum cafe into a well-performing asset. "It's critical we do retain the cafe for the three-year period.
"I believe we will recover our $255,000 outlay we originally spent. Many other institutions control the cafe they have on site. Let's forget the political aspect and focus on the financial aspect," he said.
