ELMA'S CAFE AND KITCHEN LIMITED

Executive Summary

Elma's Cafe and Kitchen operates as a micro-sized local cafe within the competitive UK unlicensed restaurant sector, currently facing financial stress indicated by a sharp decline in net assets and working capital deficits. Sector-wide inflationary pressures and shifting consumer behaviours compound these challenges, placing the business at a disadvantage relative to larger or more financially robust peers. Its niche local focus offers some operational flexibility but financial resilience is limited going forward.

ELMA'S CAFE AND KITCHEN LIMITED - Analysis Report

Company Number: 13114906

Analysis Date: 2025-07-20 14:41 UTC

1. Industry Classification
   Elma's Cafe and Kitchen Limited operates within SIC code 56102: Unlicensed restaurants and cafes. This sector is characterised by small to medium-sized enterprises providing casual dining and takeaway food services without alcohol licensing. Key industry features include high competition, sensitivity to consumer trends in dining preferences, and reliance on local footfall and community engagement.

2. Relative Performance
   As a micro-entity with an average of 4 employees, Elma's Cafe and Kitchen fits the profile of a very small business within the broader hospitality sector, which typically includes micro, small, and medium-sized establishments. The company’s financials show a recent decline: net assets fell from positive £414 in 2023 to negative £10,274 in 2024, indicating deteriorating financial health. Current liabilities have increased significantly, and net current liabilities remain negative, reflecting working capital challenges. Fixed assets have reduced slightly, possibly due to depreciation or asset disposals. Compared to industry norms, where even small cafes aim to maintain positive net assets and healthy cash flow, these figures suggest financial stress.

3. Sector Trends Impact
   The UK cafe and casual dining sector has faced considerable headwinds since 2020, including lingering effects of the COVID-19 pandemic, rising input costs (food, energy, wages), and changing consumer behaviour favouring convenience and takeaway options. Inflationary pressures have squeezed margins industry-wide. Additionally, increasing competition from delivery platforms and evolving customer expectations around sustainability and health may also impact cafes like Elma’s. The company’s liquidity issues may reflect these sector-wide trends, with rising costs and possibly uneven customer demand.

4. Competitive Positioning
   Elma's Cafe and Kitchen is a niche player focused on serving its local Grimsby market. With two directors holding substantial control and a small workforce, it likely operates with a lean structure but limited scale advantages. The negative net assets and increased liabilities suggest limited financial resilience compared to more established, possibly larger competitors who can better absorb cost shocks and invest in marketing or diversification. However, as a local private limited company, it may benefit from community ties and flexibility in operations. The lack of audit requirements and micro-entity reporting implies minimal regulatory burden but also limited financial disclosure, which can restrict access to external finance.