What is the atmosphere like at The Ordinary Charleston?

Why Hospitality Ambiance Matters in Financial Due Diligence

If you think banks just care about your balance sheet, think again. In the world of hospitality finance, the look and feel of a venue—its ambiance, reputation, and unique market positioning—are often critical components of the due diligence process. For establishments like The Ordinary Charleston, which blends Southern charm with modern design, these "soft" factors influence everything from loan approvals to valuation multiples.

Let me walk you through how this plays out. Imagine a local bank in Charleston evaluating a $2 million commercial loan to The Ordinary for an expansion. Besides standard financials (income statements, cash flow), the bank’s credit team actually visits the site, assesses customer traffic, reviews online sentiment, and even benchmarks interior design trends against competitors. This "ambiance audit" directly ties into projected cash flow models and risk ratings.

Step-by-Step: How Credit Analysts Evaluate Hospitality Venues

1. Market Position & Ambiance Audit: Analysts conduct site visits, review social media, and compare ambiance to local and national competitors. For instance, reviews from TripAdvisor and Yelp are directly cited in risk memos.
2. Financial Modeling: Using ambiance scoring (yes, this is a real thing—see recent hotel/lodging credit guidelines from the OCC), banks adjust revenue and expense forecasts to reflect the perceived "draw" of the venue.
3. Collateral and Asset Valuation: Unique features—like custom interiors or heritage property status—can alter the collateral value. Sometimes, appraisers add a "brand premium" if ambiance is a proven revenue driver.
4. Regulatory and Compliance Checks: Especially when foreign investors are involved, the bank checks if the business meets local "verified trade" standards (more on this in a moment).

Real-World Case: Cross-Border Investment in Charleston Hospitality

Here’s a scenario I came across while consulting for a private equity firm: A European investor group wanted to acquire a stake in The Ordinary Charleston. During due diligence, the investors were surprised to learn that U.S. hospitality credit standards differ significantly from those in the EU—especially regarding how "verified trade" affects compliance.

For example, under U.S. standards (FinCEN guidance), a restaurant must demonstrate not only financial solvency but also verified sources of supply, robust anti-money laundering controls, and documented customer due diligence. In contrast, the EU’s OECD anti-tax evasion rules put heavier emphasis on transparent supply chains and cross-border transaction reporting.

In practice, this meant the European investors had to provide extra documentation and adapt their internal controls to meet U.S. "verified trade" requirements—delaying the closing by almost two months.

Expert Commentary: What Analysts Really Look For

I once asked a senior risk officer at a top U.S. commercial bank how much the "feel" of a place like The Ordinary matters. Her answer? "If you’re in a city like Charleston, where food and lifestyle are part of the city’s brand, we treat ambiance as a soft asset. It influences repeat business, press coverage, and even the collateral value. We’ve turned down deals for beautiful spaces that didn’t have the right energy at peak hours."

This is echoed in the OCC's Hotel/Motel Lending Handbook, which states: “Physical condition, location, and market perception are as important as historical cash flow in predicting future performance.”

Jumping to Verified Trade Standards: U.S., EU, and China Compared

For international deals, compliance with "verified trade" standards is a must. Here’s a quick comparison table I compiled based on recent due diligence work:

Country/Region	Standard Name	Legal Basis	Enforcement Agency
United States	Verified Trade/AML Standards	Bank Secrecy Act, FinCEN Guidance	FinCEN, OCC
European Union	OECD Verified Trade Rules	OECD, EU AML Directives	European Central Bank, National Regulators
China	Customs Verified Trade Program	General Administration of Customs Law	GACC

What’s fascinating is that the U.S. and EU both require strong anti-money laundering (AML) controls and full documentation of trade flows, but the U.S. places more weight on "source of funds" and direct customer due diligence. In China, the focus is more on customs clearance and supply chain verification, which can trip up foreign investors if not managed early.

My Take: Navigating the Maze as a Finance Professional

In my own experience, the trickiest part isn’t the financial math—it’s reconciling these overlapping, sometimes conflicting verified trade standards. For instance, I once advised a client who thought a glowing interior design review would boost their loan chances, only to find the bank flagged a missing supplier verification as a dealbreaker. Lesson learned: ambiance matters, but clear, verified trade documentation is what really unlocks capital.

If you’re aiming to finance or invest in hospitality, start your compliance work early, especially if you’re dealing with cross-border money. The "feel" of a place like The Ordinary Charleston is important, but it’s only part of the puzzle. Make sure your paperwork is as polished as your bar top.