Our best wishes go out to all who are dealing with this challenging situation. As COVID-19 continues to upend the hospitality industry, our community matters more than ever. In the coming weeks, we’ll highlight restaurants that are continuing to feed their communities, how diners are supporting their local restaurants, and what we’re doing to support the industry. Head here for OpenTable’s preparedness resource centre.
Many restaurateurs are thinking about how to deal with the current financial hit, as well as how to cut costs now and in the future. These financial considerations are separate from the fundraisers many restaurants are running to support their staff and operations, and many of them require negotiating.
There’s a lot to sort through when margins are thinner than ever, so we tapped restaurateurs in our network as well as OpenTable employees with restaurant experience. Read on for their practical financial advice, and see which tips could be applicable for you.
Reevaluate your P&L
Take a comprehensive look at your cash reserve and your forecasted expenses, and create a new P&L if necessary.
“Create a miniature P&L around takeout and a declining checkbook (utilities, salaries, insurance, supplies etc.). What does it cost to operate and what are we taking in? Does it make sense?”
— Ted Swigert, owner of Drake, a New American restaurant in Washington and Bend, OR
“Create a comprehensive plan of your essential expenses, and your restaurant’s cash, savings, emergency funds, et cetera. From here, you can forecast what you’ll need to keep the lights on.”
— Sarah Chen, OpenTable marketing coordinator with a family of restaurateurs
“Set new standards of efficiency by:
– Analysing past performance to adjust opening hours, capitalising on periods of maximum diner spend to minimise staff cost percentage.
– Condensing menu offering to most popular, profitable and time (labour) efficient.”
— Oliver Gibson, OpenTable Restaurant Relations Manager, Australia
You can talk to your landlord about the possibility of restructuring your monthly rent payments or working out a rent payment plan that makes sense for both of you. The Australian Government has announced a range of measures to help renters. Find out more on Code of conduct for commercial tenancies.
“With your landlord, use the phone, not email. If the landlord is a big company, human-to-human is the way to establish a framework for the kind of relief and support that you need. For the moment, you don’t have to push for a comprehensive solution or long-term answer.”
— Dan Simons, co-owner of Farmers Restaurant Group, home to upscale American cuisine in DC
Communicate with vendors
Similarly, you may want to reevaluate any relationships with vendors that are currently unnecessary, or negotiate new options. Keep in mind that purveyors are also facing challenges and need support, so be open and honest in your communication. For example, Ted Swigert contacted all of his purveyors to work out payment plans.
“Pause all nonessential spends and communicate with vendors the reasoning and timeline for when you’ll be able to start these back up. If you have unpaid balances, consider speaking with them about a payment plan or deferring payment.”
— Sarah Chen
“Cash is king. Only pay for product you need to buy that you can actively sell. Every other Accounts Payable line should be frozen and evaluated case by case. But, along the way, be an excellent communicator with every person and company on that AP list. We have to remember that lots of our vendors and suppliers are just as hurt as we are. While we don’t always have money, we always have character and communication, so lead with that.”
— Dan Simons
“For wholesale vendors including food, wine, and liquor, negotiate payment terms.”
— Irene Wu, OpenTable Restaurant Services Manager, NY and CT
Keep your employees in the loop
“Speak to staff in a formal email outlining what you are hoping to do regarding pay, and over-communicate your intention—do the right thing. Keep your staff paid wherever you can.”
— Lucy Taylor, OpenTable Sales Director
“Continually communicate your plans with your staff so they are informed— you don’t want to leave them in the dark! Determine the number of positions essential to running takeout/delivery, and schedule on a rotation basis for those roles so you can run operations and provide hours for each of your staff.”
— Sarah Chen
Trust your entrepreneurial instincts
If any inspiration strikes, now’s the time to get creative with business models.
“Remember that entrepreneurship and fire in your mind that inspired you to get into this crazy business in the first place? Tap back into that. Put on your futurist goggles, find a need, and fill it. People need your hospitality, your heart, your commitment to community, your ability to fill their bellies with food and drink—repackage all those passions, skills, and abilities. There is no industry with grittier people than our industry. The banks and landlords will give us a runway—we need to build new models and figure out how to use that runway to launch.”
— Dan Simons
“Maximise cash flow – Assess the stock you are currently carrying and work out a strategy that will generate revenue whilst minimising stock ordering and expenditure.
– Utilise slow moving wine stock to By The Glass
– Challenge chefs to make the most of current dry-goods stock
Likewise, rebuild the cocktail list to utilise spirits in stock”
— Oliver Gibson
“Get creative and cost effective with marketing strategies:
– Involve your social media following on featured menu items
– “Raffle” the opening nights. Perhaps your regular SPH is $50. If you’ve got 50 seats and you raffle them at $20 a ticket (for 2 diners), you’d only need to sell 125 tickets to generate the same revenue with a “1 in 5 chance to win”. This assists cash flow by generating revenue in advance.”
— Oliver Gibson
“This is your chance to relaunch your restaurant the way you always wanted it to be. To be better, faster, stronger & more efficient. Now is the time to be reviewing everything that you do from moving away from less profitable, & less popular menu and beverage list items to addressing fixed costs and getting creative with new ways to maximise spend per head.”-It’s your restaurant 2.0.”
— Tim Domelow, OpenTable Senior Account Manager, Enterprise APAC
For additional COVID-19 information, visit our preparedness resource centre
Find out more on what the stimulus package means for Australian restaurants
Originally published on https://restaurant.opentable.com/news/tips/practical-financial-tips-from-restaurateurs-during-the-covid-19-crisis/ – 13 April.