Five Lessons For Restaurants to Prosper After Covid-19
Covid-19 has freed up time for us all to reflect on the past, learn and plan for the future. In this article, we share our five lessons for restaurants to prosper After Covid-19 when normality returns.
Manage cash flow
Poor cash flow is the main reason for business failure according to insurer, Hiscox. A profitable business can still fail if the inflow and outflow of cash through your business is not controlled. A restaurant with poor cash can be due to:
- Stock control – overstocking; inefficient purchasing costs; wastage; theft and pilferage. Use stock control software or a manual system – completed consistently – on at least a weekly basis or daily during busy periods. Negotiate longer payment terms with suppliers.
- Staff scheduling – staffing is the biggest overhead and must be well managed. Try to pay staff monthly instead of weekly and know the peaks troughs of trade to control staffing levels.
- Overpaying on services such as PoS systems; professional services; marketing not delivering ROI and other services
- High Asset Finance and Restaurant Loan Costs
Lastly, many profitable and well run businesses have been forced to close due to insufficient capital reserves and inadequate insurance to cover the business interruption caused by Covid-19. Although – admittedly, cover for Covid-19 was difficult to predict or insurable against if the policy was taken out before the outbreak.
Enhance your business knowledge
Make the most of this time to brush up on skills. Incompetence, at 46%, is the most common reason why businesses fail, according to a Statistic Brain study.
The difference between success and failure is to be honest about your skills and limitations – a successful restaurant requires strong management, employing in areas with a skills gap and having an effective training system. According to Typsy, an online hospitality and training company, even a small amount of training makes a significant difference to the bottom line.
The well-publicized failure of Jamie Oliver’s Italian restaurant chain serves as an excellent example of of what not to do in running a restaurant.
Improve your market knowledge
The proverb ‘Knowledge is Power’ holds true in business. Setting aside time to study the market when running a busy restaurant is not easy. But it is a necessity – so use the extra time you have now to:
- Know your competitor’s products, pricing and use of space.
- Understand your target market and your customers motivations.
- Learn how restaurants are effectively marketing and engaging with their customers.
Use the knowledge derived from the above research to create a factual, consistent and authentic story that is going to make your restaurant stand out from the crowd.
Community spirit makes commercial sense
There have been countless examples of restaurants and takeaways stepping up to the plate and embracing the community spirit in support of the NHS, Schools and those in need during this crisis.
These companies, such as Yard Sale Pizza crowdfunding to feed NHS staff are likely to benefit commercially as a result of the publicity and engaging with their target audience.
Delivery can grow your business but only if managed well
The market for delivery is growing exponentially. Despite commission rates of 20-30%, operators are increasingly turning to third party delivery apps to increase sales. But in a saturated market with thin profit margins, operators must tread carefully and assess the viability taking this route. Success will depend on:
- Your ability to negotiate a lower commission.
- An efficient ordering system. For example, MEATliquor use integrated PoS software to process delivery orders with no manual input at the till and in the kitchen.
- The level of demand.
- Creating a menu suited to delivery.
We hope this article has given you some food for thought!