10 minute read
Tips for Restaurants to Survive and Thrive During CO VID
Ti ps or r estaur ants to su and thri ve during COV
Throughout the pandemic, operators have been forced to make the heartbreaking decision to lay off team members, many of whom were like family.
They’ve lost tens of thousands of dollars and their restaurants look like a shell of their former selves, all while wondering how long their PPP money will last. Owners and operators are bruised and beaten up, but by no means counted out. Creativity and tenacity got many operators into this business and that’s what it’s taking to get them through this crisis.
They also need to determine facts versus fiction.
Fi
tion: “National chains are filing for bankruptcy; if they can’t make it there’s no way an independent can either.”
This statement is ridiculous. When it’s known that a group is filing for bankruptcy, operators need to ask themselves what strategy was being executed. Most bankruptcies made by corporate restaurants are done by design in order to renegotiate leases and corporate contracts. The clause for renegotiation of contracts is usually buried somewhere deep in the terms and conditions and it’s a very effective way of getting all parties to the table at one time.
Fi
tion:“Ghost kitchens and delivery services are going to be the only way to order food in the future.”
Seriously?! That’s also ridiculous. RSI’s data from the last financial crisis clearly demonstrated that independent restaurants
ts to sur vive ID
thrived during periods of crises. Guests are far more sparing with their money, and they feel more connected to their communities when they spend it at local neighborhood restaurants. This speaks directly to the pandemic.
Fa
t: “The only experience that any restaurants have similar to a pandemic is when they were opening for the first time.”
It’s the last time where the operator had no sales and cost history, no brand awareness, and no consumer base. Restaurant operators need to believe that their past experiences and obstacles within the “Creativity and tenacity got many operators into this business and that’s what it’s taking to get them through this crisis.”
industry have prepared them to overcome what the pandemic has and will throw at them.
Fa
t: “Many restaurant owners had limited cash or were severely undercapitalized when they first opened.”
It wasn’t magic that they became successful operators, they were forced into their success by their fear of failure. All operators should accept their fear, fully embrace it, and plough forward.
Fa
t: “Operators don’t take percentages to the bank, they take dollars, and if they don’t have a handle on their dollars, they’ll have 0% chance of success.”
Now that it’s apparent what’s fact versus fiction, restaurateurs can capitalize on success by focusing on the facts, and a few strategies that clearly position a business for survival as well as a successful comeback (don’t call it a comeback).
Circling back to the million-dollar question “how long can an operator’s PPP money last?” There’s only one way of making PPP money last and that’s strategy #1: Understanding revenue generated per seat, not by square foot, as it’s traditionally done.
Matt Vannini
seating or 50 guest restriction, it’s important to understand the top line revenue potential using these limitations. The minimum achievable costs (breakeven) can be determined by an accurate revenue model.
This brings us to our strategy #2: Unleash the Creativity. Understanding potential revenue and related costs will allow operators to just that.
Hint (and strategy #3): Every HGTV remodel show starts with five minutes of determining the budget. If it’s good for them, it’s essential for a restaurant owner.
Here’s why:
1. Operators will have the freedom to determine whether closing their dining room and moving to an online model will be successful. They’ll know if the costs associated with modifying their business is worth the expense.
2.Operators will know exactly how much revenue they’ll need from a delivery service in the event they attempt a blended approach. “Guests are far more sparing with their money, and they feel more connected to their communities when they spend it at local neighborhood restaurants. This speaks directly to the pandemic.”
down in order to achieve costs that ensure profitability.
4.Operators will know how many and at what cost they can bring back their team members. Many operations have increased wages for team members they’ve been able to bring back.
5. Operators will know which expenses need to be negotiated. Hint: It’s not always the big, non-recurring ticket items. Many times, operators can find giant savings by calling their vendor partners and asking them for ways to temporarily or permanently reduce costs and fees. Vendors know better than the operator what’s available. Leave it to them to do the work and ultimately use their knowledge of what others have done.
This is the time where it’s essential that operators are honest with themselves and their abilities. If an operator isn’t a numbers person or if they don’t like to negotiate, remember the business, team members and community who depend on it. If an operator doesn’t know how to, or can’t do it; find someone who can.
Hint: Many hospitality-focused companies have the resources available that enable them to provide restaurateurs with specific guidance dedicated to survival and success.
Examples include:
1. PPP loan management: There are constant changes in the forgiveness rules, the reporting and the payback.
Also, they will have banking and lending relationships that can prioritize small businesses in the event that a second wave of relief is available.
2.Tax and Social Security deferral strategies.
3. Lease negotiation strategies: It takes more than calling a landlord and asking for free rent. Working with someone who knows restaurants can make all the difference in a landlord’s belief in a restaurant’s success.
A fourth-generation restaurateur who has operated and sold three restaurants, Matt Vannini is president and CEO of Restaurant Solutions Inc., one of North America’s most respected restaurant consulting and accounting firms. RSI is more than just back-of-house software and management tools; the company embraces the belief that training and education must be incorporated into the system for effective integration to occur.
Righ t No is a Gr eat Ti me to Gro
Historically, tumultuous times offer the greatest waves of opportunities for entrepreneurs. The needs of businesses and consumers change in ways that are not always served in the prior months or years.
It is a common inclination among many people to hunker down, hide and get very conservative when markets are undergoing challenges or change. Doing that may ensure you miss the greatest opportunities in years.
Yes, there are some challenges in the market today, but there are challenges in every market. If challenges stop you from growing, you will never take the steps to realize your goals. you to pause, what you are often missing is information that will help you choose a path that may get you through or around that issue. By simply seeking out that information, you will be outperforming many potential competitors in a market.
This is why opportunity is limited when the market is good. The path is clear and easy, so everyone is willing to jump in and play. The field ends up being crowded, the costs are higher, employees are hard to find, real estate is scarce and expensive, and more businesses are dividing up the rewards.
When times are more challenging the competition thins out, cost of doing business often goes down, and customers are very appreciative that you were there to serve them.
While we don’t know what will happen with the employment scene or the stock market over the coming year or two, we do know that we can identify specific needs that consumers and businesses have, no matter how challenging the market gets.
George Knauf
Both have wants, things that they would pay for out of disposable income, but we may want to hold off on those and focus on needs for now.
Keeping in mind that businesses are not like jobs, in the sense that you can have more than one at a time, we should also focus on portfolio building over time. This is far better than looking at just one brand. With this diversified approach we
can build an empire that fills the needs of customers in both strong markets and more challenging ones.
As you look at franchise options, imagine the customer for that business. Are they buying in both strong and challenging markets? What motivates them to buy? Is it need-based categories like food, shelter, health or safety?
We all have to live, eat and work. All of the core services we have always relied on—like plumbing, heating and air conditioning, locksmiths, windows, garage doors, roofing and cleaning services—are still core services today. Some are even more in demand.
I have talked to franchisors and franchisees as well as our past candidates about this. I can tell you that there are very identifiable pockets of activity, even growth, in our current economy. They cross into every category, even food and retail businesses.
The focus, however, has narrowed. You want certain brands. Not all brands have stepped up to the challenge. Doing your homework can help you narrow the field. Reading this is a start. So can calling someone like me that has been in the arena for decades. It isn’t just the franchise owners growing in their local communities. National franchise brands are growing fast as people are looking for ways to advance their careers in ways they can control. Employees simply don’t feel very secure in their jobs anymore. When they are confident they have the skill sets they need to succeed, they want to put them to use building their own empires, not someone else’s.
We are moving into a period with potential for a massive shift from corporate employment to self employment or franchise ownership. This shift may be compounded by current market conditions. Franchisors, lenders and other industry support professionals are all ready to keep up.
If you have good experience in management, sales or other operational skills, then you may be an outstanding candidate to be the CEO of your own franchise empire!
Look for the underserved gaps in your market, do your homework, seek advice, don’t worry what your neighbors think of the business and most of all, be sure the role of the owner is a great fit for you. The current market will improve on the horizon, opportunities for great team members, fair priced real estate, and much more will abound. It is always a good time to be looking at core services.
What will your success story be?
Let’s go find it!
George Knauf is a highly sought after, trusted advisor to many of the top franchise ownership groups in the world. With over 25 years of experience in both start-up and mature business franchise operations he is uniquely qualified to advise individuals that have dreamed of Building their own empires. Whether you have an existing portfolio or searching for your first franchise, he can help you to pursue your dreams. Contact the Franchising USA Expert, George’s Hotline: 703-424-2980.
www.MyPerfectFranchise.com
