Ask the Expert: Strategies to Achieve Balance By Rick Braa, CHAE
Q: A:
Now that the pandemic is finally winding down, what should I focus on in my business?
It’s been a challenging two years. Life is getting back to “normal,” but COVID is an ongoing part of our lives and we face obstacles in staffing, inflation, fear and a new list of uncertainties. One of the most successful tools formulated for setting strategy is the balanced scorecard. For memory purposes, start with P in each area: Planning, People, Patrons and Profit. Because each of these deserves an in-depth look, we’ll start with planning and publish additional articles breaking down the other areas. Look for new articles this summer in your Washington Hospitality Weekly newsletter. Running a business looking backward will lead nowhere. Get the business out in front of you and steer the future. Careful forecasting, engineering and execution will lead to controlling the business and delivering successful financial results, which are the goals. The need to control your business is the main takeaway post-pandemic, and control will be perhaps the most important discipline going forward. Plan and optimize hours of operation using data, not instinct. Make sure the business is busy every hour of every day from opening to closing. Don’t be open to be open. Historically, being open all hours of the day or night was the norm. Guests would wander in and out on their own schedules and spread sales over the entire day with no thought to the fact that the restaurant being open all hours leads to difficult staffing and potentially inconsistent service. In the new reality, guests now check hours of operation before visiting a location, making it possible to open and close when productivity can be at its highest and sales can flow tightly and profitably. Properly optimizing business hours allows for accurate sales forecasting. With a sales forecast of at least three to six months, you can use accurate numbers to work with the supply chain. Shortages and outages have been the norm over the last two years, but by working side by side with accurate numbers, vendors can predictably estimate what will and will not be available. They’re the experts and have insight operators don’t possess. With this
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information, you can engineer menus that work seasonally with the supply chain to stay stocked and ready to sell. Cutting costs and driving more profitable sales are key: Engineer highly profitable food and beverage menus and increase beverage sales as a percentage of sales overall. Drive cost down with infusions, barrel-aged products and more non-alcoholic drinks that you can sell at a premium price. Use liquor as your secret weapon and make money on everything you sell. Keep a lean, dependable core menu and strong specials or a rotating menu to allow flexibility of product and profitable menus. Engineer menus to minimize labor usage and maximize labor productivity since labor is short and hours and pay are at a premium. Be sure to treat margin as superior to percentages in food and beverage. When you drive prime cost and margin as one unit, not two, the remainder of your P&L will benefit. The goal is to make more money. Properly plan your capacity needs with forecasted, controlled sales. Find out how many bodies are needed at your peak and shortfall, then use every avenue of recruiting, including job boards and referral bonuses, to get through the busy season. Pay strong employees more, keep them engaged and recruit more people like them. If you need capital, make sure you extend your Economic Injury Disaster Loan (EIDL) if you qualify. With accurate planning, you can see where the potential financial pitfalls are, where to adjust and potentially where you need funding. Lastly, be sure to get all the Employee Retention Credit (ERC) available to your business. If you haven’t filed for that yet, let me know and we can help you. With the pandemic and rogue era passing, it’s important to restore balance and control to the forefront of your business. Proper planning, forecasting and engineering will lead to profitability and a work-life balance unseen in the last two years. ■ Rick Braa is the co-founder of AMP Services, an accounting and consulting firm specializing in helping companies grow profitability. For more information on improving profitability and driving performance, contact AMP Services at rbraa@ampservices.com.
