The dilemmas facing restaurant owners today will seem light come January 2, 2009. Then and only then will we all see the true effects of the so called “recession”. You can bet the first quarter of 2009 will be the most difficult any of us who are in business have experienced over the past 4 decades.
Keeping that in mind, now is the time to trim as many frivolous costs as possible, promote as much as we can, and plan, plan, plan, for the first three months of next year.
Understanding that frivolity is not in the cards for most restaurant owners as cash dries up and customer counts decrease, I use the term to describe simple, trim-able items such as over staffing during slow shifts, managers refusing to cut staff in order to keep payroll in line, expensive food items, and electric bills that soar. Advertising is something that also needs to be analyzed as now is the time to switch from brand building advertising to value-added ads.
For many of us, even though times are tough the few holiday parties we do have are keeping the eternal flame of hope burning. And that’s a great thing. However, the flame will dim immediately following the last toast on New Year’s Eve.
Here are ten tips on what to keep your eye on to make the Q1, 2009 a bit brighter.
1). Utilities. Stay current on your utility bills. Remember that old saying “Robbing Peter to pay Paul?” Well, the electric company is not Peter. Pay them on time so when you need to make a payment arrangement they are will to talk.
2). Staffing. Stay as lean as possible on staffing. If one staff person is standing around with nothing to do this is a sign you are over staffed. Over staffing shift after shift, even if fo only a few hours a day adds up to thousands of dollars by year’s end.
3). Management. This is a tough area to analyze, especially if you have hired a manager to take over your responsibilities. However, take a close look at management and analyze their effectiveness on a daily basis. Do they work the floor? Do they add value during the tough, busy times? Now is not necessarily the time to alleviate management but they might need to be redirected.
4). Hours. Are you staying open the same hours today that you were during the busier times? Now is the perfect time to review your hourly income and decide if you should open earlier/later and close earlier/later.
5). Seven Days. Staying open 7 days a week is great when yu are busy. However, when the dining population has diminished and is not dining out as much as they used to stay open on nights that are treacherously slow is financial suicide. One solution to the problem is to close at least one day a week and possibly two. A quick analysis of your daily volume will prove whether or not that plan would work. When running the numbers, make sure you take employee hours, inventory, electric, and maintenance into consideration. I always closed my restaurants – during the slow season on Sunday at 3:00 immediately after brunch and stayed closed on Mondays. It helped tremendously.
6). Maintenance. If you have a cleaning service that comes in and cleans your restaurant on a daily basis it may be time to alleviate the service. Study whether your staff can clean your facility without increasing payroll. The other alternative is to have one of your employees take on the project after there regular shift responsibilities. The final alternative- the boss cleans the restaurant.
7). Menu. It’s time to reevaluate your menu and your customer base. Melding the two is imperative. Is the menu that you served when times were glowing adequately appealing to your customer base currently? If it is, it is time to change it. Adequate doesn’t work in the restaurant business. Your menu has to be something that people can’t live without. It has to have items that become addictive- on the food side- for a reasonable price. If I don’t have Street Fair Noodles for Sea Thai Bistro at least once a week, I can feel the difference. Plus, the pricing has to be attractive and better than your competitors.
8). Linen. Sure, they are just napkins, kitchen towels, and table clothes, but at a buck a piece or a quarter a bale, the cost adds up quickly. When we’re busy, we pay little attention to the towels being used or the clothes being flipped, yet in slow times linen bills should drop substantially. Check those regularly to make sure the pars are in line and that the sales rep is keeping the ordering department in line.
9). Over shipping. Check invoices with a sharpened pencil. During slow times some vendors over-ship to help with their cash flow and numbers. It doesn’t happen often but it does happen.
10). Personal Expenses. Take a close look at your personal expenses. Assuming you were taking a weekly paycheck it may be time to cut your expenses and take a pay cut. Of course, you could be living out of the till as many small owners do. Get off this payroll system immediately. Take a check, live on a budget and adapt to the pay check system that everyone else in your organization does. This will make any decision you need to make in the future, easier to make.