Planning for a 50% loss of restaurant sales – what will you do?

We must plan for the worst. Now’s the time to be like swans – floating calmly on the surface, and paddling very quickly under the water. This is real folks – take a lesson from what Chinese restaurants have gone through in the last 3 months, with customers almost completely disappearing.

What if half your business disappeared in two weeks?

You need to plan for a specific scenario. This is not like ‘sales are down in winter’. Take your last Profit & Loss statement and slash 50% off the sales line. Then work down through the expense figures.

  • Plan for letting staff go. Who will be first, and what will you owe them – is it straightforward? If they are permanent, there could be redundancy payments – do your research.
  • Plan your communication with staff – they’re anxious, and they hear the news. You may not have good news to tell them, but they expect you to be fair. If you don’t have an internal communication system, like a private Facebook or WhatsApp group, now’s the time to start it.
  • Be prompt with statements needed to help them get benefits. It’s useful to understand how this works in Australia.
  • Many staff don’t understand the financial workings of a business, so they need an honest explanation of the P&L – it won’t be pretty, and they need to see that.
  • Insist on unwell staff staying away from work. Many will be casual, so no work = no pay. They may want to work even if sick, and that’s not OK – sickness allowance may be available.
  • Talk to suppliers about deliveries and availability of products – your orders will be down, and they may have their own staff issues.
  • Plan for staff disruption if schools are closed – who will look after children when their parents are at work? It will be a big test of your flexibility.
  • You’ll need to handle creditors – which ones will be tolerant, and who can you negotiate with? They’ll be facing their own problems.
  • Check your function booking agreements for cancellation terms – how strict are they, and what will you enforce? Do they need to be modified?
  • Talk to your accountant about tax and bill payments – what can they negotiate with the ATO?
  • Talk to the landlord, ideally through your lawyer – you’re making a loss and paying full rent will be difficult. Share your figures – how can she help?
  • Find out about government support payments – these are likely to be available, as they were during the bushfires. Contact your local MP for information.

What does a half-sized business look like?

  • Ramp up the home delivery options – using 3rd-party systems, and also encouraging pickup through your own ordering page with systems like OrderUp.
  • Upgrade your pick-up and delivery space – people want ‘no-contact’ collection ie touch payments and hygienic packaging. Watch how big operators like McDonalds modify their systems – they are masters of adaption and will show us best practice with this.
  • Immaculately clean and hygienic – it’s one of your marketing advantages.
  • Warm and friendly – now more important than ever. Have you kept the best people for this?
  • Double your staff training – short, practical sessions on cleaning, hygiene and service. This will have long-lasting benefits.
  • Blitz your office and admin. systems – no time for waste and inefficiency. What can be done online that’s still done with paper? What can be done remotely – rostering, payroll, ordering, social media?
  • Massively improve your communication with customers – daily updates on Facebook and Instagram are not too frequent, and an interesting weekly newsletter will be welcome, especially if it comes from the heart. As ever, people look to their local cafe or restaurant for comfort and friendship.
  • Lead by example: sober, hard-working, efficient and hygienic… and still with plenty of smiles.

This article is a work in progress, and I’ll be updating it with more ideas and examples. It is private commentary, and not related to my work. Your comments and suggestions are very welcome – please send them to me through Linkedin or Facebook.