Preparing your Cafe and Restaurant for the 2020 Recession

The last time we had an impact like this in Australia was back in 2001, after the 9/11 attacks in New York. Then there was the Global Financial Crisis in 2007 – 2009, which affected Australia to some extent, but a rapid economic response by the government stopped it from having the effect here that it had elsewhere.

I wrote a fairly lengthy article back in 2001, with advice on how to manage the effects on small businesses – it still holds up well. Plus some thoughts last month on the need for a 2020 Plan B.

Now we can see another recession unfolding in front of us.

In Australia, 120,000 Chinese tourists have stopped arriving (one sixth of the normal total), and at Feb 29th 2020, there are still more than 100,000 Chinese students who can’t come back to school or university in Australia – one in four of our international students are from China. And Chinese restaurants, one of the foundations of our modern industry, are facing a catastrophic loss of customers – many have already closed.

Dramatic disruption to Chinese manufacturing and supply chains mean there could be shortages of kitchen equipment, spare parts, appliances, packaged food and chemicals. In Australia, China makes (or supplies parts for) almost everything we use!

China is a massive importer of our raw materials (from coal and minerals to lobsters and meat) – as they and other countries close borders, trade will be hit in many, many areas. A record number of purchase and supply contracts are being cancelled because of force majeure (unforseeable force).

Hospitality thrives on optimism and prosperity, not fear and contraction – we will feel these cold winds very quickly.

Can hospitality handle this crisis more effectively than before?

  • We can see it coming – this is a slowly unfolding catastrophe, so we can do some planning, but speed is essential, and there will still be unexpected events and panics.
  • We have much better management tools for handling cost-cutting – rostering systems, powerful POS systems to pinpoint customer spending, transparent online ordering for the best prices, and bookkeeping systems that give immediate insight into Profit & Loss.
  • There are great options to rent new equipment – no need to run down your capital. Renewal and innovation can’t stop during a slowdown.
  • We also have low-cost and sophisticated ways to reach out to customers, through targeted social media, email marketing, online bookings, websites and online directories – we can communicate much more effectively.
  • What’s not different is the painful necessity of reducing staff hours and paying the same rent with fewer sales dollars.

Buckle up folks – I’m an optimist by nature, but 2020 is going to be a very bumpy ride!

Your comments and suggestions are very welcome – please send them to me through Linkedin or Facebook.