Restaurant Operations - February 28, 2020 Written By: Kevin Tam
There are times of the year when it’s just hard to make sales, no matter what you do.
While there isn’t much you can do about certain times of the year, there are things you can do to minimize their impact to your bottom line.
Here are 5 tips for surviving the slow season:
1. Expect, Plan & Budget for Slow Times
After a couple of years in business, you should know how sales are affected by seasonality. You need to anticipate these times and put money aside during the more profitable months to prepare for them. Owners who take too much money out when the business is doing well cripple its ability to survive the slow season. Most times when I talk to bar operators who are having cash flow issues, I find there’s some form of this happening.
Once you’ve identified your required labor and salaries, you must set rules for how much owners can take out of the business. These numbers should be reasonable and allow each owner to profit according to his or her investment, yet at the same time allow the company to save 5 to 10 percent of all profits. You must embrace the value of prudence and resist the urge to spend big when the business is making it big. If you have a great month, the wise thing to do is pay yourself the same amount you would during an average month and save the rest. When owners share a common (and more frugal) attitude toward financial management, they’re better prepared to endure the slow season financially.
One of my friends who owns a bar with multiple partners tells me that he only issues a dividend to partners quarterly instead of monthly. Following this procedure prevents owners from taking too much out when things are good and making operations very difficult the moment things slow down. The slow season must be expected, planned for and budgeted for by everyone on the team.
2. Communicate & Reduce Hours
You must anticipate labor costs ahead of time when you know you’re going to take a hit and communicate to your staff that everyone will probably have to reduce their hours. Additionally, you need to tell your staff that during the hours everyone is working, much more will be required. Everyone will be expected to work harder, do more tasks, and be responsible for more areas.
All staff members, particularly long-term staff members, tend to get comfortable in their positions and develop an attitude of entitlement. They see their jobs as “cushy” because they have multiple subordinates performing most of their actual work.
During the slow months, this attitude must be replaced with one of complete servitude, where everyone is willing to personally sacrifice to help the business succeed. Many of those subordinates who made life easier during the good times simply aren’t affordable during downturns in the market. That’s a reality everyone must accept and be told constantly going into the slow season. Doing so will mentally prepare everyone for the coming changes and create less bitterness between employees and owners. It’s when employees are taken off guard with cuts that they get mad. Communicating before the slow season arrives is what makes the difference.
3. Resist the Urge to Fire People
Firing people during the slow season is a temporary lapse in judgment that can severely cripple your business permanently if acted upon. Always keep in mind that the slow season is temporary—it will turn into the good season in time. While cutting costs, you may start looking at key members of your team as expendable. This causes you to focus more on their faults than their strengths and can cloud your judgment about the actual value they bring to your business. If you remember nothing else from this article, remember this: You are not thinking straight when you’re losing money.
There’s a reason you brought that person on board and there’s a reason they’re in the position they’re you put them. If they were a key asset during the good times, it’s highly likely you’re going to need them when that season comes again. Instead of firing people, look for ways to cut back on variable costs like hours worked, supplies, inventory, benefits, and bonuses. This way you lose fewer good people while still reducing costs.
4. Use the Extra Time to Improve Operations
The slow season is the best time to clean and reorganize areas that have been neglected, and improve operational procedures. Every bar and restaurant has areas that require a deep cleaning. The bar area, general storage, high shelves, keg rooms, offices, document storage, and kitchen coolers always require a good cleaning and the slow season is the perfect time to do it.
There are also problem areas that can use improvement, such as reorganizing the bar inventory, the POS system, outdated manuals, and backend accounting. Take this time to ask this question: “Why do we do [insert task/responsibility] this way?” If there isn’t a good answer, now’s the time to invest energy and resources into fixing, improving, and changing things for the better.
5. Go on Vacation
When things are slow, it’s a great time to go on vacation and recharge your batteries. This is also true for your staff members, who you should encourage to take a vacation before business gets busy again. One of my good friends who operates a nightclub with multiple managers working beneath him encourages his team to take their vacation time in January and rotates out each manager week by week. His rationale is that he can still easily run the business with less labor. This also prevents employee burnout after an extremely busy end-of-year season. Everyone needs a break from time to time and the slow season is the perfect opportunity for taking that break.
*Article originally posted on barandrestaurantexpo.com by Sculpture Hospitality Expert, Kevin Tam.