Colder weather is here, and restaurant owners are thinking about how they’re going to navigate the next six months and beyond. The pandemic continues to impact restaurant operations and the restaurant industry needs to evaluate their situation so they can adapt to the next phase.
Restaurant owners need to review their overall operations including organizing financial data, acquiring additional financing if needed, operating at a lower capacity, and preparing for potential shutdowns or restrictions. Our restaurant guide is here to help restaurant owners facing adversity in this ever-changing environment.
Revenue generation continues to be the number one concern for restaurants given the current environment. Financial data is crucial for improving profitability and managing revenue. Good financial data allows for comparisons with projections, previous periods, and the best-run locations in your franchise system or other stores if you are a multi-location operator.
Managing cash on hand continues to be essential as well. Running regular cash flow forecasts is crucial for restaurant operators.
Accurate financial data will help with accessing certain government programs, such as the Canada Emergency Wage Subsidy (CEWS). Most restaurants are surviving due to this government support. However, some restaurants might have to consider loans in addition to the help they’re receiving from government programs.
In the past, restaurants would wrap up patio season in early fall. Now many are planning for an extended patio season and hoping to entice customers to continue dining outdoors during winter months.
Restaurant operators need to consider how customers can enjoy the patio during different times of the day and through weather fluctuations. If you haven’t already, you may want to invest in rain coverings, lights, heaters, and outdoor fireplaces. Demand is high for these items, so proactively securing these items before they are needed is key.
Operators are also considering ways to entice customers to continue purchasing from their restaurants with exclusive “outdoor tent” dining, Instagram-worthy visuals, providing options for patrons to donate food to healthcare workers, and making online ordering easy and contactless.
At the same time, you need to prepare for potential capacity restrictions, rolling or complete shutdowns as COVID-19’s second wave impacts Canadians. Develop a plan for shifting your operations back to delivery and take away only, such as plans for turning “on” and “off” third-party delivery apps.
Assess how potential operational changes could affect finances and staffing levels by analyzing the financial impact from the spring lockdown and preparing projections for a winter lockdown under various scenarios using cash flow projections.
The uncertain future
The foodservice industry produced over $93 billion in 2019 sales and was set to exceed $100 billion in sales in 2021. However, the restaurant industry now faces losses between $21.7 billion and $44.8 billion in annual sales this year, according to Restaurants Canada.
As the traditional patio season is over, customers will continue to be hesitant to eat indoors. Moreover, restaurants may be forced to reduce hours or completely shut down in-person dining in certain regions with rising cases, and the restaurant industry will further feel the squeeze. Restaurant owners need to prepare and adapt again to make it through the winter.
A Foodservice Facts Report provided the following trends:
- Ghost Kitchens’ provide restaurants with an opportunity to operate without a storefront and focus on delivery through mobile and online platforms
- 60% of customers surveyed indicated they would order from a ghost kitchen
- Almost one in five restaurants have altered their operations and will continue to sell meal kits
- More than half of restaurants are offering contactless payment options along with contactless take-away
COVID-19 continues to create an adverse environment for the restaurant industry. It’s important to diversify your operations so you can pivot as needed.
Reach out to BDO
The restaurant industry is facing an extremely stressful and challenging time as they continue to deal with the COVID-19 fallout. Restaurant owners and operators will have to make many difficult decisions over the next year, or longer. BDO is here to provide you with support and guidance. Read our latest guide to learn how we can help.