As bars and restaurants in New York, Los Angeles, Washington join France, Italy and Spain in being told to temporarily close their doors due to concerns over coronavirus, there’s no denying that there are tough times ahead for the hospitality industry.
But there is hope.
China are three months ahead of the rest of us on this. And the ever clever, forward-thinking team at Hope & Sesame have used this time to devise a number of resourceful ways for independent F&B businesses to survive during these worrying times. Check out their tips below:
The Hope & Sesame COVID 19 Survival Guide
We understand that it’s incredibly difficult for stand alone F&B establishments during the COVID 19 outbreak around the world. Many countries are on lock down and bars and restaurants are no longer allowed have dine-in customers, resulting in an immediate halt in incoming cash flow. With no foreseeable reopening dates, all of us will face problems of: rent due, salary, perishable goods, tax and a whole of other issues.
We are a cocktail bar & cafe/restaurant based in Guangzhou, China. Towards the end of the January this year, China went into full lock-down. All businesses were forced to close, with residential buildings not allowing any visitors, and the government basically telling all of us to stay at home and halt travel. That was incredible difficult for us running two F&B establishments – especially me and my partner who are the sole investors of the businesses, with all of the expenses coming from our own pockets. Facing this uphill battle, we did everything in our power to stay afloat, and now that almost two months have passed, we are slowly coming out on top.
We have managed to come up with strategies and cost-saving practices, allowing us to pay our staff salaries and our rent in full for the past two months. We understand that not making a profit and merely staying alive may not sound like much, but trust us, there’s no better feeling than your staff thanking you for keeping their jobs amidst such a crisis.
In the following post, we will share with you best practices in order to either bring in alternate revenue stream or to save cost without sacrificing the wellbeing of your business. Hopefully we can shed some light in what will be a very tough and long road ahead for the world of hospitality.
The number one priority is keeping your staff safe
- Try to secure enough face masks for all your staff who will be working. We recommend one per person per shift. We also suggest enough supplies for the next 60 days.
- Prepare enough hand sanitizers in your place of work, for any guests (if still allowed) to use, or for delivery guys.
- Secure at least one thermo thermometer to detect fever. Make sure to take the temperature of all staff before they start work. If they have the slightest fever or show any signs of illness, they must stay home. Don’t risk it.
- The establishment must be thoroughly sanitised using bleach (ration 1:99) or disinfectant. All tables and chairs must be sprayed and wiped down (using disposable paper towels) every time a guest leaves and you prepare for the next seating.
- All staff must wash their hands with sanitising soap for 20 seconds before touching any food or drinks. Do stock up on enough hand lotion as hands tend to get dry after frequent washing.
- Check the travel history of your staff. If anyone has travelled to serious infected cities or countries, it’s better for them to stay at home. It’s not worth the risk.
Be informed of the rules and regulations
- It’s very important during this time to know what you’re still allowed to do and what is not allowed for F&B establishments, imposed by the government.
- Find out about:
- Are you allowed to open for business? If so, what are the seating capacitie?
- Does your licence allow you to do takeaway if dine-in is prohibited?
- Is there a quarantined imposed on any of your staff after they travelled to regions heavily affected?
- What sort of food or drink is no longer allowed to be served, e.g. raw seafood?
- Do dine-in customer’s temperature need to be taken before seating?
- Does your license allow you to sell food & drink products online?
- Always keep an ear out on government notices, notices may vary within certain districts of the same city.
What to avoid
- Face to face meetings with staff. Whatever can be discussed via chat groups or phone/email, please do it. Avoid holding large meetings.
- Pressuring any staff who feels ill, of uncomfortable in coming to work.
- Immediately dismissing staff or put staff on no-paid leave. The most important thing is is to have a motivated team to help your company ride this wave.
- Don’t rely on your usual suppliers to deliver on time, they are also facing the same situation as you. Show some sympathy to others in the business
- Don’t go against policies issued by the government, it’s not worth it for the long term.
Revenue generating strategies: takeaway delivery service
- Sign up for takeaway delivery services IMMEDIATELY! A lot of the services suspend their back office admin during city-wide lockdowns, if you sign up too late, nobody will process your request. Besides the Uber Eats/Deliveroo/Panda Eats, you can also check if the local DHL/UPS or similar shipping services will do on-day delivery. Also Task Rabbit-esque apps are ESPECIALLY useful for delivery!
- Design a takeaway-friendly menu with your chef/ bartender, preferably first using up all the perishable goods in the fridge. Make sure the food or drink is delivery-friendly, meaning it’s still fresh and warm and most importantly, tastes delicious when it arrives. You will face stiff competition as most places will start their own delivery menu, customers will still choose the superior product and services. Don’t forget: you can also do packages with food and drinks, e.g. a bottle of gin with mixers and some bar snacks.
- You will need to revisit your selling price. People often expect larger portion and cheaper prices for food delivery.
- Source as much takeaway collaterals as you can. Factories will be closed, the stock for takeaway boxes will be scarce! But at the same time, please do try to use biodegradable material and most people’s homes will have cutlery, so there’s no need for extra disposable cutlery. The earth will still be here when the virus is gone, please respect it!
- Work with your designer on packaging. A lot of
freelance designers will still be working from home, and it’s a good way to set your product apart.
- Be resourceful! We started to do canned cocktails, which we had to first source empty cans that are still in stock and the factory are still happy to send shipment. We then had to source a canning machine, which again we were in luck because there was one not too far away from our city. We did the design in-house and used a nearby print shop for the labels. Each of our canned cocktails is vacuum-packed together with a personal hand-written post card note, therefore not only does the guest feel appreciated, but it also limits contamination during delivery. You will never find the most ideal packaging or design at first, but it does take a lot of time searching. Try Taobao/Alibaba in China or Amazon in other parts of the world.
- If you are a bar and you don’t have the resources to make your own takeaway cocktail packaging, you can always work with existing companies who do it. There are companies who will help you design your own product, produce the liquid and send you the final product. You can then sell on your own channels. Check to see if you need any special licenses.
- Once you have your product, it’s time to market it. Delivery apps will allow customers who know you to search for your shop and order from you. However, how do you reach potential customers or new customers?
- Work with influencers. Influencers during this time will also have a massive drop in business, you could propose them to do a post with a couple of their ‘favourite’ bar/restaurants now doing takeaway. Take good looking photos of your product and make sure you highlight the importance of hygiene and safety.
- Promote on your own social media channels. Ask regulars and friends to help repost, it’s now their time to help out their favourite local spot! Make it personal for them, so they feel they are part of it and helping you ride the wave.
- Start new social media channels. We have started to do live broadcasts of our bar on social media channels we previously weren’t on. It helps generate content, keeps the staff productive and will reach new customers. We have also started to do “classes” on cocktails and also tutorials on how we produce our canned cocktails. People are staying home, they have nothing better to do, they will watch anything once they beat Netflix.
- Work with suppliers. It is now more important than ever for them to support your business. Ask them if they can sponsor influencers or bloggers to post about your product. Ask them to post on their own social media channels, or ask if they can create some synergies between their clients.
- Create chat groups with your regulars – don’t just post products and ask them to order – this is the perfect time to bond with them. Send interesting articles or share special stories to engage them. Throw in a couple of products here and there, but don’t do the hard sell.
- Very important: please tip your delivery people. They are the pillars of your business. If they stop working, your products will never reach anyone. Make sure they are happy to take delivery orders from your establishment over others.
- EXECUTION is KEY. You’ve got to beat your competition to the market. Everyone will be doing deliveries, you have to faster than them and offer a much better product and back story.
Revenue generating strategies: others
- If you also have the ability to do consultancy work, it’s a good time to advertise your services now,. Find revenue streams which don’t require the physical presence of diners.
- Create small “paid” classes. People will have a lot more free time now, create small cooking or cocktail classes for a small fee, but make sure the venue is well ventilated and hygiene standards are met.
- Some of your talents may be revenue generating, you just don’t know it yet! If you have photography or video production skills, now is a good time to advertise your services to others who may need to promote their business.
- Start creating merchandise surrounding your business. If you’re a restaurant or bar, you can design T-shirts, caps or sell bartending/kitchen tools in your online shop.
- Vouchers: start selling vouchers for customers to dine in at a later date. Give your loyal customers a chance to help you out! This will help your cash flow and is a good way to get people back in the doors when everything returns to normality.
- Do crossovers with other small shops to create synergies. You may not have the marketing budget to advertise your product, but if you gather a couple of like-minded individuals, you can combine your efforts. A coffee shop can work together with a bakery for example.
- Clearance/fire sale! Sell all your second-hand glassware/kitchenware/plates/cutlery/ slow moving alcohol. Garage sell to raise some cash!
Cost saving strategies: cash flow and expenses
- Stop ordering in bulk. Cash flow is king, order as you go and see if your usual supplier can offer you a line of credit.
- Using your newly designed takeaway menu and use up all your slow moving items.
- Stop all projects requiring investment. Keep your cash flow for salary and rent.
- Ask your landlord for a rent deduction. We understand not all landlords are willing, but it doesn’t hurt to negotiate. It could be 20% reduction or dividing this months rent over the next 12 months. Anything you can to maintain cash flow is a must.
- If you are switching over to only do deliveries, be mindful of electricity and water bills, you can save quite a bit of money by switching off that extra AC.
- Enquire about business loans. During this time, the government will have initiatives subsidising financial institutes, allowing them to offer business loans with very little interest payment. Also the screening process will usually be expedited.
- All reimbursement must be signed off by owners during this period of time. Reduce the amount of petty cash the team is allowed to spend, make sure every dollar is saved.
- Check with larger suppliers, to see if they can extend payment terms. We didn’t negotiate with smaller suppliers, as we know they need the money as much as we do.
- Be mindful of the delivery company you use, some may take over 20% of your revenue for their delivery fees, therefore compare and choose the company that best fits your business. Encourage your customers to pick up delivery at the store, cutting our middle men fees.
- Check with your local authorities or government initiatives to see if there are any subsidies applicable to your industry. We kept a very close eye on the policies and managed to save more than 20,000USD over the next three months in terms of insurance, social security, tax breaks and local district subsidies. Nobody will call you and tell you how much you can save, you have to take the initiative to find out.
- Remind you staff during this time not to offer discounts to customers. Far better to offer them an extra shot or a small dessert. Every penny counts.
Cost saving strategies: human resources
- Clear all overtime. Nobody should have any overtime by the end of this
- Know your rights as an employer. Know when it’s legal to lay off any employees (in our case, it’s illegal to lay off any staff within 30 days of the outbreak. After 30 days we could pay them minimum wage, which we did not exercise our right)
- If worse comes to worse, you have to implement no pay leave. Do prioritise rank and file employees and let them work. They may need the money a lot more than a manager or a supervisor.
- We stop hiring part-time dishwashers and ask if any staff would like to volunteer to cover the task.
- Freeze all hire. Obviously it makes not sense to take on any new additional labour. We had to suspend a couple of new hires for a few months, but we do keep in touch with them and try offer any help we can for them.
- Regarding salary payment, we paid our senior management team in two payments. 50% beginning of the month and 50% towards the end of the month, therefore it takes a load off our cash flow, whilst we try to generate additional income from takeaway delivery and other initiatives. We do not recommend to implement this for rank and file employees, as they tend to need the money a lot more and may need to support their family as well.
- Extend probation period. If any staff were on probation period, talk to them and see if they will accept an extended probation period.
- Leverage your Human Resources! We have combined the team from our bar and cafe. During peak hours of the cafe, we have one of the bartenders come support and do easy tasks (bussing, dishwashing etc) and the cafe team reciprocates during prep time of the bar. A bartender can also help the kitchen do chopping duties or clean pots and pans. It’s all hands on deck.
- Discover hidden talents of your team. Instead of hiring a graphic designer to do your takeaway packaging, look within your team to see anyone can do it. Same with photo shooting for the product. You can suspend your contract with the PR agency and see if any team members can look after your social media account during this time, it’s always a more “personal approach” people are looking for during difficult times.
- If the staff have no overtime left and they have cleared all their outstanding holidays, try not to have them owe the company too many hours or days, as that will decrease motivation as they will realise they will not have any more holidays for the rest of the year. Be fair when asking staff to stay home and clearing leaves.
- Another great initiative we came across was staff co-sharing. Multiple venues sharing the cost of labour.
The team with their two trophies for Service and Sustainability at the DMBA Awards 2019
It’s not all about making money and saving cost. Now that everyone has more time on their hands, try do something for the community/industry. As mentioned above, we’ve started doing live streaming classes on cocktail making/knowledge, also enhancing internal training. Spend the time repositioning your product and services and be ready to pounce back when things get back to normal. Most importantly, help out your neighbours and your hospo friends, lend a hand when needed, share best practices. We are literally all in this together.
Amethy, Marcia, Andrew & Bastien – Hope & Sesame
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