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Coronavirus: 5 simple tips to help restaurant owners minimise financial losses

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We’re all facing unprecedented times due to coronavirus (COVID-19). Not only are individuals affected in profound ways but businesses are severely feeling the impact.

Hospitality has been one of the hardest hit sectors. And restaurants have faced a loss of revenue and challenges with cash flow due to the government’s requirement for them to close.

But that doesn’t mean your restaurant needs to stop trading (and it’s worth making the most of government financial support schemes that you’re eligible for too).

It’s essential now more than ever for you to put steps in place to minimise any financial losses. Try these five tips as part of your plan.

1. Continue supporting your team

Supporting your team will not only help your employees to better weather these difficult times but will earn you goodwill and help to retain critical employees. Some restaurant management are paying their employees’ salary, even sometimes from their own wages.

The Coronavirus Job Retention Scheme may also help you to protect jobs, so it’s worth exploring this if you haven’t already.

If you’re moving to a delivery and/or takeaway operation (more details below), you may find that your shift patterns will change.

Be transparent about how this will work so your team know where and when they’ll be required to work. The same goes for any decisions around staffing costs.

And you may find that some employees have concerns about working at this time – listen to their concerns and do what you can to help them.

This will show your employees that you care about their wellbeing.

If your team feels supported, they’ll be more likely to help you keep your restaurant moving – meaning you can keep serving your customers, albeit using alternative methods.

2. Start or increase your takeaway and delivery options

With the requirement for restaurants to be closed, it’s worth exploring takeaway and delivery services for your customers. This could also help you attract new customers that you may not have previously reached.

Some restaurants are working with third-party delivery systems. Others that haven’t used third-party delivery may have been understandably resistant to bite into already tight margins due to the need to pay potentially steep third-party delivery fees.

However, some third-party delivery services are deferring or even waiving commission fees for independent restaurants impacted by coronavirus, so this could be a good time to try it out.

Another option is to redeploy your employees as in-house delivery drivers (following social distancing guidelines, of course). This may have an added benefit of helping to keep as many members of your team as possible employed.

Maintaining your own delivery team can be cheaper than using third parties, as you’ll keep all of the revenue and can better control the customer experience while preserving your brand.

But setting up your own delivery can take time and there are considerations to factor, such as potentially hiring additional right employees, getting additional insurance and purchasing specialised packaging.

While it can be difficult to implement in-house delivery right away, you could look at starting quickly by using a third-party delivery service, then shift to an in-house option at a later date if that works for your restaurant.

It may be worth looking into more than one delivery service to evaluate which is the best for you, and try to avoid signing any exclusive contracts that limit your ability to partner with other services.

3. Adapt your menu

Regardless of which delivery channel you use, it’s important to track which items are most popular as well as the profitability for each item, since this may be very different to your in-restaurant items.

Restaurants that are achieving high profitability are those that have carefully crafted their menus to weed out labour intensive and under-performing items.

Additionally, it’s best to focus on menu items that need the least amount of labour and yield the highest profit margins.

Food portability is an important consideration as well as using items with low food cost variability (such as avocados).

Another tip is to streamline your offerings so you’re focusing on meals that require fewer employees to prepare, and limit ingredients to those that can work across your other offerings.

Optimising your takeaway and delivery items can greatly help in the effort to protect margins and may even open up new revenue opportunities.

4. Offer incentives to your customers

Some restaurants have been offering complimentary gifts to their customers when they purchase vouchers and gift cards, which can be used when they open their doors again – and this is something you could try.

Selling vouchers can be valuable to restaurants anyway, since a lot of customers tend to spend more than their value when using one.

And by offering escalating perks at different levels, you could have a simple way to boost your revenue and give your customers something to look forward to.

For example, you could offer a complimentary dessert with a £30 gift card or a bottle of wine with a £60 voucher.

5. Be creative to entice existing and new customers

Another idea that savvy restaurants are trying right now is getting creative with their offerings. Some restaurants are finding success by completely changing their menus.

Others are testing new concepts such as meals in a box for the whole family, incorporating hard-to-find grocery items around particular themes such as picnics and movie nights.

Then there are restaurants that are boxing up their ingredients and delivering them to customers so they can assemble them at home and put their spin on some delectable creations.

Think about how you can be creative with what your restaurant offers and reach out to your customers so they can become a part of the process too.

Final thoughts

While it’s a challenging time for restaurants, and the hospitality industry as a whole, there are opportunities that can help you minimise your financial losses.

Be savvy with your spending, continue supporting your team and keep reaching out to your customers.

Coronavirus and your business

We’ve gathered information and resources to help navigate this situation, including tools and webinars, to help you understand what financial support is available.

Find out more