By David Hunter of The Bowden Group
So… there is starting to be lots of talk about reopening. BUT… unless there is at least a tangible sign of being able to trade PROFITABLY, you might well ask yourself ‘’WHAT IS THE POINT?’’
You are not there just to provide a service to the community.You are there to make
enough of a profit to enable you to pay all your bills and live reasonably. We all know that no-one in Foodservice is going to get rich quickly after Covid-19, and we accept that, but there has to be a positive indication that you will be able to be profitable after a reasonable period of adjustment, so that you can see a future for you and your business.
I would like to touch briefly on a number of OPERATIONAL aspects, and I just need to say that these are my opinions, and I may be generalising, but there is no other way to write this article.
FIRSTLY… DO GIVE IT SOME TIME
Do not expect to bounce back into Profit straight away.The considered opinion is that it will take months or maybe even years, to get back to where you were before the Covid-19 outbreak.
The very fact that you are still here at all, is the amazing thing. So … WELL DONE for that. There are hundreds of Hospitality businesses that will NOT have survived at all.
Who knows at what rate the business will return?
A large factor is where in the market your business sits, where it is geographically and what your typical consumer base looks like.
Be prepared for demand to be different.
Be prepared for customer expectations to be different.
Be prepared for being flexible and adapting the business ‘’on the hoof’’ to the new demands.
GROSS PROFIT MARGINS
We have yet to see how Gross Profit Margins (“GP%”) will be affected by the Covid-19 outbreak.
We would all like to think that we could resume the same GP%s that we had before the outbreak – BUT – be warned – we WILL come under price pressures that will put downward pressure on our selling prices – and hence could drive our GP%s lower.
This could be driven by public expectation …
Or it could be driven competitive pricing by others …
And, the way I read it, it could also be driven by higher costs when buying from EEC countries.
It is very unlikely (let’s say impossible) that our cost prices will be any lower, so the selling price will still be crucially important.
In my opinion, there will NOT be an opportunity to take a HIGHER GP% to try perhaps to recoup some of those lost profits.
Again – just in my opinion, the competition will be fierce, and increasing our prices will lose us market share to our competitors.
There are going to be some very difficult decisions to be made.
Whenever you do re-open, it will be on reduced trade – partly down to there being less business out there, but also partly down to any continued social distancing obligations.
I believe that you will almost certainly need to reduce your staffing lev- els, and almost certainly that may involve some Redundancies. The Government has already signalled the end to their wage subsidy through furloughing, and there will be a lower requirement for hours worked. That means that manpower will have to be reduced, and that, very sadly, means redundancies will be needed – almost everywhere.
Whilst we might all believe that we are able to avoid that … we won’t be able to.
With the employees that DO get back to work with you, there will be notable nervousness … mainly about their jobs and whether they will be able to keep them.
This is a time for reality … but also, for compassion.
People do not work at their best when they feel ‘’under threat’’ … and this applies especially with ‘’customer-facing’’ staff, as their nervousness may be apparent to your customers. Managers will need to show understanding, and be encouraging, to keep getting the best from remaining employees.
You will doubtless take on too may staff to begin with, so be honest and open with all your staff about hours availability, needed flexibility and predicted incomes.
Being open and honest with employees will gain their support … we all have to work together on this reopening … and none of us have been exactly here before.
In summary, when we have taken all of the above into consideration, we (you) can decide when to reopen, how to reopen, and what changes you may need to make to the business, to be able to reopen and become a Profitable business again.
Several Foodservice businesses have already declared changes in their operating styles … to fit in with ‘’the new now’’.
It is NOT going to be easy.
It will be VERY challenging, and you will need to be confident, very pos- itive, and VERY STRONG to make it work.
The planning that you do NOW will play a huge part in the outcome … whether it is going to work or not.
If you want to talk through any aspects of this article or discuss how it affects you and your business, just call me: David Hunter of The Bowden Group, on 07831 407984.
You can call me any time, but preferably 09.00 am – 09.00 pm on any day, weekends included. Or just send me a text message asking me to call you.