Restrictions are easing but should you reopen?

When we look back I think we’ll all have our own “Where was I when the pandemic became real” story. Showing my age my story will be filed away beside my Gulf War, Veronica Guerin, 9/11, Trump and Brexit ones. . The Gulf War one is probably my first big what was I doing when big news broke and as I was in college at the time also the most interesting! One day I may share.

On the 12th of March 2020, my kids along with all children in Ireland were sent home from school with their books for an “two week” break. At the time, our company had 6 cafés, 2 venues and a thriving catering business. Yet despite being in business for twenty two years with many ups and downs (notably the 2008 crash), we were caught unprepared for the weekend ahead.

On March 13th, we paused operations in our venues, including the Royal College of Physicians (RCPI), a contract we had dreamed of for 13 years. On March 15th at 1pm we closed our 6 cafés. On March 16th we put the last of our 61 staff on temporary layoff, closed our head office and applied for social welfare support for ourselves. We had no idea how we were going to get out of this one.

We took the next 6 weeks as therapy – cleaned, painted, walked, ate and drank a fair bit of wine! When we finally got our heads back to focus we really did focus and this post is about the decisions and changes we made.

Just because you had a hospitality business before the pandemic does not mean you should continue one after it. We drilled down deeper into our figures than we ever had done before and took the difficult decision not to reopen two of our cafés. The numbers were just not adding up. Now, I am happy to share one of the simple metrics we used to decide if part of our business was worth the hard work and as we all know this business is hard work.

Food Costs

It’s all about the numbers – bottom line really is the bottom line and if the business is not performing then tough decisions need to be made. One of the main pillars of good numbers are strong Food Costs – it’s really important to communicate with your supplier and without compromising on the quality of the product push for the best prices you can get. Know when you have reached a tipping point and always leave a little meat on the bone for your supplier – there is no point in getting great prices if it’s not sustainable for your supplier. In general, a good formula for Food Costs is no more than 25% - if you were higher than this when you closed you need to reopen no higher than 25% - if that’s not possible it’s a good time for a deep look at where your business was going before the pandemic.

We have always had a strong focus on portion and cost control, but the pandemic allowed us more time to hone our skills and our tools. We take every dish we make and formulate a recipe per portion – we now have our own webapp for this but you can do this manually. We then focus on our sales and predict sales based on customer trends as well as weather – in our business weather is a huge factor. In 2021 it’s an even bigger factor than ever.

Wrapping up

Key to getting your costing right is getting your portion control right, not only will your kitchen deliver strong margins but you will cut down on waste – every penny counts in business but we also need to run more sustainable kitchens. On top of this, if you are aware of where your costs should be you will quickly be able to see items going missing from your kitchen. So, before you reopen, dig deep into your numbers and if your GP is not strong look at your process to see if you can improve - if you can’t then ask yourself should you reopen?

In my next post, I will look at another pillar to a good bottom line - Labour and Productivity.