Restaurant Tips for Getting Past Week 3 of COVID-19 Pandemic

It's week 3 of the COVID-19 pandemic and restaurants are among the hardest industry hit by the cultural shift to stay-at-home recommendations and orders. How can you can make it through this pandemic and major change in how to operate a restaurant?

There is a restaurant segment that isn’t suffering during this time: quick-serve restaurants, including pizzerias, who already had delivery and/or a drive through. For most of these restaurants, sales are booming.

But the rest of the industry is struggling. If you are a full-service restaurant, sales have plummeted. Some have found a way to pivot, but sales and staffing are the lowest these restaurants have ever seen. They’re wondering “Is this a week we battle through or is this the week we close?”

Many restaurant owners had to close their doors – temporarily or for good - because there just wasn’t enough cash to hold out. My heart is with these owners. I love this business, and I love the ingenuity, optimism and resilience of the people in the business. My fingers are crossed the government is going to provide a wealthy enough bailout to get you all back on your feet. (Make sure you’re paying attention to the legislation, loans and grant programs.)

For those restaurants whose kitchens are still open, whether for takeout and delivery, providing food to those in need or pivoting to be a different business such as catering to go or as a grocer, what are some things you must do from this point forward?  

The number one thing is to create a 12-week cash flow plan. You’ve already worked through the biggest change. You’ve paid a payroll from when you were busy and used money from your slowest time. You’ve probably tackled some big challenges, such as rent, negotiating invoice payment with your distributor, having to let the majority of your staff go, but if you were using your gut to do this up to now, it’s time to start working with the real numbers.

Since profits don't pay your bills and cash does, it’s time to figure out how to keep money in the bank so you can keep paying your bills. How many employees can you keep employed? How can you pay as many of your bills as possible and not create such a deep hole that when you get out of this, when sales go back to normal, whatever that new normal looks like, you can recover.

The 12-week cash flow plan helps you answer the most important question: can you afford to stay open? By the time you look at the end of the twelve weeks, you have answers to what your sales would have to be, what your food cost would have to be, how much labor you can afford. You can evaluate if it’s worth taking out that new SBA loan if there isn’t a guarantee it will be forgiven. Or is it better to shut down and lose less money being closed until it's time to reopen? Or close forever? I don't know the answer, but you need the numbers before can answer that for sure.

Create scenarios. You create your 12-week cash flow budget and then create a new one with higher sales, one with lower sales, one with a boost of money from a loan or a grant. For how long can you do this if no one has put a definite end date on the stay-at-home orders? This week we were given 30 more days of it. I don't know if there's going to be a third month, but my gut says there is.

Make the big decisions now. Use your 12-week cash flow budget for clarity.

The last thing I want to tell is you must lead your team. 

It takes leadership to be successful in this business, which is why leadership is a key component of my Restaurant Prosperity Formula. It takes leadership to help us get through these challenging times. Your team is dying for you to lead them now. I get it. It's frightening out there. Take a day – drink, cry, eat, whatever it is you need to get through that hard day. You get one day to feel bad. What you do the next day defines you as an entrepreneur and leader in your business.

Your employees are looking at you. They want answers to their questions and how it’s going to affect their lives. A lot of them may have already lost their jobs with you, but what are you going to do bring them back when things return to normal, or at least when a new normal is established? They need an opportunity to apply for unemployment. Give your employees the opportunity to take care of themselves.

I know it's crushing the industry right now. I know it's hurting. I know there are going to be some people that lose their businesses. But the fact of the matter is, it is a new beginning, an opportunity to cut the dead weight and do things right. So when you come back, you come back stronger, better. It's now time to put those systems in place. It's time to lead. It's time to do the best you can and take your business down another path, because this is a wakeup call for industry.

Keep in mind, this advice applies to all restaurants - whether you're booming or busting right now. If you're making more money than pre-pandemic, a 12-week cash flow budget helps you see where you can keep more of those sales as profits. 

I'm going to be here for you, and I'll do whatever I can to help. Thank you for trusting me and supporting me, too.

I cover Restaurant 101, putting systems in place and more in my book. Order your copy of  Restaurant Prosperity Formula: What Successful Restaurateurs Do here. 

You can also complete a free restaurant evaluation. It's a great way to identify immediate opportunities where you can make things better in your restaurant. 

Be sure to visit my YouTube channel for more helpful restaurant management video tips.