Reopening requires rethinking some of the norms from the past.
We take a look at some of the financial issues to consider as you prepare to reopen.
Maintaining an up to date cashflow has never been more important. Your finance manager should be producing a revised forecast of the predicted inflows and outflows of cash for your business ideally on a weekly or even daily basis. This can be prepared on a spreadsheet or as a function within your accounting package. The key with any cash forecast is to be realistic – when will you actually receive cash from your customers and when will you actually need to pay your suppliers and meet payroll obligations as well as other operating and fixed costs. In the current climate it is prudent to produce a cash flow for different scenarios to anticipate the impact of different levels of business. Remember as well that the cashflow includes all inflows and outflows including CAPEX.
Update menu costings
The restrictions imposed by social distancing requirements in the food preparation areas may mean that you need to revise your menus with possibly a more limited offering available. Every £1 of revenue needs to count so make sure that you have chosen menu items that will meet your customers requirements and will also maintain your gross profit and gross operating profit. Keep standard recipes up to date with costing of ingredients, portion sizes and a selling price that takes into account not just food cost but also labour time as well.
Track demand patterns
It is likely that as our businesses start to reopen we will see different demand patterns from possibly different market segments. Keep a careful eye on the data you are capturing regarding customer purchase patterns and popular products – these patterns may be different to pre lock down and this data will be your guide to the future.
Manage the space and time
Take a careful look at your opening hours – limited capacity at traditional peak times means that we need to think carefully about the Revenue Per Available Seat Hour (REVPASH). This may mean adapting your offering to capture different markets to build business in the quieter shoulder periods to maximise the revenue per each hour you are open. Remember you still have fixed costs to cover and that additional business revenue will make a much needed contribution.
Join us for our new webinar series with sessions focused on the steps you need to take to build your business back to profit. With volume constraints arising from social distancing procedures in place, every £1 of revenue counts.
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