If we look at recent news, one thing is clear for bars and restaurants:
The COVID-19 crisis is changing the industry landscape.
Even more businesses are filing for bankruptcy.
We’re already seeing massive layoffs.
And some establishments reinvent their entire business models.
While bigger chains may survive due to sheer size and borrowing capacity, what can small operators do in light of shrinking cash flow and uncertainty?
We created this battle plan to help heavily exposed bars and restaurants handle the COVID-19 crisis.
Here we’ll provide ideas and further resources about the following:
- Cutting costs in your bar or restaurant.
- Boosting cash flow, especially in the short-term.
- The currently available financing options and government relief.
By the time you finish reading, we hope you’ll be in a better position to handle the crisis, save your business and perhaps come out stronger than before.
Let’s dive in.
Cost savings for bars and restaurants
The first aspect of surviving the crisis is cutting immediate costs.
You might have already taken steps in this regard pushed by recent developments and restrictions.
So you can treat the below as a checklist for reducing costs to a minimum, starting with bigger expenses and moving down to smaller ones.
Negotiate rent terms with your landlord
One of the biggest concerns is likely covering your rent during the crisis. So it makes a lot of sense to approach your landlord (if you haven’t already) and ask to reduce or defer this month’s rent payment. There’s a lot of sense for them to do so – if you leave or go out of business, they end up without a tenant.
Cancel or amend supplier contracts
It’s a similar situation when it comes to suppliers – while they are likely under similar circumstances, try to pause or postpone payments for a future date.
Discuss the severity of the situation with your staff
As painful as it could be, this crisis may require you to let go of some or most of your employees. At this stage, temporary leave seems like a logical option as we’ve seen chains like The Cheesecake Factory furlough 41,000 employees recently.
Still, keeping capable staff on makes a lot of sense if you want to get back on track once the crisis is over. So consider retraining and utilizing employees in other roles. Yes, this requires ongoing investment but it could be well worth the money (we’ll cover generating new revenue and relief options later in this plan).
Partner up with (reasonable) competitors
Think about approaching other local businesses that are heavily affected, even if they are considered your competitors. You can share resources or at least exchange information to help you go through the crisis.
Cancel or pause any software payments
Another main expense could be your software tools – think about canceling or pausing these if your vendor hasn’t removed fees yet.
And many companies in the space understand the severity of the situation so they are reducing or removing fees altogether. For example, Glimpse customers can now use our technology free of charge and new customers get the first month off. Learn more in a free 1-on-1 consultation.
How to boost cash flow in the short-term
Reducing costs is just the first step which helps you increase runway. To make sure your business survives COVID-19, you will likely need to explore new business models. So in this section, we’re going to look at a few ways to generate revenue and improve your cash position.
Focus on home deliveries
If you offer food, think about arranging for delivery and focusing on this channel. Services like DoorDash and Grubhub can make it easier to start so you don’t have to set up the whole operation from scratch. You can also check out some of the best online ordering systems.
Sell gift cards
While bookings in hospitality are on a decline, gift card sales are relatively stable. Consider pushing gift cards on your website and other channels as people can redeem them at a later point. If you don’t offer gift cards yet, you can get started with services like WeGift.
Promote future events and themed nights
If you need to boost cash flow fast, consider events and themed nights as new potential offers. For example, you can create a wine or whiskey tasting event. People can purchase a ticket now and experience the night at a later date, once things are back to normal. To get started, you can check out services like Eventbrite.
Sell off remaining inventory
If you have unused inventory on hand that you won’t be able to push through normal channels, consider selling it off to other businesses. This might be a small amount but can still help you boost cash flow in the short term.
For more information on improving cash flow, check out this guide by the Harvard Business Review.
Government support and funding options for bars and restaurants
Unfortunately, cutting costs and generating cash flow in alternative ways may not be enough. If worst comes to worst, quick access to financing can help you overcome the situation.
Below we’re going to look at the currently available financing options for bars and restaurants, including government support and business loans.
SBA Disaster Loan Program
The U.S. Small Business Administration (SBA) can offer up to $2 million to businesses affected by the coronavirus. The interest rate for small businesses is 2.75% so it’s reduced because of the health crisis. Learn more about the SBA Disaster Loan Program.
Florida Bridge Loan Program
This program is available to small businesses based in the state of Florida with 2-100 employees. You can get up to $50,000 interest-free for a full year before you need to repay the loan. If you fail to repay, there is a 12% interest rate applicable on the remainder. Learn more about the Florida Bridge Loan Program.
Mainvest
Mainvest is a crowdfunding platform for small businesses. If you launch a fundraising program on their site, they offer a zero-interest cash advance of up to $2,000 brick and mortar businesses affected by COVID-19. The cash advance has a 120-day interest-free period and is in addition to the $100,000 maximum you can raise from local patrons and loyal customers. Learn more about the Main Street Initiative.
Kiva
Kiva is a peer-to-peer lending platform that facilitates microcredits from individuals to small businesses. Currently, they offer 0% interest loans of up to $15,000 to U.S. small businesses. Learn more about borrowing with Kiva.
Compare COVID-19 loans in Finder
Finder lets you search and compare small business loans that can help you navigate the coronavirus health crisis. Compare loans with Finder.
In addition to the above resources, companies like Facebook, Yelp, Grubhub and Uber Eats have all pledged significant resources to help bars and restaurants fight COVID-19. These come in the form of free ad credits, waived commission fees, same-day payouts and incentives for consumers to keep ordering food and beverages.
Further resources
Above we tried to include a comprehensive list of tools and resources to help you handle the COVID-19 crisis. However, things move fast and any information we publish can get outdated quickly.
So how can you stay on top of things? In addition to this battle plan, below is a community-generated list of COVID-19 resources for small businesses:
COVID-19 Small Business Community Resource Guide by Loom
If you’re based in Florida, you can also check out the Florida Restaurant & Lodging Associations guidelines and updates here:
These are some of the frequently updated pages with resources we’ve found so far. We’re also sending regular updates on the situation in our newsletter.
Conclusion
This pandemic caught most people off-guard. And bars and restaurants are some of the most affected businesses out there.
In order to survive the crisis, smart operators must explore new business models in addition to saving costs.
And even this might not be enough.
Day by day, governments across the world introduce new relief programs and many organizations offer cheap loans to help the industry bounce back.
If one thing is clear, it’s that there will be a significant shift in the way hospitality businesses operate.
And the winners will likely be the ones who can adapt the fastest.
No matter if you’re struggling with making payroll, or looking for a new set of SOPs to save you from bankruptcy, our team at Glimpse is here to help. You can send us your most pressing questions here.
Trifon Tsvetkov
+1 (786) 292-2373
insights@glimpsecorp.com
