As restaurant owners tighten their belt among declining sales linked to Coronavirus closures, here are fifteen things you can do immediately to extract savings from the expense lines on your profit and loss statement. While a single idea may not turn up a lot of free cash, the combination of several can result in keeping precious funds on hand while we get through this short-lived crisis.
- If you have an SBA loan, contact your lender and ask for a deferral. SBA loan payments can be placed on hold for up to 90 days even if the bank has sold the loan. If they retained the loan in house, you could ask for six months.
- Cancel all recurring bills. This will force you to examine each line item carefully and not just have them auto deducted from your credit card or bank account. This is actually a very good process to re-evaluate everything subscription based or auto deducted. Too many items hit the books on a recurring basis that are not adding value to your business. You may discover charges for programs you no longer use.
- File an insurance claim for business interruption even if you are being told your policy does not cover “Pandemic” or “Civil Acts.” There are rumblings that some state legislatures who primarily control insurance at the state level may act on this issue. Filing now preserves your claim when and if the dust settles in a positive way on this.
- Check your HVAC settings for the entire store and dining room. With little to no traffic, you should be able to move the temperatures up to save money. Make sure this doesn’t impact your kitchen system however if you’re still doing carry out and delivery.
- Cut trash service and any other recurring expenses like window cleaning, lawn service, security, or outside cleaning services if you aren’t open or are operating on a limited basis.
- Temporarily cancel liquor insurance policies if you are unable to serve. Insurance agents are telling us you can just start it up again when you start to pour but check your local licensing requirements.
- Cut back or cancel linen delivery, floor mats and kitchen cloths while you’re closed or downsized in operating hours.
- Cut back on CO2 deliveries or anything else that scales up or down. Make sure any recurring deliveries are stopped until they are needed.
- Public utilities are subsidized by the government. Ask if they can defer payments on utilities in the wake of the crisis. It is government action shutting you down. Ask them to wait on their money.
- Most major credit card companies are allowing clients to skip their March payments. This includes Citibank, Capital One and American Express. Check with your provider to see if this is available for you.
- Ask your landlord for a rent deferral. If you need help with this, contact the restaurant brokers at We Sell Restaurants. We are working with any restaurant owner free of charge to assist with this.
- Ask your food vendor to increase the term on payments.
- Limit your menu for the short term and adopt the McDonald’s model with fewer items. Carefully understand the food costs associated with each service item.
- Make sure the items you are serving up for carry out transport well and think ahead to delivery containers becoming more difficult to find as the entire industry shifts their model to take out. You need to factor paper into your cost of goods sold and look for the most cost-effective ways to package “to go” orders.
- Leverage social media which is pretty much free to share the message that you are opening and that you need community support.
Use these 15 tips from We Sell Restaurants compiled from the industry on ways to save on expenses and find more revenue until our restaurant owners are back in business! If you have other ideas, post them in the comments section. Let’s get American restaurant owners back to work along with all the people they employ!
Robin Gagnon, Certified Restaurant Broker®, MBA, CBI, CFE is the co-founder of We Sell Restaurants and industry expert in restaurant sales and valuation. Named by Nation’s Restaurant News as one of the “Most Influential Suppliers and Vendors” to the restaurant industry, her articles and expertise appear nationwide in QSR Magazine, Franchising World, Forbes, Yahoo Finance, and BizBuySell. She is the co-author of Appetite for Acquisition, an award-winning book on buying restaurants