As an industry, we have to get past the undeniably unprecedented nature of what happened to us.
In fact, it does little, if any, good to lament that COVID-19 and the attendant shutdowns happened to us. In an environment where government intervention is scant to non-existent to hardly effective, we have to get past the reality that we got shut down through no fault of our own and better prepare for the future.
In this article, I detail two steps every bar and restaurant in America should take immediately.
Create An Emergency Fund
It’s personal finance 101 for individuals and it should be standard fare for restaurants and bars.
In an Eater LA article, Osteria la Buca owner Stephen Sakulsky said this in reference to having to close the restaurant’s takeout business due to an employee contracting COVID-19:
We’ve had the luxury of building a rainy day fund… That’s why we do these things, so we can be prepared for this.
I’d make one adjustment to that comment. I’d replace “luxury” with “necessity” or “obligation.”
Personal finance 101 teaches individuals to become debt-free (maybe not possible for bars and restaurants) then create an emergency fund with enough cash to cover three to six months of living expenses. In the pending “new normal” there’s no reason why businesses in the hospitality industry shouldn’t follow the same principle. In fact, it’s probably critical.
If you’re an established bar or restaurant that doesn’t have an emergency fund to cover, if the COVID-19 pandemic has taught us anything, up to a year’s worth of expenses, you need to find out how to make that happen.
In a business with huge expenses and razor thin margins, how do you accomplish this? Evaluate everything you’re doing and free up cash you can sock away.
Are you a bar with a coffee program? Do you really need that coffee program? Can you, at the very least, cut that coffee program in half?
Are you a bar that serves food? Do you really need an all-out, restaurant-style food menu? Can you serve your guests just as well with three-bite snacks (in the spirit of Death and Co.)?
Look at everything you do — current programs, expansions, labor. Decide – with raw honesty and objectivity – if you can do it more efficiently, forgo it, or cut it. Take the savings and plow it into a savings account each month until the balance equals up to (and preferably) one year of operating expenses. In other words, create a fund that will sustain your business for up to one year without revenue. In the takeout days of COVID-19, you might use this money to supplement reduced revenue.
If you’re a new restaurant, part of your path to opening and/or your pitch to investors should be that you’re simply not ready to open without an emergency fund equal to a year of expenses.
Employees (myself included) know all too well that many bars and restaurants are notorious for running lean. Suddenly, this doesn’t seem like as much of a bad thing.
If we want bars and restaurants to be around for the long-term – thus increasing the chance they can provide stable employment – it’s probably better that they run lean. Post-pandemic, they need to run leaner than ever.
As an example, bars and restaurants should ask, and employees should expect to work multiple roles. The days of standing behind the bar and not moving from behind the bar for an entire shift should be over for bartenders. Bartenders should prepare to double as server/host. If a bartender takes a section, you can run with one less server on a shift.
Not only does this type of multitasking help a bar’s bottom line, it can provide a better guest experience. There’s nothing that has worked better for me as a bartender from a hospitality standpoint than taking tables. If you’re going to be a few seconds slower, you can make up for it by giving guests one-on-one attention from the person making their drinks.
This cost-savings can be temporary. But COVID-19 has made it imperative that bars and restaurants take these and other measures, but not for all of the reasons we hear listed daily amid this conversation. They need to do it to create the aforementioned emergency fund.
Without sufficient federal, state, and local support in most places, an emergency fund will prepare establishments to weather whatever the next storm is.