Article written by:
Director, Restaurant Services
So much has changed in so few days and we wanted to reach out during this troubling time to make sure you’re aware of and leveraging the information being put out by the National Restaurant Association (NRA) and Ohio Restaurant Association (ORA), including their recent communication regarding order limiting the sale of food and beverages, including alcohol, to carry-out and delivery only.
In Ohio, the governor announced restrictions on restaurants and bars that went into effect on Sunday, March 15, 2020 at 9:00 pm, which will limit restaurants to only carry-out, drive-thru and delivery of food to further support physical distancing of people and discourage congregation of people. For those operators not in Ohio, I would recommend paying attention to what is happening in Ohio as these restrictions may be coming soon to your state.
The following is a punch list of financial items to address:
- GBQ will be providing a synopsis of the proposed bill “Families First Coronavirus Response Act” early this coming week (understanding it’s still being negotiated). We will also have a website page directly related to the coronavirus impact and SBA loans.
- News headlines can be confusing so leverage social media to let customers know you are open for business, just not dining in. Be creative with sales incentives.
- Cash is king in the restaurant industry. If you haven’t already, it’s time to update your cash projections and determine your cash flow needs for the next 30, 60, 90 days (SBA loan) to weather the storm and what expenses can be cut back during this time.
- Adjust food/beverage orders immediately
- Consider scaling back the menu to “customer favorites” to reduce waste
- Adjust labor schedules
- Adjust employee classification in the payroll system as needed (tipped employees)
- Reach out to your landlords and ask for temporary payment relief
- Challenge discretionary expenses without jeopardizing quality and cleanliness
- Put non-essential initiatives on hold until this passes
- Ohio has just announced economic plans around unemployment benefits as temporary loss of jobs are expected which will reduce the wait time to receive unemployment benefits and lift the requirements to receive those benefits. Transparent communication with your employees is so important as this will be concerning for them. More than ever, it’s important to take care of your employees. Here is an article on what some restaurant companies are doing.
- Ohio Liquor (OHLQ) is also allowing returns for unopened liquor products purchased in the last 30 days.
- We do expect the tax deadlines to be extended but as of now, that has not happened.
- For those with debt covenant requirements to submit audited/reviewed financial statements in the near future, we would recommend asking for a deadline extension now if you think you’ll need it.
- We would also recommend reaching out to your insurance company to better understand whether business interruption applies in this case and around providing your own delivery services, should you be considering it. Our understanding is business interruption will not apply, and unless you currently provide your own delivery services, offering delivery now will not be covered by your current policy. Please reach out to your insurance agent.
- Some third-party delivery services are offering reduced fees. Take the time to understand what is being offered.
- Above all, customer service will continue to be especially important and a differentiator on ease of service.
As you know, new information is coming in fast. The ORA and NRA are doing a great job of staying on top of the situation and working with local and state government officials. I would recommend checking out the website links above to stay current (as well as your respective state’s restaurant association).
The restaurant industry is comprised of strong and passionate entrepreneurs and always rolls with the punches no matter the challenges being presented. I know operators will find a way to survive this challenge and bring about further innovation and ingenuity. It’s going to be tough, but we’ll make it through.
Please do not hesitate to reach out to members of GBQ’s restaurant team should you have any questions or wish to brainstorm on ideas.