Bouncing back from a surreal and nightmarish ordeal, persistent restaurant CFO’s push through coronavirus impact and promptly shift gears to prepare for a substantial economic surge.
As a direct result of the ongoing pandemic mandating non-essential business shutdowns, restaurants lost an estimated $270 billion last year, permanently closing many and sending those remaining to endure a perilous journey.
Fast forward to today, with the economy boosting and business doors reopening, those surviving restaurants are preparing to welcome a high volume of eager customers. According to the Commerce Department Reports, first quarter sales in bars and restaurants rose 13.4% in March compared to February, followed by an even higher standard-the highest since February 2020-in the month of April. With a continuing roll out of vaccines and accelerated desire of people to leave their homes, restaurants are taking precautionary measures by boosting inventory, developing their scenario plans, lining up back-up vendors, exploring consolidation and ensuring access to capital in case of a new wave of the virus.
While the pandemic notoriously presented a multitude of unique challenges for the restaurant industry, CFOs continue to adapt their innovative solutions inside their restaurants and to their business models, this time with a greater focus on take out and deliveries.
With demonstrated capabilities and a new founded skillset, these CFO’s have begun to offer advice to CFOs in less-stressed industries.
Although customer demand remains substantial, restaurant CFOs struggle to forecast the true impression to this current situation and its likelihood to continue. Adding to this stressful state, many restaurants may need to repay their Payroll Protection Program loans from the SBA if they fail to meet terms for loan forgiveness, which would, in turn, counteract their initial goal of paying off debt and improve their balance sheets. Staffing is another issue, with many businesses struggling to hire and retain managers, cooks, and servers due to worker fears of the virus and $300 a week unemployment. In turn, restaurants are offering higher compensation to attract potential employees.
To differentiate between surviving restaurants to those no longer in business, it is important to note that a key factor is not only finances, but the ability to adapt with flexible methods and innovative ideas. Most-if not all-succeeding restaurants took to practices including:
● Electronic menus such as QR Codes
● Installation of other tabletop technology that combines orders for beverages and food, and where customers can pay without the need of a server
● Building up loyalty programs
● Improving drive-thru ordering.
● Fast food restaurants prioritizing self-service order kiosks.
“Ghost” or virtual kitchens are also growing in popularity, and will be backed by private equity and other sources of capital.
Adapt or Die
The privately owned company, Dartcor, withstood the storm of the pandemic by taking initiative-analyzing its current methods and making adjustments where necessary. The restaurant was well known for its on-site dining services for corporate clients in the New York City region, and, upon the immediate situation, Dartcor launched an app that enables employees to order meals for delivery to “outposts” near their desks and consolidated orders from several office buildings in off-premise “commissaries.”By taking orders through their app and centralizing their methods in preparing their food, Dartcor reduced food waste, cost, and increased efficiency and cut costs, gaining an advantage over its larger competitors.
While businesses in every industry face some form(s) of external threat, the restaurant and bar industry had the impression of longevity. The coronavirus pandemic proved this notion to be incorrect, pushing restaurant CFO’s and their teams to adapt and come out with new ways to survive-even when it seemed bleak. If you and your business are struggling in cycling innovative ideas to push past your barriers, our team at MCDA CCG, INC. can help you. Contact us and our experienced CFO’s will work with you and your unique business to help you innovate towards long term success.