Roland Smyth: 10 reopening tips for bars and restaurant owners
Roland Smyth, head of Scottish hotels & leisure group at law firm CMS, provides some tips for bars and restaurant owners who are planning to reopen their businesses this week.
The hospitality sector, which has suffered immensely from the coronavirus lockdown, is set to reopen this week. This includes thousands of restaurants and bars across Scotland which have seen little if any revenue since March. With many owners of these businesses well advanced in their reopening preparations, here is a checklist of 10 important points to consider in advance of 15 July.
1. Double-check your supply chain: Many operators have kept their supply chains in place, talked regularly to suppliers and continued to make payments to them to ensure they’re on board for re-opening. Some terms of supply may have now tightened however, with suppliers asking for cash up-front or seven-day payment terms so it’s essential to reach out to suppliers, treat them as valued team members of your business and maintain high volume expectations.
2. Re-open at the right time for you: This will differ from operator to operator: some of our London clients, for example, reported brisk trading on reopening while some of the UK’s more premium concepts, including Dine restaurant situated in Edinburgh’s Saltire Court, and the city’s Matthew Korecki’s Otro and New Chapter restaurants, have decided to wait it out until they have more clarity on likely footfall and spend per head levels before they reopen for business.
3. Be innovative: Lockdown saw many successful initiatives, such as Edinburgh-based Civerinos’ popular “Dough It Yourself” make-your-own pizza kit which they delivered across the city centre. Some of our clients have described the take-up of online sales during lockdown as “eye-opening”, enabling them to generate close to similar sales but with reduced staff. It may be worth considering whether these services should be maintained and even expanded as a delivery model could be preferable to retaining or rolling out further physical premises.
4. Technological service with a smile: Operators looking to develop apps and new technology systems to reduce staff interaction should ensure that these integrate with and indeed, where possible, enhance their brands. They should also check that apps are scaled for purpose and competitively priced.
5. Use PPE appropriately: As Food Standards Scotland has reminded the industry, the use of face coverings where food is being prepared and served can bring its own health risks as well as help minimise the spread of COVID-19. Business owners should therefore keep updated on government and industry guidance and, where appropriate, take into account the views of staff and customers.
6. Confirm staff availability: Since lockdown some restaurants and bars have reported a drift in staff with up to 10% of employees, some of whom are migrant workers, opting not to return to their jobs. The flexible furlough system allows employers to share hours out amongst staff by keeping two teams in operation, allowing one team to step in if the other suffers an infection or a track and trace issue requires its members to self-isolate.
7. Take legal advice if you’re planning redundancies: Despite the support of the furlough scheme, making redundancies will be necessary for some bar and restaurant business owners. Collective consultation is legally required if this involves more than 20 employees at any one establishment with specific processes which must be followed. It’s therefore important to seek legal advice from the onset.
8. Engage with your landlords: Some operators have successfully restructured their rent payments to help sustain their businesses while others have been threatened with lease termination once the current moratorium ends, highlighting the importance of engagement between landlords and tenants. Anecdotal evidence suggests that operators who share with landlords their cash flow and revenue projections to demonstrate the financial pressures their businesses are facing are more likely to have a positive discussion on proposed lease restructurings.
9. Keep on top of your finances: The temporary respite for directors incurring liability for wrongful trading due to COVID-19 is due to end on 30 September. Going forward, it will be important to ensure that cash and cash burn are monitored on a weekly basis and that directors seek legal and insolvency practitioner advice to ensure they continue to comply with legislation.
10. Speak with others: Lastly, remember that everyone is in this together. Share ideas with neighbouring businesses and look for opportunities to work with people offering complementary services. Restaurant operators could, for example, consider pairing up with a bar to offer cocktails alongside your food takeaways.
While this week’s reopening is hugely welcome, there’s little doubt this will be a challenging year for most bar and restaurant businesses. Further government support through initiatives such as the VAT cut for hospitality and the Chancellor’s ‘dine out to help out scheme’ will be needed to ensure the sector makes a strong recovery.
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