The team behind Guangzhou bars Hope & Sesame and Charlie’s published a great guide to surviving the epidemic of coronavirus COVID-19 as a small business, and with their permission, we have edited it for DRiNK Magazine in the hope it can inspire and help others. By Hope & Sesame. Edited by Holly Graham.
We understand it is incredibly difficult for independent f&b establishments during the COVID-19 outbreak around the world. A lot of countries are now on lock down and bars and restaurants are no longer allowed to have dine in customers, resulting in an immediate halt in incoming cash flow.
With no foreseeable reopening dates, all of us will face problems of: rent; salary; perishable goods; tax and a lot of other issues. Towards the end of the January, all cities in China went into full lock down meaning all businesses were forced to close, residential buildings were not allowing any visitors, and the government told all of us to stay home and halt travel.
That was incredibly difficult for us running two f&b establishments – especially as we are the sole investor, meaning all expenses come from our own pockets. The situation was dire.
Facing this uphill battle, we did everything in our power to stay afloat, and almost two months later, we are slowly coming out on top. We have managed to come up with strategies and cost-saving practices, allowing us to pay our staff their salary in full and our rent in full for the past two months. We understand this may not be good news for business owners, with no profit and merely staying alive – but trust us – there’s no better feeling than your staff thanking you for keeping their jobs amidst such a crisis.
In the following tips, we will share with you best practices in order to either bring in alternate revenue streams or to save costs without sacrificing the well being of your business. Hopefully we can shed some light in what will be a very tough and long road ahead for us hospitality people.
1. The number one priority is to keep your staff safe
- Try to secure enough face masks for all your staff who will be working. We recommend one per person per shift. Try and secure enough supplies for the next 60 days.
- Prepare enough hand sanitisers in your outlet, for any guests (if they’re still allowed) and for delivery workers.
- Secure at least one thermometer to detect fevers. Make sure the temperature of all staff is taken before they start work. If they have the slightest fever or are ill, they must stay home. Don’t risk it.
- The establishment must be thoroughly sanitised using bleach (ratio 1:99) or disinfectant. All tables and chairs must be sprayed and wiped down using disposable paper towels every time the guest leaves and you prepare for the next seating.
- All staff must wash their hands with sanitising soap for 20 seconds before touching any food or drinks. Ensure you have hand lotions as hands tend to get dry after frequent washing.
- Check the travel history of your staff. If anyone has travelled to seriously infected regions, tell them to stay at home – it’s not worth the risk
2. Be informed of the rules and regulations
- It is very important during this time to know what your government is allowing – and not allowing – for f&b establishments.
- Find out about:
-Are you allowed to open for business? How many guests can be in the venue if you are allowed to open?
-Does your license allow you to do takeaway if dine-in is prohibited?
-Is quarantine imposed on any of your staff after they travelled to regions heavily affected by the outbreak?
-What sort of food or drink is no longer allowed to be served?
-Do dine-in customer’s temperatures need to be taken before seating?
-Does your license allow you to sell food and drink products online?
–Always keep note of government notices, as these may vary within certain districts of the same city.
3. What to avoid
- Face to face meetings with staff. Whatever can be discussed via messengers, phone calls or email – do it. Avoid holding large meetings.
- Pressuring any staff who feel ill or uncomfortable to come in to work.
- Immediately dismissing staff or putting staff on no-paid leave. It’s very important to have a motivated team to help your company ride this storm.
- Don’t rely on your usual suppliers to deliver on time – they are also facing the same situation as you. Show some sympathy to others.
- Don’t go against policies issued by the government, it’s not worth it for the long term.
4. Revenue generating strategies: Takeaway delivery
- Sign up for takeaway delivery services immediately! A lot of the services suspend their back office admin during city-wide lockdowns, so if you sign up too late, nobody will process your request. Besides regular food delivery companies, you can also check if local DHL/UPS or similar shipping services will do on-day delivery. Also, Task Rabbit-esque apps are especially useful for delivery.
- Design a takeaway friendly menu with your staff, preferably using up all the perishable goods in the fridge first. Make sure the food or drink is delivery-friendly, meaning it’s still fresh and tastes delicious when it arrives. You will face stiff competition as most places will start their own delivery menu, but customers will still choose superior products and services. Don’t forget, you can also do packages with food and drinks like a bottle of gin with mixers and some bar snacks.
- You will need to revisit your pricing. People often expect larger portions and cheaper prices for food delivery.
- Source as many takeaway collaterals as you can. Factories will be closed, so the stock for takeaway boxes will be scarce. But at the same time, do try to use biodegradable material and as most people will have cutlery at home, there’s no need for extra disposable cutlery. The Earth will still be here when the virus is gone – please respect it.
- Work with your designer on the packaging. A lot of freelance designers will still be working from home, and it’s a good way to set your product apart.
- Be resourceful. We started to do canned cocktails, and we first had to source empty cans that were still in stock with a factory that was still happy to send shipments. We then had to source a canning machine – again we were in luck because there was one not too far away from our city. We did the design in house and used a nearby print shop to do the labels. Each of our canned cocktails is vacuum packed – to limit contamination during delivery – together with a personal hand written postcard note to make the guest feel appreciated. You will never find the most ideal packaging or design at first and it does take a lot of time to search.
- If you are a bar and you don’t have the resources to make your own takeaway cocktail packaging, you can always work with existing companies who do. There are companies who will help you design your own product, produce the liquid and send you the final product. You can then sell on your own channels. Remember, you are doing delivery – it’s not a product you sell in a supermarket, so you don’t need extra licenses besides the takeaway delivery license. However, this will vary depending on the country, so do check.
- Once you have your product, it’s time to market it. Regular customers will search for your shop and order from you. However, how do you reach new customers?
-Work with influencers. During this time, influencers will also have a massive drop in business, so you could propose to them that they do a post with a couple of their favourite bars and restaurants now doing takeaway. Take good photos of your product and make sure you highlight the importance of hygiene and safety.
-Promote on your own social media channels. Ask regulars and friends to help repost – it’s now their time to help out their favourite venue! Make it personal for them, so they really feel they are part of it and helping you through this tough time.
-Start new social media channels. We have started to do a live broadcast of our bar on new social media channels that we previously weren’t on. It helps generate content, keep the staff productive, and will reach new customers. We have started to do classes on cocktails as well as tutorials on how we produce our canned cocktails. People are staying home and they have nothing better to do, so they will watch anything once they’re fed up of Netflix.
-Work with suppliers. Now is the time more than ever for them to support your business. Ask them if they can sponsor influencers or bloggers to post about your product. Ask them to post on their own social media, or ask if they can create synergy between their clients.
-Create large chat groups with your regulars – don’t just post products and ask them to order as it’s a good time to bond with them. Send interesting articles or share special stories to engage them. Throw in a couple of products here and there, but don’t hard sell.
-Very important: please tip your delivery people. These workers are the pillars of your business. If they stop working, your products will never reach anyone. Make sure they are happy to take delivery orders from your establishment over others.
-Execution is key. You have to beat your competition to the market. Everyone will be doing deliveries, so you have to be faster than them and offer a much better product and story.
5. Revenue generating strategies: Others
- If you also have the ability to do consultancy, now is a good time to advertise it. Find revenue streams that don’t require physical presence.
- Create small paid-for cooking or cocktail classes at your venue if you’re allowed. People will have a lot more free time now, and will be keen to learn. Make sure the venue is well ventilated and hygiene standards are met.
- Some of your talents may be revenue generating, you just don’t know it yet! If you have photography or video production skills, it’s a good time to advertise your services to others who may need to promote their business.
- Start creating merchandise surrounding your business. If you are a restaurant or bar, you can design t-shirts, caps or sell bartending tools, kitchen tools etc on your online shop.
- Start selling vouchers so guests can dine in at a later date. Give a chance for your loyal customers to help you out! This will help your cash flow and it’s a good way to get people back in the doors when everything returns to normal.
- Do crossovers with other small shops to create synergy. You may not have the marketing budget to advertise your product, but if you gather a couple of like-minded individuals, you can combine your efforts. A coffee shop can work together with a bakery for example.
- Do a clearance sale. Sell all your second hand glassware, kitchenware, crockery, cutlery, slow moving alcohol etc.
6. Cost saving strategies: Cash flow and expenses
- Stop ordering in bulk. Cash flow is king, so order as you go and see if your usual supplier can offer you a line of credit.
- Use up all your slow moving items by featuring them on your new takeaway menu.
- Stop all projects requiring an investment. Keep your cash flow for salary and rent.
- Ask your landlord for a rent deduction. We understand not all landlords are willing, but it doesn’t hurt to negotiate. It could be a 20 per cent reduction or dividing this month’s rent over the next 12 months. Any way to maintain cash flow is a must.
- If you are switching over to only deliveries, be mindful of electricity and water bills – you can save quite a bit of money by switching off the air conditioning.
- Enquire about business loans. During this time, the government will have initiatives subsidising financial institutes, allowing them to offer business loans with very little interest payment. Also, the screening process will usually be expedited.
- All reimbursement must be signed off by owners during this period of time. Reduce the amount of petty cash the team is allowed to spend, make sure every dollar is saved.
- Check with larger suppliers to see if they can extend payment terms. Don’t negotiate with smaller suppliers, as they need the money as much as you do.
- Be mindful of the delivery company you use, some may take over 20 per cent of your revenue for their delivery fees, therefore compare and choose the company that best fits your business. Encourage your customers to pick up delivery at the store, cutting out middleman fees.
- Check with your local authorities or government initiatives to see if there’s any subsidies applicable to your industry. We kept a very close eye on the policies and managed to save more than $20,000USD over the next three months in terms of insurance, social security, tax breaks and local district subsidies. Nobody will call you and tell you how much you can save, you have to take the initiative to find out.
- Remind the staff during this time to try not to offer discounts to customers – better to offer them an extra shot or a small dessert. Every penny counts.
7. Cost saving strategies: Human resources
- Clear all over time. Nobody should have any over time by the end of this.
- Enquire to the labour department and know your rights as an employer. Know when it is legal to lay off any employees. In our case, it is illegal to lay off any staff within 30 days of the outbreak, after 30 days we could pay them minimum wage, but we did not exercise this.
- If worst comes to worst and you have to implement no paid leave, do prioritise rank. Other employees may need the money a lot more than a manager or a supervisor.
- We stopped hiring part-time dishwashers, and asked if any staff would like to volunteer to cover the task.
- Freeze all hires. Obviously it makes no sense to take on any new additional labour. We had to suspend a couple of new hires for a few months, but we do keep in touch with them and try to offer any help we can for them.
- Regarding salary payment, we paid our senior management team in two payments. 50 per cent at the beginning of the month and 50 per cent towards the end of the month, taking a load off our cash flow while we tried to generate additional income from takeaway delivery and other initiatives. We do not recommend implementing this for other employees, as they tend to need the money a lot more and may need to support their family as well.
- Extend the probation period. If any staff were on probation, talk to them and see if they will accept an extended probation period.
- Leverage your human resources, We have combined the team from our bar and cafe. During peak hours of the cafe, we have one to two of our staff from the bar come to support and do easy tasks such as bussing and dishwashing. The cafe team reciprocates during prep time at the bar. A bartender can also help the kitchen do chopping duties or clean pots and pans. It’s all hands on deck.
- Discover hidden talents of your team. Instead of hiring a graphic designer to do your takeaway packaging, look within your team to see anyone can do it. Same with photo shooting for the product. You can suspend your contract with your PR agency and see if any team members can look after your social media account during this time. It’s alway gives the more personal approach that people are looking for during these difficult times.
- If the staff have no overtime and they have cleared all the outstanding holidays, try not to have them owe the company too many hours or days, as that will decrease motivation as they won’t have any more holidays for the rest of the year. Be fair when asking staff to clear leave and stay home.
- Another great initiative we came across was staff co-sharing – multiple venues sharing the cost of labour.
It is also not all about making money and saving costs. Since everyone has a bit of time on their hands, try to do something for the community and industry. We have started to do live streaming classes on cocktail making and knowledge, and we’re also enhancing our internal training. Spend the time repositioning your product and services, ready to bounce back when all returns to normal. Most importantly, help out your neighbours and your hospitality friends: lend a hand when needed and share best practices as we are literally all in this together.
Amethy, Marcia, Andrew and Bastien
Hope & Sesame and Charlie’s (Guangzhou, China)