John Ennis, managing director of the eight-venue strong Graffiti Spirits Group in Liverpool, says the latest reopening is a critical moment in which profitably trumps everything. He lays out what you should and shouldn’t do to emerge from lockdown stronger.
It goes without saying the past year has been tough on our industry. Stopping, starting, stopping again, starting with restrictions, tier systems, fines, badly funded and executed support systems: we’ve seen and experienced it all.
But even if some things are out of our control, we have to get everything right inside of our control. Whether you’re a bar owner, manager or head bartender, you have a big role to play in getting your venue ready - and profitable. Here is what you should and shouldn’t do to emerge from lockdown stronger than ever.
1. Try to set conservative and reasonable targets for day-by-day takings (gross). Monitor these targets and set them as goals that can change as you progress and your venues become busier.
2. Review your P&L. As a rough guide you should be aiming for the following spends as a percentage of your gross takings: 25% on wages (including cleaners and security), 30% on stock (to include all fruit, dry goods, alcohol of all varieties), 5% on rent, 20% on VAT (this may be reduced but will act as your buffer). This will leave to 20% cover all your other variable and non-variable bills.
3. If your current company isn’t in great financial shape, organise another trading company to trade from while you organise a system to repay your debts. This will allow you to earn without the pressures of the debt from the first company. It’s referred to as ring fencing. Now, this brings with it a number of issues - as I’m sure your accountant will tell you - but it will isolate any trouble that you may be in in the interim period. You will also be allowed a new VAT threshold.
4. Speak to your Landlord. Now I know a lot of you have difficult landlords but if you are going to act on point 3, they may need to know as it may be in your lease to notify them of any changes to the trading co. Also make sure you try to isolate any Covid rent debt. Make sure you offer to pay all rent moving forward and if you are aiming (as in point 1) for that amount to be less due to reduced revenue, try to follow the 5% allowance from point 2.
5. Contact your local rep. Get cash and stock. Doesn’t matter what it is, every little helps.
6. Make a post-Covid plan and use it as your guide to stay on track.
1. Don’t drastically change your concept for reopening. If you are a high-end cocktail bar there is no merit in changing your concept to selling takeaway coffees and pints of Stella on a makeshift terrace just because your local council gave you a few quid to spend on outdoor seating. Your concept may never get back to the way it was if the changes you make are too dramatic.
2. Don’t spend money on things you don’t need. That luxury booze, the new shaker off eBay you’ve had your eye on and makeshift Covid venue changes that have no future – all these things don’t need your cash right now.
3. Don’t be afraid to ask for help. Friends, family and employees might all be willing to help a little. Saving an hour here and an hour there could mean the difference between profit or loss for the week.
4. Don’t hold on to things that don’t make you money. There is little point in retaining the same staff structure, high-end back bar spirits, PR agencies and consultants if they're not making you dough. Find a new way.
5. Don’t take a chance and bend the rules. You’ve come this far. There is no point in throwing it all away on a 10k fine for having people dancing on bar tops and packing out your venues. There will be a time when numbers go back to normal so let’s just play it safe until we get there.
6. Don’t be distant from day-to-day operations. The time is now to roll up your sleeves and get stuck in. Whatever the hours, you can spare them. Save that wage and help it save your business. Even if its bar backing or DJing, it’s going to help your bottom line.
7. Don’t give away booze to industry friends. We all know everyone likes a free bev, but it’s damaging your business. Industry people will understand if we all do it together. Now, if your staff carry on giving away free drinks, that’s an issue – and one for you to make a call on. The simple mathematics of it is this: bartenders can only be paid for a job that actually earns revenue. A free drink means the effort and work you have all put in amounts to zero....... You and your staff are worth more than that.