FULL STORY Total Food Service

By NECG Member David Sederholt 
October 7, 2016

When I was in the restaurant business in New York, I was always happy to get out of the dog days of summer. Everyone went away on vacation and we were finally getting back to normal.  After the first couple of weeks of school, people felt comfortable getting back to eating out and making my restaurants hum again.

We always did well as we moved through the Fall and into the December holiday seasons and like most restaurant owners, I should have looked up from the euphoria of office parties, families dining out, friends gathering for celebratory lunches. I was busy and buying more from my suppliers, paying more in labor and collecting substantial sums in sales tax. 

Once the buzz subsided and everyone attempted to adhere to their New Year’s resolutions, they got their credit card bills and decided to slam on the brakes – and the restaurants slowed down.  Now this all sounds fine and logical but the first couple of years I went through it, I wasn’t really prepared to pay all the December supplier bills, additional payroll taxes, hefty sales taxes and the increased heating and fuel bills.  Basically I was in that deep gulf of the winter down turn caught between a dramatic decrease in sales and all the heavy bills I incurred throughout December.

On top of this there often came insurance and license renewals and the new year came on. This is one of those humbling moments that have taken me years to figure out.

You have heard me say this before in my articles, but now is the time to plan your cash management.  You need to sock extra cash away as the winter snows and slow nights are coming and what you do now will have a dramatic effect on how much stomach lining you lose during the down months.

Forecast sales by week, for the next 3 – 4 months and then start building a labor budget. You can adjust labor and keep your food and beverage spend under control but you have no control over your base rent, insurance, untilites.

Next make sure that you impound every sales tax dollar the day you collect it into a separate bank account – DO NOT  TOUCH THIS MONEY – it’s not yours! You will thank me later.

Be more aggressive than ever in your purchasing and menu pricing. You can get a higher price for food and beverage during the holiday and if you are really paying attention to your purchasing you can boost your margins dramatically.

Don’t overstaff except when absolutely necessary. This is a game of dollars and every one you save will be there for you when you need it.

Lastly, you can do what many smart business owners have done to ride the wave.  They get some supplemental working capital to insure that they won’t fall short during these questionable months.  I remember having 5 restaurants open through one of the worst winters in the region.  I was spending more money on plowing parking lots, offering 2 for 1 discounts to drive people to my restaurants and paying for employees to be in empty dining rooms.  If I didn’t have a cash reserve – I would not have made it.

Think about it – be prepared!

Questions for Dave? Write to dsederholt@sfscapital.com