Question:
Our weekend business has bounced back pretty well from COVID, but it’s pulling teeth to get people in the door early in the week. Any advice?
– General Manager, Philadelphia
Answer:
The pandemic has challenged a lot of assumptions about the way foodservice operations work, both ideally and practically.
One example is operating hours. Conventional restaurant wisdom is that fixed expenses—rent, insurance, management salaries, equipment and the like—are 24/7 expenses. The logic goes that if you are paying rent all week, you should be making your best efforts to earn revenue all week, not just at peak times like Friday and Saturday nights and Sunday brunch.
However, that logic is predicated on two key assumptions:
- There is demand for your restaurant throughout the week.
- There is an ample supply of staffing.
With slow returns to office-based work patterns and challenges recruiting and retaining employees, along with higher labor costs, many operators are finding it challenging to break even early in the week. Happy hour is not what it used to be.
That challenge leaves operators with two options: coming up with a strategy to build demand or focus on meeting demand where it is. Strategies like special events, collaboration dinners, early-week promotions and loyalty perks can help on the demand side. If that doesn’t work, it may be time to focus on what does.
Ari Miller, chef-owner of Musi restaurant, made the difficult decision to open for only five services per week: Friday dinner, Saturday and Sunday brunch, and Saturday and Sunday dinner. While this is an extreme solution for most restaurants that I don’t recommend, the rationale is a familiar one.
Miller says, “Our decision to be open just Friday, Saturday and Sunday was in response to being slow on Thursdays and wanting to introduce brunch to offset that. Because we start all our employees at $15 per hour, it puts us in a difficult situation regarding labor costs, so slow nights can become a death sentence faster than when employees were underpaid. But we’re unwilling to return to sub-$15 wages and we are willfully struggling to build ourselves back without compromising this value…”
My advice is to take a hard look at each meal service rather than speculating on what works and doesn’t. Divide your annual fixed expenses by the number of services you currently offer per year. See if revenue can cover fixed expenses, resulting in break-even for that service. If the revenue covers, keep it and work on growing revenue.
If not, ask yourself some questions: Do guests or other stakeholders expect you to be open? Would closing result in a larger problem such as a violation of a lease agreement or loss of good will? Is there a way to drive demand? If the answer is “no,” it is probably time to tighten your hours, at least temporarily.
More on operating hours here.