It’s no great revelation that hospitality businesses have to get bums on seats to keep their restaurants, cafes, and bars running. So what happens when the country goes into lockdown and there’s no more morning coffees, client lunches, or after-work drinks? We talk to Steve Logan, local Wellington legend and restaurateur, about his experience operating through economic downturns and how businesses can make it through to the other side.
Q: How can hospitality businesses prepare for periods of quiet and uncertainty?
You can never prepare for situations like we're in at the moment - it's unbelievably tough with the forced shutdown and economy collapsing. You know you can say “I wish we’d put some more funds aside or had a bigger nest egg”, but in reality, it’s extremely difficult to predict and prepare for situations like this.
Ultimately it comes down to the fact that if you leave yourself in a vulnerable position, then of course you can be knocked down by situations like this easily. Businesses that already have a good base and are on top of things like wage and stock costs, finances, and marketing, will potentially be in a better situation in periods of uncertainty.
At Logan Brown and Grill Meats Beer, we usually prepare for seasonal quiet times. This year we organised heaps of events, such as winemakers events and dinners, as well as activities and promotions outside of our restaurant such as Matariki and Mother's Day. Right now though everything's been cancelled and no one's operating. We need to prepare for the fact that people may not have as much disposable income when they come out the other side, and that people may limit their socialising for a while until things settle down.
Q: What measures are you taking now to get through the non-essential business shut down?
We’re using this time to plan, and adjust our business model for the different stages following level 4 lockdown. For example, what is our business going to look like at level 3, level 2 and so on? We’re also aware that we may fluctuate back and forth between levels so it’s about being flexible.
Right now we’re looking ahead 3-6 weeks where we can expect to go down to level 3. At this level, we can prepare meals for delivery and pickup, so we’re thinking of a heat and eat type model. Customers may have to heat or microwave something, but they’re still getting a high quality, restaurant-style meal.
As soon as we reach level 2, we can take guests as long as we implement social distance. We already had two days at level 2 before lockdown so we’ll be going back to that. To get as many people in the door, we will be looking at a different menu and price point, like a pop-up, with simple dishes, comfort food, and a minimal wine list. To minimise outgoing costs we will potentially need to make other considerations like reducing our number of suppliers, using up our stock on hand and reducing margins, and running with a smaller team. We’re kind of looking at it like running a little restaurant within our big restaurant.
To try to limit our outgoing expenditure we will use the stock we’ve got and not buy in any new beverages. Forget about margins, we’ll be looking at passing on wines at cost. We’re also going to try to reduce the number of suppliers to 3 and 4 which will help create a shorter menu with minimal ingredients. Correspondingly we’ll also need to run with a smaller team - we’re kind of looking at it like running a little restaurant within our big restaurant.
Overall we’re expecting that for the following month's post lockdown we will do about a quarter of what we would normally do - so this helps to justify running as a smaller restaurant. Everyone will be getting back on their feet, their disposable income could be a fraction of what it used to be, and unemployment levels are going to increase. People also aren’t going to be travelling as much so we’ll lose all our tourists and people in Wellington for business. If it gets busy sooner than what we’re expecting - then that’s a great problem to deal with.
Q: How can people support hospitality businesses?
People can support their favourite restaurants, cafes, and bars just by going there. Even if it's just for an entree and a few drinks, as soon as you’re able to get out there and start being social again. We know it depends on how much money people have got in their pocket, but for those that can, we need them to share their experience, tell their mates, and support hospitality businesses so we can hire more people again, give more money to suppliers and so on.
At Logan Brown, we’ll open up our booking system again as soon as we have a confirmed date but in the meantime, you can still purchase vouchers on the website.
Q: Should businesses be engaging with their customers during lockdown?
It’s so important to keep engaging with your community - essentially you want to let them know you’re still around and waiting. Over the past couple of weeks, we’ve had to focus on things like staff payments and welfare, discussing rent with landlords, and all the other administration that comes with running a business. But once you’ve settled and got your strategy in place, it’s the right time to start communicating with your customers again and tell them what you’re up to. Whether it’s a free drink on the house or a 2 for 1 meal, it’s about dangling that carrot, keeping your business top of mind and ultimately maintaining that community engagement amongst your loyal customers.
Q: Any final words of advice?
To future proof your business, think about what’s the worst-case scenario for your business. Understand what it is and what it looks like. For example, is it going to affect you personally if you have to guarantee your loans or lease? In what circumstances would you have to make the choice whether to continue or not. If you can picture that worst-case scenario you can use it to motivate you to not end up there and help you to make good decisions now before you are forced into a more difficult position.
You also have to look at the bigger picture. The loss of hospitality businesses causes a domino effect - more people out of work and looking for employment, suppliers having to downscale operations, building owners with places unleased and so on. We’ve all got to give each other a leg up and help each other get through it.
If you look at it from another perspective, this is our opportunity to look at what we're doing and reevaluate. We’re being forced to do a different menu, and use different products and this could be good for us. We could provide a different type of customer experience - who knows maybe people will love us more!
Nga mihi nui Steve for taking the time to answer our questions and provide your invaluable advice to other hospitality businesses. Logan Brown and Grill Meats Beer Wellington are RIP Expenses merchants. If you have any questions about how RIP Expenses works, or how you can get your business onboard, get in touch with a member of our friendly team.