Businesses within the Hospitality and Leisure sector will have endeavoured to stay afloat during the pandemic. Using various means, such as cutting costs, furloughing staff, and diversifying their offerings. However, with the current successful roll out of the vaccines, and with hospitality and leisure businesses beginning to reopen, now is the best time to put plans in place to reopen and hopefully continue to succeed in the future.
How can your Hospitality & Leisure business plan for future success?
Our hospitality and leisure specialist consider the areas you should include below:
Cashflow
Without detailed cashflows, it is almost impossible to accurately estimate how much cash your company will need during this recovery period. Cashflow forecasts will need to consider the following:
- Cash outflows for the repayment of various debts which are likely to have built up e.g. government backed loans, time to pay arrangements with HM Revenue & Customs, landlord and other supplier payments.
- Consideration of any government incentives; business rates relief, grants, continuation of the VAT reduced rate, furloughing etc.
- Running ‘What If’ scenarios to determine which areas require priority and need investment and planning for providing customers with alternative experiences.
- The effect of allowing incentives and special offers to drive customer traffic.
- Costs associated with implementing all the necessary COVID safeguards for employee and customer health and safety.
Cash flow forecasts will not only allow business owners to make informed decisions on future plans whilst we come out of this pandemic, it will highlight whether there will be a requirement for a ‘Recovery Loan’, launched on 6 April 2021. Furthermore, effective forecasting will help protect directors from becoming personally liable for creditors, for any wrongful trading accusations.
Customers
As businesses reopen, owners will understandably want to drive customer traffic to their business, although many customers will likely be concerned about exposure to the virus for months to come. Therefore, areas that need careful consideration are as follows:
- Owners need to take stock of what they have learned from 2020 about their business. Does the customer experience need to be adapted? To help mitigate risk, if there is any further strain of the virus, is there a need to pivot offerings? For example, if you are a restaurateur, do you offer takeaways, hampers, meal kits to boost sales whilst social distancing rules are still in place?
- Communicating offers to entice customers, those loyal to the business, whilst ensuring that it is made abundantly clear that all necessary safeguards have been put in place as much as they can to make their premises COVID safe.
- With a greater number of people likely to work from home as a result of the pandemic , consideration should be given to alter opening times and menus to take in account lunchtime trade. Moreover, consideration may need to be given to location to maximise the opportunity for more lunchtime trade.
- Should thought be given to partnering up with an organisation to maximise delivery capabilities?
Staffing
The furlough scheme has provided significant support for the Hospitality and Leisure sector and has recently been extended to 30 September 2021. However, thought needs to be given to ensure that the optimum level of staff is in place to maximise profits and to rebuild reserves once the scheme ultimately comes to an end.
Consideration should be given to reviewing employment contracts in order that workers can be used on a flexible basis, or to use contractors. However, please do refer to a specialist employment adviser, such as Menzies, on these matters.
Another challenge likely to affect Hospitality and Leisure businesses going forward is how to attract and retain talent in the sector. Thought therefore needs to be given to training needs for life after COVID, and to different forms of incentives, whilst keeping a careful eye on cashflow.
Suppliers
As many business owners will understand, it is not only their own business that needs to be considered to survive the pandemic, their supply chain needs consideration too.
To avoid being unable to source key supplies and products, its good practice to broaden your supply chain. Although there is a fine balance due to the importance of supplier loyalty and likely discounts and payment terms.
Technology
The use of technology within the hospitality sector was increasing before COVID, and this is likely to accelerate to help with efficiencies and to reduce costs. However, owners must ensure technology does not negatively impact the customer experience or desire for human interaction.
Where this type of interaction is not key, for instance stock control, technology should be used to create efficiencies.
Conclusion
It is important that we take onboard all the lessons that have been learned from the experience of the pandemic. Future plans should be put in place now that allow for further COVID related disruptions, but also to succeed and thrive in the ‘new normal’.
Despite recent challenges, Hospitality and Leisure has always been a robust industry and whilst this year will not be easy, the Menzies sector team feel there are opportunities in 2021 but they just need to be ready to re-open and flourish.