Most businesses within the Hospitality and Leisure sector will have worked hard to survive during the pandemic. The basis for this survival has encompassed various means, including furloughing staff, cutting costs, and pivoting their offerings. With the current success in the vaccine rollout and the steady reopening of businesses within the sector, now is the time to put future plans into place towards success.
The Menzies Hospitality and Sector team consider these plans should include the following:
Without detailed cashflows, it is almost impossible to 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 debts of various types which are likely to have built up; government backed loans, time to pay arrangements with HM Revenue & Customs, landlord and other supplier payments.
- The effect of allowing incentives and special offers to drive customer traffic.
- Running ‘What If’ scenarios to determine which areas to prioritise and invest in and for providing customers with alternative experiences.
- Costs associated with putting in place all the necessary COVID safeguards for employee and customer health and safety.
- Consideration of any government incentives; grants, business rates relief, continuation of the VAT reduced rate, furloughing etc.
As we come out of this pandemic, cash flow forecasts will not only help business owners highlight whether there will be a requirement for a ‘Recovery Loan’ that was launched on 6 April 2021, it will also allow informed decisions regarding future planning. Furthermore, effective forecasting will help protect directors from becoming liable for creditors, or for any wrongful trading accusations.
Following the COVID-19 virus, business owners will want to prioritise increasing their customer traffic. On the other hand, many customers will understandably be concerned about their exposure to the virus. In order to sufficiently plan ahead, areas that need to be considered are as follows:
- 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 going forward, do plans need to be made 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.
- 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, meal kits, hampers to boost sales whilst social distancing rules are still in place?
- Should thought be given to partnering up with an organisation to maximise delivery capabilities?
To survive the pandemic, one important element business owners need to bear in mind is their supply chain.
To safeguard the sourcing of your key products, broadening your supplier chain is a good place to start. Getting the balance right between the importance of supplier loyalty, payment terms and discounts will need further focus.
The further extension of the furlough scheme to 30th September 2021 can provide additional significant support for the Hospitality and Leisure sector. Once the scheme comes to an end, careful consideration needs to be given to guarantee that staff levels area at an optimum to build reserves and maximise profits.
Retaining specialist sector talent within Hospitality and Leisure businesses moving forward could throw up more challenges. Therefore, thought needs to be given to post COVID training needs, such as cashflow and varying forms of incentives.
To make sure workers can be used as contractors, or on a flexible basis consideration needs to be given to accurately reviewing employment contracts. However, following these matters, please refer to a specialist employment adviser, such as Menzies.
There was certainly an increase in the usage of technology pre COVID and this is likely to accelerate to help reduce costs and increase efficiency. 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.
It is important that lessons have been learned from the experience of the pandemic. Plans should be put in place now that allow for potential further COVID related disruptions, but also to succeed and thrive in the ‘new normal’.
Despite all the challenges over the past year, Hospitality and Leisure has consistently been a robust industry and whilst this the rest of this year may throw us some challenges, the Menzies sector team feel there are opportunities in 2021 but they just need to be ready to re-open and flourish.