Relieving cash pressure and restoring profitability to a restaurant
Talented chef, good location
Peter, a small-business consultant phoned Clive Eplett asking for some help with a restaurant he was involved with. Clive discovered the location was good and the chef talented.
But problems too
The chef’s business partner was a different matter. At her insistence, the menu was too broad for the cover numbers – so though the theoretical margin from each dish was excellent, wastage meant the overall gross margin was disappointingly low. Further, bookkeeping was far from ideal and there were substantial arrears of creditors including an aggressive HMRC seeking arrears of VAT and PAYE.
Staffing cost percentages were also too high, partly because front-of-house disorganisation meant service was too slow, which was also damaging sales. Sometimes, customers were refusing to pay, having run out of time just as their meal arrived.
Relieving the cash pressure
A deferred payment plan was proposed by Clive and agreed between the client and HMRC, and with key creditors, without whom the restaurant was unlikely to survive.
The chef was instructed to reduce and focus the menu. The chaos-inducing partner was side-lined, allowing staff to work more calmly and smoothly. Speed of service improved, resulting in increased sales of profitable desserts and coffees.
With ten years’ experience in pubs and restaurants, Clive was also able to propose several other subtle operational and financial improvements including signage, lighting, pricing, gratuities accounting and more.
Strength to strength
Everything then came together quite quickly and the business has gone from strength to strength – it now has a deli too, which also trades online. The troublesome partner was soon eased out completely, boosting the bottom line further.
Not many restaurants last long, but this is one of the exceptions to prove the rule.