Every industry feels that they are the ones hit hardest by the effects of Coronavirus, but the hospitality industry is right, it has hit them the hardest and the full effect is still to be seen.
At the time of writing, this article, we are expecting the re-opening any day albeit with guidelines on maintaining a form of social distancing.
The only certainty is that tomorrow is another day. It is vital that practical plans are put in place for recovery. Once you are open again, it is time to look at recovery. Some will have weathered the storm and are only looking at reduced savings, others have had to take on debt. Either way, all hospitality businesses have taken a beating and it will take careful planning and budgeting to get back on track.
On re-opening, we will be putting together a full 5-year P&L forecast for our clients, in doing so we will be looking at a range of factors.
REVENUE: Uncertain and is likely to slowly rise as consumer confidence in safety or going out increases. Interestingly, in our recent survey (LINK) 47% of people were a bit nervous about visiting a pub and needed time to see how the reopening went first. On the bright side though 29% would return asap with an additional 22% going back to their regular pattern.
STAFF: This is a massive cost in our industry, so until you know the level of trade you will experience, caution of staffing levels is advisable. Look at your rota in a new way. If possible change your shift patterns so that you have 2 or 3 ‘teams’ who never cross over. This way if one person in a team gets ill, there is only one team affected and not the potential of all your employees needing to isolate.
Even before opening, speak to your employees about their holidays. Otherwise, you could be in a position of re-opening, and then having your employees with unused holidays all wanting to get holidays booked in to enjoy the easing of lockdown themselves. You can request employees take holidays during furlough (make sure you give them twice the amount of notice, e.g a week’s notice for a week’s holiday), also, accrued holidays can be carried forward over the next two years. If you request staff take holiday whilst on furlough, you will only have to pay the additional 20% so this will save in the long run, but employers should be careful not to remove all holidays through this method as it could adversely affect morale. When costing your new rota system, don’t forget to take into account the rise in the national minimum wage.
TAX: If you had a VAT return due periods ending February, March or April then you can defer payment until 31st March 2021 (you must still file returns for these periods on time though). This will help with cashflow, but remember to factor in that repayment. On the upside, many pubs could be due a small VAT refund during a period they were paying some bills but with no taxable income.
Remember, you can also extend your limited company accounts filing date by three months. It is automatically accepted, but must be applied for.
STOCK: When you know the timing of a re-opening, get a stocktake booked in. You’ll need to assess your current stockholding and get accurate figures of waste for insurance/pub company reclaims. Remember, your stocktaker will be very busy immediately a re-opening date is announced, so book this in as early as you can.
RENT: Speak to your landlord and agree a set repayment schedule based on affordability to pay off any accumulated rent debt. If you feel that your landlord is trying to recoup unpaid rent unfairly or aggressively, speak with the Bii’s legal team who can support you.
LOANS: You’ll need to take a look at your re-payment schedules for any loans you’ve taken and include this in your planning. Remember that the bounce-back loans have no early repayment penalties and are interest-free for the first year. If you have one of these loans it makes sense to plan the best way to use it, perhaps paying off or reducing a high-interest loan or repaying some of the bounce-back early if un-needed?
HELP: Good businesses work well, great business work together. Reach out for advice and support. There really are a myriad of things to consider when you’re in a position to re-open. Make a discussion with your accountant a priority. They should be able to help you with this. If they can’t, we can. [email protected]
We also have a guide to other practical factors to consider around social-distancing re-opening that you can find as part of the resources on our website toolkit page here