Has Your Hospo Business Pivoted Properly?
The last six months have been overwhelming for everyone, and the hospo industry has had it particularly rough. While retail businesses often have certain infrastructure already set up, many businesses, especially initially, had to scramble when lockdowns were implemented in March to be able to provide their service or product in an accessible or even legal manner.
As the people who’ve had to help businesses navigate their finances and balance books during these ~ unprecedented times ~ we can confidently say that not everyone has scrambled well. Perhaps, in hindsight, not every business that rushed into a new revenue stream would do the same thing again.
Many business owners, particularly small-business owners, have rightly been left feeling helpless, stressed and disappointed by governmental restrictions. Despite working as hard as possible to keep afloat, feeling as though they’ve let the business, employees or customers down hasn’t been uncommon for owners.
Our antidote? Take a breath, or ten, then plan. What’s changed in your area? A lockdown? People working from home? No more commuters? Do your homework, actually run the numbers and most importantly, talk to your bookkeeper or accountant about your plans – they know this stuff better than you and it’s ok to ask for help
Below we outline a few of the best pivots for hospo businesses in a pandemic and a few options which may be worth looking past.
Some positive pivots:
Are people making more coffee at home? Chances are the answer, countrywide, is yes! If your business makes coffee, sell whole beans retail and get your barista to grind them on-site for the customer’s brew method. Sell filters, that hard-to-find soy or nut milk and grinders.
Produce boxes! If you’re getting daily produce deliveries anyway add some more bits and bobs to your order and sell artisan boxes – just advertise them on your Instagram page! If your locals are staying close to home, saving a trip to the busy shops is ideal (and could mean an extra trip to your business instead).
One day, when this is all over and getting a table at a restaurant is simple again, a venue gift card will come in handy. These are a great way to boost cash flow but are also an effective marketing tool. These bad boys can increase word of mouth and loyalty. In addition to selling cash values, you can create special combinations or experiences to pre-sell. (Giftup is a very well-designed and easy-to-use platform to sell, manage and redeem vouchers.)
Move that wine! Wine is a great product to sell wholesale (permits and licenses permitting!). It’s non-perishable stock and suppliers love giving discounts for buying in bulk. The margins may be lower but it's almost no work to sell.
Drive thru! Our clients and friends at Brooklyn Boy Bagels have nailed this new avenue. If you’re a wholesaler opening up your factory or storage and popping up a simple structure for sales is an awesome way to reach the general public, plus it’s novel and fun and you can keep it round post-pandemic
Some pivots to be wary of:
Delivery, it’s tricky, tricky business. A number of big delivery platforms made token gestures such as free on-boarding to try lure new venues into home delivery when lockdown initially started. The commission fees they charge, however, can be crazy (as high as 35% of the total including GST). Delivery using these platforms only works when the revenue is incremental – adding expensive delivery as your primary income could lead to you losing money, not making it, so be careful.
Low-fee delivery platforms are also tricky. Some newer platforms have sprung up with lower commission structures than the usual, but unfortunately, these rely on the customer having the correct platform installed as an app ready to use. In addition, consumers launch their usual app and use that as a search tool for delivery options. In short, UberEats, Deliveroo have the market share. So should you sacrifice commission or volume?
Bottled cocktails for delivery – these may seem like a great idea in theory, and something many bars pivoted towards at the start of lockdown, but setup costs are high and demand is unknown. While the idea is novel and fun, it can wear off quickly and given the amount of work involved this idea feels a bit risky. Stick to wine and beer instead, and keep the cocktails for takeaway only.
Similarly, selling merchandise for your venue might be fun to do, but once your friends and family all have a t-shirt and tote bag, you might find you are stuck with stock that you can't move. Consider running a smaller amount first to see if they’re popular. Also shop around for quotes or try a print on demand solution like Ogo.!
Need some more advice on how to PP? Get in touch with us here. The best hospitality bookkeeping advice in the business is just a few clicks away.
