How to protect your Restaurant Business from Covid-19 effect? – Ultimate Quick Guideline for Restaurant Business!

Yes, today we are in a dreadful situation due to Covid-19 Pandemic. It may take some more time than what our experts have estimated in order to get out of this arduous situation. 

This is the right time when our patience will be tested along with our knowledge, judgements, confidence, technical know-how, leadership skills, organisational capabilities of running this ‘Complex Business’. 

My fellow friends, Colleagues, Business associates, 

I am assuring you the growth and very good prospects of this business. 

The base of this businesses is the exigency for human survival and our industry is one of the long-established Hospitality Industry. Our Restaurant Business has survived every stumbling rock which came in its way, let it be natural calamities, pandemic, World wars and many such mishaps in the last 5 centuries.

We follow certain set of rules and regulations while playing a Game. Similarly, we need to follow certain directives to run our business which is prominently known as the “Hospitality Business”. 

Considering the current state of affairs, the dynamics of our business will change and our obligation will be to habituate to novel set of rules and regulations. Some of the directives are mentioned below :

• If you are having your own place, then the calculations will be a little different than some people who are operating their premises either on long lease or rentals. Reworking on your viability of business in both scenario is the key.
• Keep Basic Restaurant Operating Cost structure in your mind while you calculate or arrive at the viability decision.
• The following should be the Basic Cost Structure : 

EXPENDITURE	PERCENTAGE (%)
MATERIAL COST – Food Cost / F&B Cost	25% TO 35% (10% VARIATION DUE TO MENU PRICES & CRISIS SITUATION )
H.R STAFF SALARIES AND WAGES	15% TO 25%
OVERHEADS	18% TO 20%
FUEL AND ELECTRICITY CHARGES	3% TO 4%
RENTALS	7% TO 10%

 

Let us consider the averages. (%)
MATERIAL COST - Food Cost / F&B Cost	35%
SALARIES AND WAGES	18%
RENTALS	10%
FUEL/ELECTRICITY	4%
OVERHEADS	20%
TOTAL	87%

From the above calculations, one cannot make any losses and considering the taxes levied by the government, that will be charged and collected from the guests.

Notice, the percentage (%) we have considered is from the higher range. But if you are unable to control any of the above mentioned cost now, then you will be the one to be blamed.

Right from forecasting, planning and organising to implementing correctly and with complete professionalism will eventually reflect on your competency. If you are lacking in any case, please do hire the right person or organisation to advice you and help you to run your restaurant business effectively.

Unique Challenges you may face in the current scenario :

• Handling of Perishable & semi-perishable  goods is one the major challenges you are going to face, since the life of these goods are very meagre. Therefore, your team has to be very skilled, experienced and technically sound.
• We are aware of the Channels of distribution cycle which involves = Manufacturer - Distributor/Wholesaler - Agent - Retailer - Customer. This process can be executed within a broad time period. But, it is not the same for our Industry.
• As I mentioned in the beginning, we are in a ‘Complex’ Industry. We do not have any Middleman like the general distribution cycle mentioned above. Our Guest is right in front of us and in our personal care and service.
• This factor makes it more challenging as we have to satisfy our clients and we call them our ‘GUEST’ i.e., ‘ATITHI’ in Hindi language. And our culture interprets our guest as “ATITHI DEVO BHAVA” which means “Guest is our GOD”. So it becomes our obligation to do our best in order to please them.
• Food is an integral part of our lives and we humans have our own preferences. Some like it more spicy, while some don’t and some like it well cooked, some like it semi-cooked (This in case of steaks) 
• Along with all the above preferences, you have to consider measures like Guest’s Health concern, adequate salt/sugar/oil/butter/fat, etc.
• Your Sales and product cycle functions on daily basis. Therefore, one needs to be very effective while monitoring the business.
• As our Industry deals with food, there are certain rules and regulations which need to be followed very strictly by the owner i.e., Covid-19 guidelines, hygiene standards issued by HRAWI and FSSAI . These rules must be followed especially in the production area i.e., by maintaining personal hygiene of the food handlers.
• ‘HYGIENE OFFICER’ is appointed to inspect and verify whether all the hygiene standards are followed and aptly implemented or not.

Dr. H A Mishra

www.fsaaudit.in

Management Consultant - Hospitality