Opinion:
The cost of doing business – what are your options when it’s all getting a bit much?

Many hospitality businesses are still reeling from the pandemic, with a cocktail of bounce back loans which need to be repaid, recruitment problems, economic uncertainty as a result of the war in Ukraine, and ensuing reduction in consumer confidence.

It’s clear that the Government needs to come up with some way to support the hospitality industry and the wider high street during this difficult period. But while they and the newly appointed Prime Minister work out what exactly “that” is; what can you do yourself to mitigate the rising cost of business?

1. Closing on quieter days:

Whilst turning away customers may seem like the opposite of what you should be doing right now; there’s no denying that sometimes it can be cheaper closing on quieter days than opening in the hope of serving a couple of tables. Closing one day a week will lead to a saving in wages, utilities and stock whilst also allowing staff a much-needed rest day.

However, before shutting your doors a day, or more, a week it’s worth revisiting your lease to see if you agreed to be open for certain periods. Whilst there’s an argument over how effective so called “keep open” provisions are; if your lease contains a performance related element, such as turnover rent, landlords may argue they are entitled to damages as a result of your closure.

2.   Hosting pop-ups or supper clubs

If you have signed a conventional 5/10 year lease you will be paying rent on your premises regardless of whether you are open. Could a fledgling concept make use of your coffee shop after you lock up at 5? Is your private dining room perfect for supper clubs? Hiring out your space using platforms such as Spaces by Countertalk could provide a passive income helping your bottom line.

3. Look at your outgoings

As with anything controlling your outgoings and knowing where your money is going is key. Look at your business rates bill and compare your rateable value with your neighbours on gov.uk.  If they are paying less than you there might be an opportunity for you to apply for a rates revaluation. Speak to a specialist before pursuing any application – most will operate on a no win no fee basis taking a percentage of any saving secured.

4. Get Creative

The pandemic showed the best of the industry and how creative it can be with restaurants turning to delivery and grocery stores to survive.

Have you been working on a new concept or sister brand you could launch as delivery only from the kitchen to keep the chefs busy? Were your pre-bottled lockdown cocktails a hit? Whilst delivery and takeaway sales may be declining they are still more than twice the level seen before the pandemic meaning a potential new source of revenue.

Restaurateurs and hospitality business often don’t realise they might qualify for research and development tax credits; which can provide a cash rebate or tax relief against any qualifying R&D spend. So not only could you launch the sister brand you may be entitled to tax relief as a result…

5. Be honest

If it does get too much it’s important to be up front with your landlord and keep them up to speed with what’s going on with your business. Don’t bury your head in the sand.

If quarterly rent payments are becoming an issue, could you switch to monthly payments for a period to help with cash flow?

This isn’t an excuse to ask the landlord to fund your business or write off some of the rent you deferred during the pandemic. However, your landlord has a vested interest in your success and a well thought out proposal may be well received.

If you are a hospitality or leisure business and want to discuss the difference the Real Estate team at Greenwoods could make to your business, get in touch.