6 Ways To Build Better Budgeting Strategies For Summertime Success

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You’ve made your budget for 2021, but Q1 is over, and now it’s time to adjust as you’ve seen your results. Summer is nearing with encouraging news hitting the nation of reopening opportunities! With the ice slowly melting and patios regaining the spotlight, every restaurant knows that the extra square footage means additional sales – so now it’s time to plan.

Throughout this post, we will work down the P&L with our top tips to adjust budgeting and forecasting so operators can meet the new demands that come with summertime!

1. Getting Creative to Drive Top-Line Restaurant Sales

A top example of getting creative to drive top-line revenue came from a creative Denver client who recently opened up their patio for springtime. With Colorado weather always a bit on the frantic side, snow one day and 80-degree weather the next, they created a deal for a beer and a blanket totaling $10 to cover their bases on the cooler days. The combo has already increased their overall retail sales a few percentage points, and patio season has only just begun!

There’s always an opportunity to up the ante with a logo for brand awareness when creating marketing specials where operators can create a positive sales and marketing cycle. A few additional summertime top-line revenue-generating ideas include:

  • Provide summer holiday patio specials and events
  • Capitalize on patio space for community or business events
  • Adding entertainment to patio spaces (i.e., booking music, adding games)

Restaurant table on patio with beer

2. Restaurant Forecasting & Budgeting Adjustments

Adjusting for Sales Changes

As a result of the lasting impacts that COVID has had on the restaurant industry, most restaurants have taken a slow-roll approach in building out their budgets; They’re bringing over November and December sales and projecting those numbers up through April. Many restaurants don’t expect to return to full business until midsummer, at best. However, the data says something different. Restaurants have perhaps been overly conservative with their projections. They’ve already seen skyrocketing sales from the end of January throughout February and into early April. The combination of warming weather that’s enabled patio sales, vaccinations, and people feeling more comfortable going out and spending time in the restaurants and bars they were accustomed to has driven sales growth more than most were anticipating.

Adjusting for Cost of Goods

It’s imperative that restaurants consider higher commodity prices. Supply Chains are working overtime to try and accommodate the need for certain products, and there’s been a significant delay country-wide with production. Because of that, prices are going to be higher for specific products. If operators aren’t factoring that in and making sure they’re considering those increased prices within their budget, they’re not setting themselves up for success.

3. Managing Restaurant Labor

Unfortunately, the restaurant industry may still struggle with labor this year. Covid presented some fears about people wanting to work in contact-facing positions, so restaurants must budget for potentially higher labor costs. The most important factor is for operators to ensure they’re adequately staffed to accommodate increasing summertime sales.

While operators may run a slightly higher labor percentage in the near term, it will help build their business and brand in the long run when they’re able to provide guests with a positive experience returning to the dining-out world again. With the need to increase staffing, restaurants are looking for targeted tactics to attract the right candidates; a few that we’ve seen successfully done are the following:

  • Increased pay
  • Increased Employee Benefits
  • Health Insurance
  • Paid Time Off Structure

When utilizing any of the tactics above, it’s crucial to include them in the budgeted labor costs.

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4. Planning for Restaurant Direct Operating Costs

Just like operators should plan for higher Cost of Goods, they should also anticipate higher operating costs in the near term. Items like disposables, soaps, and chemicals are in high demand right now; however, much like the commodities market, it’s not unreasonable to expect those prices to return to normal as the world continues to move forward. Keeping an eye on those prices and proactive planning allows operators to weather the storms until they pass.

TIP: It might be in an operator’s best interest to budget 3% for their paper products, whereas in an average year, they might budget 1½% – 2%. Being more conservative can only help an operator make better plans moving forward.

Proper To-Go Packing Protects Your Brand

5. Managing Restaurant Comps

Building business comps and earning repeat customers, particularly within delivery, is a large area of opportunity in the industry’s current landscape. There’s no better time for operators to review their comp and discount practices, as well as look at their marketing and study their website to ensure it’s optimized for driving business. A restaurant’s website can act as a revenue center where operators can sell Gift Cards or retail items in addition to their core product (food and beverage).

Rethinking the relationship with 3rd party delivery services

Operators should rethink their relationship with 3rd Party Delivery Services. They can use those services less as a lifeline moving forward and more as an opportunity to reach the guests and customers that they may not otherwise be able to. Throw in a promo with their next delivery meal expressing that it’s usable only if the customer orders directly through their website. This positions operators to utilize 3rd party services to reach a new guest and then drive their focus back to the website.

Building Back Business

When operators are building out budgets and looking at areas to cut costs, it’s important to drive away from advertising expenses to try to save money—building back business after COVID is essential for long-term survival. While people are primed, ready to go back out, anything that a restaurant can do to attract customers or put their restaurant at the top of minds will help out in the long run. When looking at business-building initiatives, i.e., advertising expenses, it’s money well spent from a budgeting perspective.

Bentobox ad - restaurant websites

6. Planning for lease repayments

With many budgets being built out, operators have their baseline rent payments in place. If an operator has been able to work directly with their landlord to have their rent abated in the last year, now is most likely the time they’re going to have to begin repayment. That is a substantial consideration when it comes to budget building. It’s also essential when an operator is looking at the bottom line. Every restaurant operator should keep a close eye on their cash flow statement; if they see an increase in cash, paying down that debt when they have the money will help them in potentially slower times. Lastly, if an operator can front-load abated rent payments now, it’ll position the operator to continue to be successful in the future.

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