Hospitality business owners are no strangers to the financial fluctuations of the changing seasons.
At Christmas time, you are rushed off your feet and the warmer summer weather brings packed pub gardens and outdoor dining. But the slower months of January and February can prove challenging.
So how can you plan for the quieter periods and manage cash flow?
As specialist hospitality accountants, we’ve seen the financial strain it places on owners. But with some strategic planning and financial diligence, you can minimise the winter slowdown and survive comfortably through the year.
These are our 7 top tips to beat seasonal fluctuations in hospitality
1. Forecast realistically
First and foremost, forecast realistically. Look closely at past sales trends and accounts to estimate how much your revenue will decrease in the slow season.
Identify your main cash drains during this time - food costs, staffing, utilities, etc. - and budget accordingly. Knowing what to expect enables you to plan.
2. Build up a cash reserve
During the busier periods, build up a seasonal cash reserve. Save a percentage of your summer sales to tap into later for operating expenses. Having this contingency fund means you won't struggle to cover costs when money gets tight.
3. Evaluate your menu and pricing
Consider adding some wintertime comfort foods that are cheaper to prepare or increase your beverage prices. But remember don't go overboard with price hikes that could deter customers.
4. Optimise staff
Flexibility in staffing is key. Consider cross-training and adjusting schedules to match demand without sacrificing workforce morale.
5. Get creative with off-season offers
Offer discounts on slower nights to draw in locals. Consider partnering with nearby venues such as theatres or hotels to create packages that encourage foot traffic. Host unique events like pub quizzes or themed nights to bring in customers.
6. Diversify revenue sources
Explore additional revenue streams such as external catering, full venue buyouts or hosting unusual or interesting collaborations with other hospitality businesses/freelancers.
7. Use downtime efficiently to get ahead for the busy months
Invest in maintenance and repairs during slow seasons to avoid costly breakdowns later, as well as planning your marketing for the busy month, for example, revamping your website, and planning social media campaigns.
By planning, budgeting, and using new incentives, it is possible to navigate the quieter months without compromising your profits.
We work with some of the most exciting restaurants and bars across London and help them manage their cashflow year-round.
Speak to us if you’d like advice.