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24
May
wpx_admin
9:10 pm

Less is more: Why you might be losing money being open for longer

Most restaurants feel the need to be open throughout the day- they don’t want to lose out on custom or they have this niggling fear that if they shut slightly earlier than their competitors, then they’re setting themselves on a slippery slope to closure. But the truth is, that trying to compete with the opening times of the likes of Wetherspoon is often costing them money.

It used to be standard practice for restaurants and bars to close between lunch and dinner. When licensing laws became a little laxer, opening hours started to increase across the country. With those extended hours came the requirement for more staff, longer shifts and additional breaks, which then required longer opening hours to combat rising staff costs. Restaurants that would only ever open for evening service then opened for lunch and those that were already open for lunch then started to open for breakfast.

It seems obvious that longer hours require more longer shifts, but it also means that you need more staff- particularly if you’re employing people under the age of 18 as they can’t work more than 8 hours per day (40 hours per week) and no one over the age of 18 can work more than 48 hours per week (on average).

We’ve carried out an experiment with 10 of our clients that operate different types of venue and the results are pretty consistent. All 10 had at least 2 hours in the day where it was costing them more to be open and 8 of them had 2 days per week that consistently made a loss. We asked them to change their opening times and reduce their days for a month. They all saw a small drop in revenue, but they also saw a decrease in costs that was equal to or higher than the revenue that they would’ve generated had they been open for that time period. Costs were also decreased across the days that they were open as the remaining days could be predominantly managed by the existing full-time staff and salaried managers. Staff holidays also became less of an admin burden as there's less movement in the rota.

ACTION: look at your worst performing days and hours, then work out how much it’s actually costing you to be open for those periods. You’ll also want to consider the extra costs that come with being open 7 days per week for the hours that you’re currently operating for- do you need an extra manager? Are you working 6 or 7 days per week yourself? How many more staff do you need to be open for those periods? If you reduced those operating hours, how much would your labour cost reduce if you don’t have to worry about overlapping shifts?

If you're not sure how to calculate your costs, then please don't hesitate to get in touch.

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