Immediately following the Chinese full lockdown towards the end of last January, the Guangzhou cocktail bar & café with jazz club Hope & Sesame experienced an abrupt cessation of its cashflow leading to its own problems with rent due, salaries, perishable goods, tax “… and a whole host of other issues”.
Yet over the past two months China’s Bar of the Year & Best Cocktail Program 2018 winner relied on its successful marketing methods and managed to come up with strategies and cost-saving practices which have allowed it to pay staff salaries in full and pay rent in full over this period.
The bar, which also won Best Bar Team, Service Award and Sustainability Award last year and which holds 35th position among Asia’s Top 50 Bars in 2019, is a joint venture between seasoned hoteliers Bastien Ciocca & Andrew Ho.
During the lockdown Hope & Sesame’s management sought to bring in alternative revenue streams and save on costs without sacrificing the wellbeing of its business.
The long list of its actions that could be taken by others seeking to survive the Coronavirus lockdown and boost their marketing efforts during and/or after lockdown included seeking to sell product online.
H&S suggests that outlets going into lockdown try to avoid immediately dismissing staff or putting them on no-paid leave as it is important to have a motivated team to help the company ride this recessionary wave.
‘Takeaway delivery’ figured amongst the bar’s revenue-generating strategies during the crisis and outlets are encouraged to sign-up for takeaway delivery services “immediately”.
In the case of deliveries, H&S advises picking the right delivery company.
“Some may take over 20% of your revenue for their delivery fees,” states the bar, therefore compare and choose the company that best fits your business.
“Don’t rely on your usual suppliers to deliver on time, they’re also facing the same situation as you,” points out the pub, “Show some sympathy to others in the business.”
Takewaway delivery considerations
H&S advises, “Design a takeaway-friendly menu with your chef/bartender, preferably first using up all the perishable goods in the fridge. Make sure the food or drink is delivery-friendly, meaning it’s still fresh and warm and most importantly tastes delicious when it arrives.
“You will face stiff competition as most places will start their own delivery menu, customers will still choose the superior product and services. Don’t forget you can also do packages with food and drinks, for example a bottle of gin with mixers and some bar snacks.”
However the bar advises that the selling price will need to be revisited as people often expect larger portions and cheaper prices for home deliveries.
With the competition doing deliveries too you have to be faster than them and offer a much better product and back story.
“Encourage your customers to pick up delivery at the store, cutting out middlemen fees,” advises H&S.
As for packaging and plating, most homes have cutlery of their own so this is not required but takeaway boxes and packaging may be scarce during this time.
“Work with your designer on the packaging,” it adds, “A lot of freelance designers will still be working from home and it’s a good way to set your product apart.”
Even outsourcing this task may be unnecessary.
Instead of hiring a graphic designer to do your takeaway packaging, look within your team to see if anyone there can do it, suggests H&S, who advocates the same approach when photographing product for marketing purposes.
The pub also set about canning its famous cocktails but this required sourcing of cans and canning equipment so it might not be for everyone.
“If you are a bar and you don’t have the resources to make your own takeaway cocktail packaging, you can always work with existing companies who do it. There are companies who will help you design your own product, produce the liquid and send you the final product. You can then sell on your own channels.”
The bar adds that delivery apps will allow customers who know you to search for your shop and order from you but in order to reach potential customers or new customers it suggests working with influencers.
Working with influencers
Influencers during this time will also experience a massive drop in business, the bar points out, “You could propose them to do a post with a couple of their ‘favourite’ bar/restaurants now doing takeaway. Take good-looking photos of your product and make sure you highlight the importance of hygiene and safety.
“Promote your own social media channels. Ask regulars and friends to help repost, it is now their time to help out their favourite spot! Make it personal for them, so they feel they are part of it and helping you ride the wave.”
Bars are encouraged to start new social media channels.
“We have started to do a live broadcast of our bar on new social media channels we previously weren’t on. It helps generate content, keeps the staff productive and will reach new customers. We have started to do ‘classes’ on cocktails.”
Working with suppliers
The time is appropriate for asking suppliers to lend support to your business, states the bar.
“Ask them if they can sponsor influencers or bloggers to post about your product. Ask them to post on their own social media, or ask if they can create some synergies between their clients.
“Bars can also create large chat groups with regulars.
“Don’t just post products and ask them to order” warns Hope & Sesame, “its a good time to bond with them. Send interesting articles or share special stories to engage them. Throw in a couple of products here and there but don’t be hard-sell.”
Now is a good time to advertise your skills as a bar consultant in seeking out revenue streams that don’t require the physical presence of a customer. “People will have a lot more free time now” states H&S, “create small paid cooking classes or cocktail classes.”
Merchandising the premises
You can also design tee-shirts, caps or sell bartending tools or kitchen tools via your online shop.
“Start selling vouchers for customers to dine in at a later date,” suggests the bar, advising that you give your loyal customers a chance to help you out.
This will help your present cashflow situation and is a good way to get people back in the doors when everything returns to ‘normality’.
Crossovers & Co-ops
In suggesting that you make crossovers with other small outlets to create synergies, it states, “You may not have the marketing budget to advertise your product but if you gather a couple of like-minded individuals, you can combine your efforts. A coffee shop can work together with a bakery for example”. H&S even advises outlets to undertake a clearance/fire sale of all second-hand glassware/plates/cutlery/slow-moving alcohol lines – all of which can help raise cashflow levels.
Cashflow & cost-saving strategies
Among the suggestions the Chinese bar puts forward are to stop ordering in bulk when you do re-open to preserve cashflow.
“Cashflow is king, order as you go and see if your usual supplier can offer you a line of credit,” it suggests, “Stop all projects requiring an investment. Keep your cashflow for salary and rent.
“Ask your landlord for a rent deduction. We understand not all landlords are willing but it doesn’t hurt to negotiate,” it suggests, “It could be 20% reduction or dividing this month’s rent over the next 12 months.”
For pubs that have decided to weather this period out by switching to deliveries and takeaways, “be mindful of electricity and water bills, you can save quite a bit of money by switching off that extra AC”.
H&S also recommends reducing the amount of petty cash the team is allowed to spend, making sure that every dollar is saved where possible.
“Check with larger suppliers to see if they can extend payment terms. We didn’t even negotiate with smaller suppliers as we know they need the money as much as we do.”
Also during this crucial time H&S considers it expedient to avoid offering discounts to customers, “… better to offer them an extra shot or a small dessert. Every penny counts.”
Cashflow & human resources
In order to save on costs, the bar stopped hiring part-time dishwashers and asked if any staff wanted to volunteer to cover this task.
“Obviously it makes no sense to take on any new additional labour. We had to suspend a couple of new hires for a few months, but we do keep in touch with them and try offer any help we can for them.
“Regarding salary payment, we paid our senior management team in two payments, 50% beginning of the month and 50% towards the end of the month therefore it takes a load off our cashflow whilst we try to generate additional income from takeaway delivery and other initiatives.
“We do not recommend implementing this for rank-and-file employees as they tend to need the money a lot more and may need to support their family as well.”
H&S recommends extending the probation period for any probationary staff.
“Talk to them and see if they will accept an extended probation period.”
The bar also leveraged its human resources on reopening.
It combined the team from its bar and its café; during the café’s peak hours one or two of the bartenders come to support it by carrying out easy tasks (bussing, dishwashing) and the cafe team reciprocates during prep time at the bar.
“A bartender can also help the kitchen do chopping duties or clean pots and pans. It’s all hands on deck.”
The bar discovered a staff co-sharing initiative too where multiple venues shared the cost of labour.
It’s not all about making money
It’s not all about making money and saving cost, points out H&S, “Now since everyone has a bit of time on their hands, try do something for the community/industry.”
The bar has also begun enhancing its internal training.
“Spend the time repositioning your product and services,” it advises, ready to bounce back when ‘normality’ returns.
Most importantly it suggests helping out neighbours and colleagues in hospitality, “… lend a hand when needed, share best practices – we are literally all in this together.”