Closing restaurants and rooms in January
We have had several debates about whether we close our restaurants and bedrooms for a few days in January. This is a big decision for us, as our philosophy is to be open all the time. It’s important that our customers know they can always turn up, so of course this isn’t an action that we have decided to take lightly.
We’ve weighed up the pros and cons, so I thought I would try and set out our logic:
Let’s start by trying to calculate our P&L. Daily sales would be, say, £1,000 max, with a GP of around £700 (probably less when sales are low). Staff costs for the day, for three team members for 12 hours, are £540, and energy costs for the day are £150.
Already, we’re at zero profit before we count variable consumables, operating costs and so on, which I think amount to around £600 a week, and therefore truly variable costs are around £80 on these quiet days. I doubt we will even get to £1,000 for the day or manage to restrict it to one person front of house. Our breakeven sales are probably around £1,200. The maths is easy – closing is the right financial option.
Closing for this period also presents an opportunity to tackle some of the difficult tasks to schedule in a normal week. Our list includes: reflooring the bar; repainting and re-tiling the toilets; stripping out the kitchen and doing a full deep clean; putting in new windows and cleaning and polishing hard floors. All of which, are hard to do when we are open.
We are choosing to let the staff either take holiday or come in to help make the site look amazing – a real winter clean. I hope it will be fun, and will energise the team, making them even more proud of the business they are part of.
Rather than closing both sites for the same period, we have decided to close one Monday to Thursday on one week, and the other Monday to Thursday the next, as we are only ten minutes apart. This way, we are still available to those who are wanting to go out, even if it comes with an extra few minutes in the car.
Beyond all of this, the point of this article is to remind operators to calculate their daily marginal profit. It is a vital calculation that can help you make a decision in one of three directions. Either reduce your cost base so that you can make money on quieter days, grow sales to get over your break-even, or close.
We can’t afford to invest all of our Christmas profit in January losses. Closing in January is the best decision for our business, and likely many others.