The Calm After The (Grand Opening) Storm

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HH 6/4.0

QUESTION From: Barbara in MN:

“Desperately looking for advice on getting through the post-honeymoon phase.

We are a new bar that just opened mid-February (in the middle of a HORRIBLE winter). We had a decent first month as people tried us out, but we were mis-categorized as a restaurant (there was a restaurant in this spot before us, and we've also had amazing feedback on our food).

We need to change people's perception of us (that we are a bar first), and also need to get bodies in the door. We're operating at a big loss right now, and are negotiating a second mortgage on our house.

Please give me honest advice. Is this experience common for new bars? How long did it take you to come out of it? What type of marketing campaigns have worked for you?

It's no wonder that so many places shut their doors in the first year... this feeling SUCKS! Our regulars have been so supportive, and love everything that we're doing and all the ideas we have. But I worry about losing our house."

HH ANSWER:

Before negotiating a remortgage on your house, I’d make certain to have your business financials re-evaluated (from budget to pro forma).

In the event your projections and/or financials are unrealistic (or improperly being tracked) you may want to first consider adjusting them (if possible) in order to meet the proposed additional financial demands of a second mortgage or any loan/financing for that matter.

The other (and IMO more attractive) option would be to abandon the bank as a potential source of bridge capital and instead seek out other ways of reducing your costs of doing business.

Borrowing to cover a fiscally unbalanced operation (especially a new one) is not a sustainable solution as it only temporarily delays the inevitable and leaves you worse off. (See: 8 Alternative Funding Sources For Your Restaurant).

That being said, overcoming the initial inertia of an opening or rebranding is not only common (especially if a non-resort area / not a destination location who opened in Jan/Feb or July/Aug), it’s typically healthy.

It’s far easier to sustain your business with no-slow growth initially than with an explosive growth as most new/er operations are rarely prepared for the latter.

A prudent plan would include loss Y1, break even by Y2 and profit Y3.

When did you project / expect to hit your break-even point?

I’m sorry you’re having trouble getting guests through the door. Have you considered additional training programs for all staff, re-evaluating your atmosphere or following the suggestions previously mentioned in other columns like: reaching out to nonprofits to provide a discount for them and cross-promote one day (or one day/month) where you donate a portion of sales their organization?

As far as other marketing ideas go- I’d start with the basics and focus on developing a strong grass-roots local catering program:

https://www.hospitalityhelpline.com/new-blog-1/2018/4/2/developing-catering-to-go-delivery-sales

Walk your local trade area and make a list of every retail/office & residential development then make a point of delivering a box/boxes of food with menus and business cards/coupons to that captive lunchtime audience. They represent the lowest hanging fruit and if they know you’re there, and they like your food they WILL be customers... but they have to know you’re there and taste your food.

Hang in there,

Josh