Marketing and Cost Control During Slow Revenue Periods
Almost all restaurants experience seasonal fluctuations—there are “good times” when customer traffic is high during peak season, and there are “slow times” or the “off-season” when business tapers off. In between, restaurants face varying levels of customer activity based on factors like location, weather, holidays, events, or broader business cycles.
During these slow periods, restaurateurs face a significant challenge: CASH FLOW issues. Simply put, there’s not enough revenue coming in to cover all the expenses. As a result, restaurant owners must make tough decisions to cut costs, borrow money, or, ideally, find additional ways to bring in revenue to ease the financial strain.
Cutting Costs to Survive the Slow Period
The first step many restaurant owners take during slow revenue periods is to “tighten the belt” by reducing expenses. However, not all costs can be slashed. Certain fixed costs, like utilities and rent, remain constant regardless of sales. But there are some areas where cost-cutting can provide some necessary relief:
- Payroll Adjustments: In almost every restaurant the most significant expense is labor. During slow periods, reducing employee hours or offering temporary layoffs—especially for tipped employees—can help ease the burden. (Be mindful of maintaining positive relationships with your team so they are eager to return when business picks back up.)
- Inventory Control: Reducing inventory dollars can also help with the cash flow, as lower foot traffic means less need for dry goods and perishable products.
- Vendors: Some vendors may be open to flexible payment arrangements during the off-season. Established long-term relationships with suppliers may open doors for delayed or split payments. Credit card payments, although having high interest rates, are short term (until business picks back up) options.
- Operational Efficiency: Evaluate operational costs and find areas where small savings can add up. This is also the opportunity to fine tune operations year-round.
MARKETING – don’t cut, increase!
When times get tough, marketing is often one of the first expenses cut because it’s just easier to do. However, marketing is critical to driving business and maintaining a restaurant’s visibility – ESPECIALLY during slower times. A restaurant can never stop Marketing – PERIOD. Creative marketing during slow periods can maintain and generate new revenue streams without requiring a lot of money.
Here are some low-cost or even free marketing opportunities that restaurants can tap into:
- Leverage social media: Use platforms like Instagram, Facebook, and TikTok to engage with customers in real-time. Post regular updates, showcase your food, beverages and ambience, share behind-the-scenes content, or highlight special events. Social media can help build loyalty and keep your restaurant top-of-mind for regular customers.
- Create promotions that generate excitement. For example, if your restaurant is in a residential/walkable area and there is a blizzard, send out an e-blast offering 2 for 1 Margaritas or very reduced priced appetizers of your restaurant’s most popular food and drink. Remember: it’s snowing out and nobody is driving anywhere! ( I write from experience: during the Blizzard of 1993 in Philadelphia, my restaurant actually ran out of liquor!)
- Collaborate with Local Businesses: Cross-promotions – especially retailers and other non-competitors — can help tap into a broader customer base.
- Host Events: Hosting small events or themed nights can attract diners and/or drinkers. You know you are going to be slow this time of the year, so, look into trivia nights, live music, cooking classes that cater to your target audience, etc. Give the smaller customer pool you are sharing with competitors a reason to choose your restaurant over those competitors.
The Bottom Line: MARKETING – Time Well Spent
While you might not have the cash to spend on traditional marketing campaigns during slow periods, some creativity and a time-investment (yes, time is money) can go a long way. By leveraging digital tools, creating promotions, staying visible online and by other means available, you can generate additional revenue that will help to ease the almost inevitable cash flow crunch.
Then, when peak season rolls back around, you’ll be in a stronger position—with
less debt from the off-season and greater year-end profits.