Surviving Coronavirus in 7 a Restauratuer
Johann Moonesinghe

Hi, I'm Johann. My company inKind has financed over 400 restaurants in the last three years and I'm one of three partners in Emilie's, Washington DC.

As the owner, you know more than I do about how you need to reduce your menu and clean your surfaces, so this guide is just focused on my particular expertise: restaurant finances.

And remember, this is about survival. No one is going to be profitable during this crisis, but a lot of restaurants will die if they don't take immediate action to survive.

Step 1. Email your landlord right now.
Don't keep reading this. Seriously, email your landlord and tell them that you cannot make April's rent payment. If your restaurant is like all of the ones that I've talked to today, your sales are down more than 50% and that is just the start of the crisis. There is no way that you can afford your rent payment. Your landlord will understand because they don't want you to go out of business. Replacing you will be a nightmare for them. No one is going to open new restaurants for months and there will be a lot of second generation restaurant spaces available in the market because--unlike you-- plenty of restaurant owners will wait too long to figure out how to survive. In your email to your landlord, tell them that you are in this for the long term, your business is strong as an ox, but you need their understanding on rent payments. They will probably need to see some point of sale data to prove that your sales are much lower than they were two weeks ago.
Step 2. Very tightly manage your labor.
You know the traditional formula: 30% food costs, 30% labor costs, 30% fixed costs, and 10% profit. That doesn't apply today. If your revenue is 50% of what it used to be, your new formula is 30% food cost (you can't change that), 20% fixed costs (since you aren't paying rent and electricity), and 50% labor. So that means that if you do $1,000 in sales, you can afford $500 in labor. No matter what, you cannot spend more than 50% on labor or you will run out of money.

Coronavirus Model
50% sounds more than 30%, but remember that your revenue is half (or less) of what it used to be. So please measure your labor each day and take immediate action. If you did $2,000 in sales today, only spend $1,000 on labor tomorrow. It's rough, but everyone else has to get cut. Rotate through cuts in staff so everyone can take the pain equally.

Step 3. Do not pay any bills that you do not have to.
That means your electric bill, for example. It's going to be a long time before they shut off your power for non-payment and you need that money now to get through this. When you get a demand notice, call the companies and ask for a reprieve. At some point, when business returns to normal you might have some late fees to pay, but the good news is you'll be around to pay them.

Step 4. Call any creditors and ask them if you can defer your debt payments.
Do not avoid them. They'll understand and work with you. More than likely they'll ask you to pay interest only payments, or no payments at all with interest still accruing. If you have a merchant cash advance which takes money directly out of our point of sale (like a Square Loan or a Toast Loan) call them right now and ask them to reduce their payments. If you have daily or weekly automatic payments, call the creditor and ask them to pause the automatic payments. They would rather you survive.

Step 5. Don't order any more alcohol.
Sell what you have in stock and replenish only what you have to. Again, preserve cash as much as possible. But make sure you pay your food vendors because if they stop delivering, you go out of business.
I'll expand on this step in a lot of detail when the SBA announces how it's going to provide up to $2,000,000 in loans per affected small business
Step 6. Get more money from anyone that will provide it (if it's less than 10% interest).
It's time to have cash in the bank, but don't borrow from predatory lenders. Selling gift cards is a great way to get cash now and you don't have to pay that back. Remember, if you run out of money and cannot pay your food suppliers or employees, you die.

I'll expand on this step in a lot of detail when the SBA announces how it's going to provide up to $2,000,000 in loans per affected small business. I'm really excited for it and we will be applying for one as inKind and Emilie's will also be applying for one, so leave your email address and we'll share the documents that we are using.

Step 7. If you are a franchise, look at your documents.
It's likely that you don't have to pay the franchise fees right now because of the pandemic. This is 6-8% of your sales which you can keep. Ask your franchise lawyer for a free consultation on this.

Johann Moonesinghe is the CEO and co-founder of inKind. inKind is the only restaurant financing platform that's an ally of restaurants, using an innovative, community-based financing approach. If you have any questions on restaurant finance email me at
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