James Sinclair recalls closing his hospitality business on March 16th after watching labour costs spike to 575% of turnover. The decision to shut down a week before competitors saved roughly £250,000 and kept him from taking on heavy debt when reopening.
Questions this video answers
Monday 16th March (decision made that evening).
£30,000 per day.
About £250,000 (a quarter of a million pounds).
25% of turnover, maximum 30%.
About a week ahead of everyone else.
Chapters
I think he's the British version of Gary Vee. I've got a lot of time for James. I've got to know him quite well. Over the course of the last year, we talked about the Chancellor, we talked about insurance, we talked about proactive tips that people can be doing, we talked about diversifying, we talked about what he has done in the past week, how he has saved so much money and how you should be having a conversation with your bank manager right now. Monday 16th March, when you woke up after having a bit of a briefing with your FD and your team, where was your mindset at right then? Like, how were you feeling? Seeing that you knew what you were gonna have to do very quickly over the course of the coming days?
I could. So basically everyone that works in hospitality, one of their biggest costs is walks on two legs. Their labor costs. And they were, you know, I get sent a daily income sheet from all of our sites and one of our key KPIs is to. We are 3 average customer value, labor to turnover ratio, monthly profit and loss. And they're the three things that we track. And really that monthly profit and loss is tracked daily through our D income sheet. And I was seeing our labour percentages went to 575% higher than our turnover. And we want to be 25% of turnover, maximum 30%. I decided that Monday evening, the evening of the 16th of March, that we had to close our business because every day that we dithered and delayed on this, we would lose £30,000 a day. And I was not prepared to make that decision. So we closed probably a week ahead of everyone else. But that decision saved us quarter of a million pounds in wasted revenue and we got ahead of the game. And I feel really strong that we made the right decision because when we come back from this, we're a business that won't be, you know, borrowing loads of money to pay back our debts, etc. Etc. So we'll, you know, we'll still be around.
