A look inside the restaurant industry during the pandemic: Part 2

 

By Jessica Salerno, OSCPA senior content manager 

Read the first part of this story covering how restaurants are adapting to change, local and federal restrictions and successful strategies here

Although businesses have cautiously adjusted to the coronavirus pandemic restrictions, the memories of spring and businesses temporarily closing are still fresh. 

Man in suit smiling for camera.

“At the beginning of the pandemic, many people in the restaurant industry were scared,” said Vince Stasiulewicz, CPA, client executive at Hylant. “And the fact that these businesses are open to the public created another layer of interaction, which meant many people did not feel comfortable going out to restaurants.” 

Although in recent months restaurants have reopened inside dining and allow for patio seating, many are still figuring out how to function in a COVID-19 world. Stasiulewicz and Dustin Minton, CPA, director, restaurant services at GBQ, discussed the areas restaurants need to prioritize to survive: 

Cash flow 

Man in suit smiling for camera.“Cash is king in the restaurant industry,” Minton said. 

In the spring, most restaurants were trying to conserve as much cash as possible. He said restaurants still need to decide what is discretionary and what money needs to be spent. 

Stasiulewicz said the speed at which changes were happening at the various levels of government meant for some restaurants cash flow depleted altogether. This led to unprecedented challenges in terms of managing cash, including asking for payment deferrals, waiver of rents and restructuring of leases. 

“Really help your clients understand that they need to conserve cash,” Minton said. “Have you gotten your debt payments or rent deferred? Anything that could be deferred to save cash for now is something that the CPA can help their restaurant clients with.” 

Minton said after understanding what can be deferred, look at cash projections. Know how long until the cash runs out based on the level of current sales and if anything can be done to increase sales, such as third-party delivery. 

Communication with clients 

Minton said if CPAs haven’t already reached out to check on restaurant clients, they need to immediately. 

“I've heard many times where the CPAs have not reached out and clients have gone elsewhere for help,” he said. 

It’s valuable for CPAs to remember there are many different segments of the restaurant industry, and Minton said it’s helpful to understand which sectors are thriving, which are failing and why. Do research on how various sectors have fared so far in the pandemic and see if there is anything to suggest to a client to help increase profits or cut costs. 

“The segments that ultimately thrive in this environment are quick-serve, meaning having a drive thru or quick delivery,” Stasiulewicz said. 

Ongoing government guidance 

Although there is not quite the rush of guidance that came out during the spring, Minton said CPAs still need to be aware of additional guidance. 

“There was so much legislation that came out, especially on the tax side, that's very favorable to restaurant clients,” he said. “Maybe there's opportunity to amend prior year returns to get a refund in short order. But if you're not on top of it, your clients are going to miss out on some great opportunities.” 

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