It happens every spring in Canadian cities: the local professional hockey team goes on an incredible playoff run, turbo-charging enthusiasm and pulling fans to their local bar or restaurant. Ok not quite – magical runs don’t happen nearly enough for Canadian hockey fans, and not nearly enough for local economies. If you’re in the restaurant and hospitality business, and lucky to be in a winning market, you know the benefits are bountiful.
But what other industries benefit from a fanatical playoff run? What’s the best way to invest the extra revenue and profit? How to best meet the temporary spike in demand? Two restaurant leaders and a north-south sample of CWB business banking experts weigh in.
Pubs, restaurants and the trickle-down effect
The surge famously helps the restaurant and hospitality sector, and this year is no different, says PJ L’Heureux, Chief Executive Officer, CRAFT Beer Market. “Each game played adds more revenue, so the further they go, the better. Overall, it’s great for business, and we’re hoping for a long playoff run!” Derek Doke, CEO of Franworks Group of Companies – home to notable establishments like Original Joe’s, State & Main Kitchen & Bar and Elephant & Castle – matches and expands, saying “the increased demand is exciting for two reasons: more dining room traffic as well as higher delivery volume as many customers enjoy the game at home.”
Indeed, the longer local teams play on, the deeper the benefits – well beyond hospitality. “Think of the trickledown effects into the retail sector and related merchandise purchases,” says Trevor Palmer, Associate Vice-President, Business Development in CWB’s Edmonton South District. Factor in the transport companies – an industry benefitting from increased demand on the supply chain – who replenish supplies day after day and “all of that activity adds up. Then you consider how a positive atmosphere can lead to new business contracts – especially one side foots the bill on premium seats – and the economic benefits can be exponential,” says Palmer.
A playoff experience can cement new business because personal, face-to-face experiences are just good for commerce. However, Terri Lawrence, AVP and Manager, Commercial Relationships for CWB in Calgary notes that it can be more so a relationship builder between new partners than an avenue to complete fresh contracts. “Celebrating new business is important, as is getting to know each other on a human level, whether it be on the golf course, at the arena or elsewhere,” Lawrence explains.
What to do with extra revenue?
It starts with your financial plan
New, non-forecasted revenue and profit can create temptations to spend freely, but a fortunate windfall should be carefully aligned to your business’ big financial picture. Every business should have a strong handle on their fixed and variable costs, and a good banking partner will be able to work with you on liquidity forecasts.
Cash – and cash management - does remain king, after all.
“The mania of an extraordinary cash injection, like a playoff run, adds fuel to what continues to be a very unpredictable period,” Palmer notes. “The reality is that for many businesses, holding on to the extra money until things normalize will be a prudent move. For others, bonus cash might be best invested in a deposit fund, like a GIC or Flex Notice Account, or even to pay down some of the COVID debt they incurred to keep the doors open the last couple years.”
Taking a measured approach makes sense to Doke as well. “This period will be a meaningful shot in the arm, but time will tell how the rest of 2022 plays out. The demand increase will hopefully balance out any reduction in traffic in the year. Inflation remains a concern.”
Invest in your employees
In a tight labour market, especially for service-oriented businesses like restaurants and bars, the income might help attract and retain the right people. “Sales have increased substantially since pandemic restrictions were lifted, so a playoff run just adds more volume – but staffing and supply do become issues,” says L’Heureux.
As challenging as it’s been for restaurants and bars to attract service employees given the number of closures since 2020, idle cash can be smartly invested in both current and prospective team members. “Employers may be wise to invest the bonus into employee-focused programs, like a benefits plan or professional development opportunities,” Lawrence says. For decision makers, it may mean using that extra capacity and resources to recalibrate a people strategy that matches the new reality of today’s labour market.
Continue to innovate
Innovation is part of a wider trend that has more businesses reinventing themselves as the economy emerges from COVID-19. In the short-term that’s especially true, with bars and restaurants turning to the experience factor to draw streams of hockey fans who are equally excited to watch the games among a crowd as they are to celebrate a winning goal. “More establishments are looking to enhance the in-house experience,” says Jacob Mancini, AVP, Franchise Restaurants with CWB Franchise Finance. “That can mean offering themes, games and offers that go beyond the food and enhance the dining and bar experience that so many have missed.”
Scaling up to meet the demand
Scaling up quickly can be a challenge for any business, even without global supply chain issues disrupting ambitions. When demand spikes, decision-makers will need to know their industry well and make smart choices to meet the opportunity of insatiable hockey fans. This is where having a relationship manager that knows you and understands your business can help you quickly raise additional liquidity. “At some banks, the process to secure an additional operating loan can take longer than a 4-game series sweep,” says CWB’s Calgary-based Harold Fast, AVP, Business Development. “Businesses need a banking partner that can respond and move at the speed they do.”
Indeed, sometimes building your own championship business just requires invested teammates. “Essentially, we treat every game day like a Friday. Our team has to work a little harder, but they are all excited,” says L’Heureux.