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Washington restaurant shutdown checklist
By David Faro, director of the Washington Hospitality Association Education Foundation
Because of the coronavirus outbreak, restaurants and bars in Washington state have been ordered to shut down all in-house dining in their operations for two weeks. Closing your doors temporarily or permanently leaves you with many steps to consider..
This is an extensive list that should give your operations a good starting point as you begin to make your moves toward the future.
Restaurant operation issues to consider (provided by the Massachusetts Restaurant Association)
- Does the revenue model for take-out only meet expenses?
- Is it worth staying open with a negative revenue model?
- Consider the options of taking on additional debt?
- Small Business Administration loans
- Interest-only loan
Discussion with landlords:
Operators should consider approaching landlords to reduce rents to somewhere around 6% of sales while operations are closed and for a 60-day period once we re-open. If doing some to-go or delivery sales, offer to share a percentage with them. Landlords should be our partners, and they should have flexibility if they want to get their tenants back and paying rent. The ramp up will allow business to get their feet back on the ground.
Contact your utility companies: you need a temporary time-out from payments. Ensure they will keep your power/gas/energy on.
Building and Property:
- Compile list of all lease and contract obligations.
- Make list of personal guarantees.
- Make list of equipment with liens or UCC filing.
- Review/negotiate lease exit agreement.
- Review potential liabilities, liens, compliance issues.
- Initiate procedures for forwarding address for business mail.
- Set up post office box to receive forwarded mail.
- Arrange for moving and storage of furniture and equipment.
- Inform leased equipment lien holders of plan to close or temporarily close.
- Schedule liens holders pick up of equipment.
- Contact storage facility if possible, for remainder of equipment.
- Identify fixtures that are part of the leasehold improvements (leasehold fixtures cannot be removed).
- Review vendor agreements.
- Review vendor payment terms.
- Estimate remaining purchases needed.
- Review security procedures.
- Get all keys from employees.
- Change alarm codes.
- Make sure all sprinkler systems are disconnected/deactivated. Check with insurance for requirements about keeping these systems in place.
- Lock all doors.
- Turn in keys to landlord if not remaining in possession of building.
- Turn off all switches and breakers if required.
- Remove all product from refrigerators. Thoroughly clean all surfaces to prevent mold/pests.
- Remove locks from refrigerators if applicable.
- Turn off water at meter.
- Turn off water supply to all appliances.
- Cancel all cable and satellite services.
- Schedule pick up of equipment.
- Cancel music service.
- Schedule pick up of leased music equipment.
- Cancel dishwasher service.
- Schedule pick up of dishwasher equipment if applicable.
- Contact linen supply service.
- Check contract items; liability.
- Cancel linen supply service.
- Arrange pick up of inventory with linen provider.
- Contact pest control service.
- Cancel pest control service if applicable.
- Review trash disposal service.
- Check trash disposal contract terms.
- Schedule for final pick up of trash disposal equipment.
- Review vending machines service.
- Settle outstanding commissions.
- Cancel and schedule vending machine pick-up.
- Review closing inventory plan.
- Take full physical inventory on remaining food and beverage items the day after closing.
- Change alarms and passcodes.
- Get all combinations for safes etc.
- Remove currency from change dispensers.
- Have all locks rekeyed if you are retaining possession of building.
- Determine if you are doing stand-by layoffs or final layoffs.
- Determine the best time to announce to employees if you are closing or temporarily closing.
- Prepare an employee notification plan.
- Include Employment Security Department details and links regarding unemployment insurance options and assistance.
- Include Washington Hospitality Association website (wahospitality.org) so employees can stay up to date on what is happening statewide with the industry and assistance.
- Prepare final payroll checks.
- Determine best time to announce closing.
- Prepare a Customer Notification Plan.
- Prepare email list, social media, website updates and final letter.
- Contact all customers letting them know what is happening to you and your operations.
- If you are continuing or planning on providing to-go or delivery service provide details on how customers can access these services.
- Cancel all future reservations.
- Obtain all guest data available, mailing lists, databases, loyalty programs etc.
- Determine value to other restaurants.
Final closing procedures (provided by the Massachusetts Restaurant Association)
- Let staff take any food that cannot be frozen/saved.
- Remove all trash from the building and cancel dumpster pickups.
- Take pourers off and tightly wrap open bottle tops of liquor in plastic wrap.
- Leave all exhaust fans running – In the unlikely event of a gas leak or pilot goes out during the closing, the fans will help to exhaust any hazardous gas from the building.
- Turn off any autopayment processes.
Cancel any scheduled deliveries. Examples would include:
- Broadline Distributer
- Knife sharpening
- Beer line cleaning
- Cable/satellite TV
- Armored car
Close out your month-end procedures:
- Alert your payroll company as to the layoffs and changes in payroll hourly and salary.
- Update employee contact information and addresses.
- Alert your health insurance company to the layoffs and the elimination of benefits.
- Set up restaurant email to be forwarded.
- Set up restaurant phone to be forwarded.
- Cancel all reservations.
- A final Inventory of all food and beverage should be taken.
- Prepare and transfer all perishable food.
- Ensure all alcohol is locked in cages or office.
- Clean and blow out beer Lines.
- Take your thermostats to the high 50’s to save on electricity, without turning the system off completely. Reconditioning the entire restaurant’s air after being off can cause compromised HVAC systems to fail. Better to spend a little to save what could be a lot.
- Set any tankless water heaters to the OFF position. Turn off gas to each unit.
- Turn off water circulator pump.
- Turn off all gas to kitchen equipment.
- Ensure all kitchen equipment knobs are set to the OFF position.
- Empty all refrigeration on the line, unplug and leave doors open.
- Unplug all refrigeration at the bar and in club houses, remove any items that may spoil and leave doors open.
- Ensure all lights are off in walk-ins, kitchen, dining room, mezzanine and office.
- Ensure all doors are locked.
- All trash removed from building including office trash cans. Re-line all cans to keep fruit fly activity down.
- Perform a walkthrough ensuring walk-in doors are closed and all exterior doors are locked.
- Turn off any entertainment electronics.
- All patio couches and chairs should be pulled inside and stored.
- Select attorney. (Contact the Washington Hospitality Association for a list of applicable attorneys if needed.)
- Determine liability concerns like gift certificates.
- Review state laws for obligations.
- Check into outstanding property tax liability against personal or business property.
- Cancel state/local sales permits.
- Keep all employee files for 3 years.
- Obtain all personnel records:
- Disciplinary action
- File final state tax returns.
- Review the State Unemployment Tax Act.
- For list of state agencies visit: http://www.irs.gov/businesses/small/article/0,,id=99021,00.html
- File final quarterly or annual employment tax form.
- Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return.
- Form 941, Employer’s Quarterly Federal Tax Return.
- Issue final wage and withholding information to employees.
- Form W-2, Wage and Tax Statement.
- Report information from W-2s issued.
- Prepare Form W-3.
- Prepare Transmittal of Income and Tax Statements.
- Prepare and assess so you can file final tip income and allocated tips information return.
- Prepare Form 8027, Employer’s Annual Information Return of Tip Income and Allocated Tips.
- Prepare to report capital gains or losses.
- Prepare Form 1040, U.S. Individual Income Tax Return (PDF).
- Prepare Form 1065, U.S. Partnership Return of Income (PDF).
- Prepare Form 1120 (Schedule D), Capital Gains and Losses.
- Issue payment information to sub-contractors.
- Prepare Form 1099-MISC, Miscellaneous Income.
- Prepare to Report corporate dissolution or liquidation.
- Prepare Form 966, Corporate Dissolution or Liquidation.
- Prepare to report business asset sales.
- Prepare Form 8594, Asset Acquisition Statement.
- Prepare to report the sale or exchange of property used in your trade or business.
- Prepare Form 4797, Sales of Business Property.
- Consult with a bankruptcy attorney.
- Determine if bankruptcy attorney is needed.
- Set funds aside for paying attorney before paying bills.
- Prepare budget.
- Investigate potential sources for capital.
- Consider asset sales, product returns, equipment sales.
- Arrange sale of equipment if applicable.
- Compile detailed list of equipment and furniture.
- Verify and evaluate condition.
- Contact used equipment dealers.
- Contact other restaurants.
- Place advertisements in applicable formats (Craigslist ETC.)
- Obtain all guest data available, mailing lists, databases, loyalty programs etc.
- Determine value to other restaurants or organizations.
- Close/amend all bank accounts.
- Prepare final payroll checks and ensure funds are available.
- Contact all vendors.
- Confirm outstanding balances and whom will be responsible (as per purchase agreement).
- Examine utilities billing changes.
- Change address/party responsible for utility bills.
Shut off the following:
- Cancel all advertising contracts.
- Cancel Internet service provider.
- Cancel website hosting.
- Review banking supplies.
For closed accounts:
- Destroy deposit stamp.
- Destroy unused checks.
- Destroy deposit slips.
- Review credit card merchant accounts.
- Cancel all accounts for MC/Vis, Amex, Discover once final deposits are received.
- Review Insurance accounts.
- Verify with your agent that all policies are in force.
- Review POS services.
- Print final hard copy of all sales reports.
- Print final hard copy of payroll reports.
- Retain all records electronically (save as separate files if possible).
- Obtain copies of all past reports filed – sales tax, liquor taxes, federal and state reports, etc
David Faro has extensive experience in the hospitality industry, running operations that run the gambit from full service to facilities management. This list was drawn for his operational experience and cross referenced with lists from various industry sources