The ice cream parlor had been featured in the local paper yesterday morning, and the owners were remarking that it had really drawn the crowds and they were having one of their busiest days yet. It was so wonderful to watch their success and then, as we walked up and down the pier, I reflected on a sobering thought. The numbers of perfect summer days like this are pretty few in South Eastern Wisconsin. What will it look like here in November, December, January and February? How many people will be lining up for ice cream on this off-the-beaten-track area of the city even in March? This year we had snow right into April and this summer we have had a fair share of cool, wet days too.
Most businesses that offer any kind of hospitality service have to navigate through some element of seasonality. Unless you are located in Southern California, it is likely that there will be some times of the year when the weather is less kind to business than others. How do we have a successful business when we only have a few months of optimum conditions and what should we do to minimize the effects of slow business in the "low season"?
The old adage that a business needs three things to be successful - location, location and location really holds true more than ever before as we continue to claw our way out of this recession. If our business is located in a location that has no traffic or little appeal for half the year, then it will be exceedingly difficult to be profitable. Most hotels need to run at a minimum of 70% occupancy year round. Even if you run in the 90s for six months of the year, that means you still have to run at 50% for the other six months. That is an increasingly difficult challenge for some hotels particularly when rates are also being driven down by a "buyer's market" . The same goes with ice cream parlors. The lines outside the doors in June, July and August need to be VERY long to survive the winter famine.
So what do we do? Basic as it seems, there are really only two ways to succeed in a seasonal market. The first is to do everything possible to steal market share and maintain the highest levels of business possible in the low season. This needs to include building loyalty to our brand, encouraging what business there is to use us rather than the competition and to come up with innovative ways to bring in new business as well as maintaining our current position. Social media has a lot of potential to help in this area, and an intelligent pricing policy (or revenue management strategy) is essential to balance rate (or price) and volume. The other essential but equally difficult thing to do, is to reduce costs to the bare minimum WITHOUT negatively impacting your customer or guest experience. And herein lies the challenge. As hospitality and business leaders, we have to walk the fine line of cost cutting while ensuring that we don't undo the reputation that we have worked so hard to build in the high season, because now, more than ever, we need loyal customers.
Our ice cream parlor will likely struggle in the winter. Hopefully that has been fully fleshed out in their business plan and they have not been too optimistic in their revenue projections. If they can reduce costs or maybe even close altogether for the winter, they stand a good chance of succeeding. But even if they close, there are ongoing fixed costs that don't disappear. Cash flow becomes critical. If they could pick up the parlor and put it in Malibu, California, they would have a greater chance of success. But people want ice cream in Sheboygan as much as California and I am pleased they are taking the chance and putting everything into it to provide a great summer experience for visitors. They will have to navigate the seasons as carefully as the mariners who take their boats up and down the estuary. Lets hope that the seasonal rocks don't snag them and they come out unscathed.