I’m reading articles almost daily about the doom and gloom facing American restaurateurs. We’re all particularly worried about Independent operators, as they usually do not have deep cash reserves or lines of credit. While some are reopening, those who have are noticing very light volumes, reaching only 10-15% or pre-Covid19 levels. Social distancing takes its toll, but more important is the fear American consumers feel about restaurants, and dining rooms in particular.
Most restaurant operating models and budgets presume a certain level of revenue to support labor, operating costs, occupancy costs, carrying costs, and debt service. The great majority of Independent restaurants operating pre-Covid19 either had no contingency plans for “acts of God” or only kept a month or two of operating costs as a buffer against hard times. No one expected this pandemic to dive so deeply into business as it has. Too many landlords (and a few mortgage banks) have not offered relief in terms of deferred payments, so we will be seeing foreclosures and default judgements in the next 6 months. Some(1) have called this an “extinction event” for independent restaurants.
YouTube and More
I watched a YouTube video today which extolled the virtue of American ingenuity, promising that great success will rise from the ashes of this disaster, just as they did from WWII, 9-11, and the “Great Recession.” While it’s nice to have something to hope for, it does not mitigate the current pain and suffering, nor suggest concrete plans for reversing the spiral down. What this video did offer is the prescient suggestion that restaurant entrepreneurs will devise new and better ways of doing business, and quickly. As examples, we’ve seen the delivery business, lounging at about 10-15% of restaurant revenues pre-Covid (2) now passing 75-80%. Curbside delivery is through the roof. New software companies have sprung up which allow restaurateurs to offer their own delivery service, bypassing the expensive (for operators and consumers) third-party companies such as Grub Hub.
- (1) Articles in both The Atlantic (6-19-2020) and from Andrew Zimmern through Market Insider (4-29-2020) have observed that the forced closing of so many restaurants will lead to what they referred to as an “Extinction Event” for many Independents and even some chains.
- (2) Pre-Covid numbers published in a Joint Study by the National Restaurant Association and Technomic show that 92% of customers used a drive-though at least once a month, 79% used a delivery service at least once a month, and 78% of operators already considered off-premises programs as strategic priorities.
Most importantly, operators have been able to get rid of poorly performing employees, and are learning not to rely so much on diners in their public areas, releasing valuable real estate for more off-premises related Expo and service areas. We’re still waiting for the disposable companies to offer more comprehensive packaging solutions so that consumers will have higher quality product when they open the packaging. And we all know that some foods (you know who you are, steaks and French fries) just do not do well travelling.
Some Equipment and Supply Companies, such as Vollrath, have stepped up quickly to offer new, sturdy, multi-use carrying and delivery options with heated interiors. They also now offer Sanitation Carts, portable handwashing stations, and custom-designed breath guards and Safety shields. We’re likely to see much more of this as we proceed through this period of stress.
One thing every one of us in the Foodservice Industry needs to do on a daily basis is to think outside of the box, and place yourself in the position of a parent, office worker, or visitor. Why should they feel good about visiting YOUR place? What have you done to assure all of your customers that:
- You have taken the Covid19 risk seriously? Too many operators only want to reopen, not considering that a significant portion of the population has health concerns about this Pandemic.
- You have acted upon professional advice and put new sanitation procedures in place? An extra sanitation bucket is not enough. These new measures MUST be obvious and visible to guests.
- Your staff has been completely retrained and exhibits awareness and consideration for your guests’ concerns? Gloves do no good if staff wears them continuously – they’re not to protect their delicate hands, but to prevent cross-contamination!
- You are setting a good example in inviting guests into your business and to order from your business? Make no mistake, guests are paying attention to what you’ve done to protect them, and you should not be shy about reassuring them.
Our Industry is in a new state of extreme change. It’s not evolutionary. It’s being forced upon us. So operators who want to thrive over the next few years must think outside the box, expand the envelope, and truly strive to anticipate what their customers want, and how to meet those needs.
Regarding ongoing customer concerns, we already know a few critical things:
- Customers are very skeptical of returning to crowded dining rooms
- Customers have gotten used to ordering on-line for delivery
- Customers still are not happy with the condition of the food they receive from third-party delivery services
- Certain operating protocols have been smashing successes – curbside pickup for one has exploded and eliminates the delivery cost and delay
- With the changing operating dynamics, staff profiles have changed – many fewer wait staff, but the more carry-out staff
- much more need for comprehensive packaging and carry-out organization, such as the new Delivery Centers from Vollrath.
Those operators who understand the need to study their market position and adjust to radical changes in the restaurant atmosphere have many places to turn for advice and direction.
The team at Tom Redditt Foodservice Solutions has over 300 collective years of Foodservice experience, with relationships throughout the Industry. We take the title “Solutions” seriously. While we may not have all of the answers to these new and unique challenges, we can certainly ask the right questions and help you to focus your creativity and entrepreneurship towards changes which will benefit your guests and your business. Other potential sources for advice include Equipment and Supply Dealers, followed by Foodservice Consultants and Manufacturer Representatives who all have a finger on the pulse of the industry, and can share their and other operators’ experiences, successes, and failures as well.
Please give us a call at one of offices in Colorado, New Mexico, Arizona, and Utah. We’ll look forward to hearing from you.