As the pandemic rages on in some places and diminishes in others, the time frame to complete reopening is too difficult to pin down. Some say it may happen by Spring 2021 and that by then, we would be well on our way to feeling normal again with a vaccine and recuperative therapies that work. Others believe a different path that will take us deep into 2022 before we return to a recognizable and familiar business landscape.
From where I sit at the time of this writing, I’m of the opinion that if you’ve been able to keep the lights on, paid most of your bills, got your staff back at work, and you’ve had some positive conversations about the future of your business with your landlord and/or banker then you’re a great success already.
With such a wide scope of restaurants in the industry, it’s nearly impossible to include all the pertinent elements of success in a checklist that works for everyone. So instead, let’s break the path to reopening into four big subjects that cover most of the problems facing all restaurateurs. They are, in no order;
- Covid Compliance and Safety
- Becoming Socially Responsible,
- The New Financials
- Understanding New Technologies.
Covid Compliance and Safety
We’ll start with Covid Compliance and Safety which happens to be the simplest of these issues to define and understand. The materials, products, and protocols you need to do to mitigate infection are all readily available through any number of resources. The information you need about local government mandates and recommendations by the CDC are easily found online or in several of the “playbooks” offered by many of the big suppliers.
Reducing guest touchpoints is still high on everyone’s list of concerns. There is a big need to maintain high levels of visible sanitation procedures the guest can witness and take part in. A hand sanitizing station out front for guest use is a smart message to send right away. Distancing and separation become extremely difficult to manage in small dining spaces and extremely costly for larger ones.
Yet until the spread of the virus can be checked through vaccines, therapeutics and/or mask mandates this will be a problem for every operator. After all, unless you operate a QSR with no seating even when the mandated reduced capacities are lifted, which I don’t see happening any time soon in most urban areas, many guests will remain hesitant to sit in a closed room with strangers.
Ideas on how to convert your space are a little more difficult to find. There are designers, equipment consultants and architects that have done their homework and created a new service to clients with designs for altering your dining and workspaces reducing touchpoints and proximity with some pretty innovative products.
Those fortunate enough to be able to operate outdoor dining in more temperate climates don’t necessarily need most of the fixtures and products needed to mitigate the effects of weather. The right solution to cold weather dining will take some homework on your part but the right answer is the one that is the right mix of innovative designs and your capital budget. Assuming there is one. But more on that later.
A lot of operators, when approached with this next subject, are likely to say, “that’s great and we should do something about it…but right now I’m focused on getting open again first.” Yet when you take a close look at social responsibility, you can see why it’s quickly moving up the ranks to become the single most important aspect facing any operator, big or small. This relatively new business component was fueled at first by the loss of meals at schools, community centers, and shelters when the pandemic forced the closing of these facilities and others like them.
It was restaurants and caterers, independent and chain, that stepped in to fill the void by setting up community kitchens serving millions of meals across the country. Then the Black Lives Matter movement shined a bright light on the systemic racial inequities that exist in the restaurant industry. And after a few years of the #MeToo movement exposing and removing celebrity and ordinary bad actors alike, the conversation is changing about misogynist and sexist behaviors that were once rampant in the industry. It needs to be more respectful and inclusive now whenever the subject of gender and color need to be part of the consideration. Gen-X and millennials are drivers of this opportunity for change as they begin to take the reigns of the industry and are making it core items of their mission statements.
Tied to this new level of social responsibility are the environmental obligations of sustainability, achieving a zero-carbon footprint, sourcing everything locally as much as possible, and using more plant-based foods on the menu. The old and well-established practice of using recyclable packaging is no longer enough. All of this and other concerns, more in step to your location, size and abilities form your group of social responsibilities need to be blended into business plans, operating procedures, staff training, order guides etc., whatever it touches. This forced restart is offering the opportunity for many operators to incorporate these obligations into their new normal.
The New Financial Model
Reopening is the time to re-evaluate everything. Whether you’ve been completely shut down or operating with nothing but curbside pickup and delivery or have been able to add a few tables, both inside and out, you’ve probably noticed your old business model won’t work for this new normal. And, good or bad, it may never come back to the way it was.
This unique once in a lifetime opportunity allows you to take a long hard look at things like cash flow, balance sheets, P&Ls and any other financial information you may need. If you don’t take the time to do this, you’re going to operate behind the eight ball for a long time. Don’t be afraid to tear it all down and rebuild it. Everything needs to be based on the limited socially distanced seating that may be around for quite a while as well as any new sources of off premise revenue.
At the peak, or nadir depending on your attitude, of the last seven months, it was curbside pickup and delivery that provided the boost many operators needed to stay alive. To let these go now would be a huge mistake. Now is the time to explore all the ways revenue sources can be found that will supplement the expected revenue sources of the past. But beware of the pitfalls many of these off-premises revenues come with.
Besides the expected elevated packaging and a possible capital investment in temperature-controlled holding equipment, the service charges and fees from the 3rd party delivery services will take a big bite out of that new revenue. Most of the big guns in that segment are finding ways to lessen the pain with LTO promotions but the fact that up to 30% or more of this new revenue will be skimmed off the top to pay for the services they offer.
So when this new operating model starts to take shape, pricing will have to support increased labor, food and other costs as well as the vig (their cut) charged by these companies. Consider the possibility of bringing the delivery function in house or signing up with one of the inventive software providers that assist with everything from online marketing to delivery logistics.
Another big part of this new financial model should be taking this opportunity to correct some of the livable wage problems existing in food service. Government mandates to raise the minimum wage will be only part of the issue. Fixing the inequity in pay between the front of house (FOH) and back of house (BOH) was already on the table for many companies. Employee taxes and gratuity laws seem to get in the way and will need to be addressed, but in the meantime, operators need to try some solutions on their own.
The first is an added service charge to help pay for wage increases and benefits. For some operators this seems to be working. Others have tried a no-tipping model in conjunction with a service charge which seems to be confusing the customer and not really providing the complete answer to the problem. This and some other less notable problems all exist due to the thin margins restaurants have gotten used to operating under. For some reason the fear of negative customer reaction to price increases has kept many operations from being as successful as they could be. The restaurant industry needs to generally raise prices in every segment from QSR to Fine Dining. Subsidizing dining with low prices has to stop. Every other industry will raise prices when operating costs increase, most operators have never really done this part well. The ones who figure it out are the ones who seem to soar.
The technology ready to help you develop and maintain this new normal is so vast and complex that it’s too big a subject to review here. Every day new solutions from new developers come online. The best way to tackle some of the apps or programs available is to follow one of the several hospitality technologies blogs or podcasts. It’s where you can get detailed information and reviews of the products you might be looking for.
To prepare for success is to take this opportunity to re-evaluate and not fear change. With simple rules operators of all types in every segment of the industry will be successful and create a “new normal” with the substantial and positive changes it will take to bring this once vibrant industry back to life.
This blog was originally published on December 1st, 2020 at 11:35 am