At the time of this writing, the National Restaurant Association had just announced that more than 110,000 restaurants around the country – representing one in six dining establishments – had closed either long term or permanently due to the pandemic. If you’re reading this, your business has likely already developed strong survival strategies, but the winter months are likely to test them yet again as the country manages winter illness spikes and more potential lockdowns. Is your restaurant as ready as it can be? In a recent Restaurant Dive article, several attorneys from the global law firm Goodwin’s financial restructuring group offered guidance to help restaurants weather the challenges of the next few months. Specifically, they said restaurants have two critical capabilities now: their ability to identify and implement practices to enhance revenue and reduce expenses, as well as their ability to connect with stakeholders and create a mutually agreed-upon restructuring plan that maximizes the value of the business and develops a business model that is sustainable in the current environment. As part of this, restaurant operators will need to conduct a thorough analysis of their operations, including calculating all assets and liabilities, and consider potential opportunities for getting concessions from landlords and suppliers, as well as securing external sources of funding. While there are sure to be more restaurant closures ahead before this crisis is over, there will also be opportunities available. Savvy businesses that have a precise understanding of their operation, as well as contingency plans in place to provide help in various scenarios, will be in the best position to seize those opportunities.
This year, consumers and restaurants alike could really use the morale boost that holiday gatherings and celebrations can offer – but those events will look a lot different this year (if they happen at all). But not so fast. Could you find a festive way to help people enjoy great company, food and drink in a new way? Could you still help them toast to a long-awaited 2021? Think about how you can bring the party to your guests individually or virtually. Are there businesses in your neighborhood who have always held their holiday lunches and happy hours with you but will miss them this year because their employees are working remotely right now? More than ever, they want to make their employees feel appreciated and connected to their work from afar, so promote some holiday bundles that can be delivered to individual employees as a special treat. Do your customers still feel the need for a party – even if it’s not a traditional one? If you don’t have access to a large outdoor space where you are allowed to plan a socially distanced gathering, don’t underestimate the appeal of a virtual party, cooking class, quiz night or wine tasting held via Zoom. It can come together with a menu of festive food, cocktails and party bags for delivery, a few festive or funny Zoom backgrounds and some music.
This year has been a frightening rollercoaster ride for restaurants – and while 2021 shows glimmers of improvement, we’re surely going to experience more twists and turns between now and recovery. But restaurants can also play an important role in shaping what’s to come. Recent research from McKinsey & Company said that to survive COVID-19, most restaurants will need a redesign – both in terms of their physical layout and business structure. If you’re planning to scale down your hours this winter or close altogether in anticipation of a stronger reopening in the spring, how can you use that down time to your advantage? Can you reconfigure your interior and exterior space to accommodate streamlined food pick-ups? Now is the time to, at the very least, create new systems that allow you to keep a finger on the pulse of your business every day (ask us how we can help). Ideally, that means adopting analytics and automation capabilities. They will help you manage inventory, monitor your equipment and energy use, provide contactless pickups, manage labor fluctuations, anticipate customer preferences – all of the critical capabilities you will need to succeed as we push through this difficult period.
Recently the long-anticipated “second wave” of COVID-19 cases was spurring an indoor dining ban in Chicago, leading to talk of heightened restrictions in the U.S., and bringing back lockdowns in Europe. At a time when COVID fatigue has set in and we’re all eager to congregate again, restaurant operators are in the difficult and pretty impossible position of being arbiters of public safety. Unfortunately, the colder air will make virus transmission even easier than it has been to date: As reported in the Oregonian, Dr. Emily Landon of the University of Chicago medical school said colder air is drier and the droplets that transmit the virus become smaller – so removing masks to eat and drink poses extra safety risks. Instead of pouring your creativity and resources into building a safer outdoor dining area to sustain you in the months ahead, you will likely be better served by going all-in on perfecting your off-premise offerings right now. Think back to how you operated in the early weeks of the pandemic and focus on doing those things again and better. People may be less comfortable eating out for the next several months but they will still need to eat – and the public has become more educated about the low risk of COVID transmission on packaging. Your off-premise menu can help bring some festivity and normalcy to life in these strange times.
At a time when operators have been struggling to make delivery profitable, curb-side pickup has solved some problems. Consumers like it too: Recent Technomic research found that about 40 percent of Americans who have purchased takeout from a restaurant during the pandemic have chosen curb-side pickup and two-thirds of those respondents say they will continue to use curb-side pickup service even after indoor dining restrictions are lifted. The challenge is that many restaurants offering curb-side pickup created the structure on the fly as the pandemic created the need for it. As a result, the service may not be as seamless as it could be. A recent Restaurant Dive report describes operator challenges such as difficulty managing the high volume of calls from customers placing orders and arriving to pick them up. Busy periods have also made it difficult for operators to notice when a particular make and model of car arrives to pick up food. A mixture of new technology and more conventional reconfigurations can help streamline the process. For example, some online ordering platforms – Olo is one – offer alerts that let restaurant staff know when a curb-side customer has arrived. QR codes or textable numbers can also be posted on signs in designated parking spots outside the restaurant to alert staff inside to the arrival of a customer. Other operators are making new use of interior space once needed for guests dining inside – by redesigning waiting areas as places where curb-side orders can be held at the right temperature and ready to be handed off quickly to an arriving customer.
Fall is the season of preparation. What can you do now to keep business steady through the winter? In Chicago, no stranger to frigid winters, IDEO, BMO Harris Bank and the Illinois Restaurant Association partnered to launch the Winter Dining Challenge, which invites Chicagoans to suggest creative ways that the city’s restaurants can transform their on-premise dining areas to comfortably serve guests through the winter. (The selected ideas will be announced in late September and each winner receives $5,000 and the opportunity to develop their idea at a restaurant or bar.) If your menu and service model are a fit for takeout, double down on your efforts to offer seamless curbside pickup and, ideally, in-house delivery this winter. That includes ensuring your menu travels well, is profitable, is easy for customers to order via your website or app, can be prepared quickly and efficiently in your kitchen, and is packaged in a way that protects both the safety and quality of the food. Or…you might step back altogether. Some operators are considering closing their doors during the winter months. This option may suit operators that are not only financially able to hibernate for a few months but are also used to doing a robust business for holiday parties and groups that won’t be gathering in large numbers this winter. While the loss may be too large for some operators to manage, taking a break may provide a rare opportunity to renovate dining rooms for a new way of operating, make overdue repairs and upgrades, and revamp menus, technology, staffing plans and promotions for a grand reopening in the spring.
Even before the pandemic, ghost kitchens were on the rise for their ability to ensure faster, less expensive food preparation and more efficient delivery to customers looking for off-premise dining options. Now, many restaurant operators are looking at ghost kitchens as a critical way forward at a time of great uncertainty for the industry. They may be on to something: Recent research from Euromonitor found that the global market for ghost kitchens could reach $1 trillion by 2030 – and in the process, capture big slices of industry segments including drive-thru sales, take-out foodservice, ready-to-eat meals, pre-packaged cooking ingredients, dine-in foodservice and packaged snacks. But when you’ve been running a traditional brick-and-mortar restaurant, what actions (and investment) are required to pivot to the ghost-kitchen model? Food distributor US Foods is aiming to give operators a hand with that transition through its newly launched US Foods Ghost Kitchens program. The company promises that for an average start-up investment below $5,000, they can help operators open a ghost kitchen concept in about three weeks and achieve an average profit margin exceeding 35 percent. The program includes market research, marketing support, a digital technology framework, menu optimization and management guidance.
COVID-19 has turned the employee training rulebook on its head – and it’s a major area of investment among restaurant operators right now. A June survey of senior executives in retail and hospitality found that for 75 percent of respondents, employee training was their highest priority – well above even contactless payment (48 percent). At a time when fluctuations in COVID-19 cases are causing mandates to change at the state and local levels, it’s critical to be able to contact your team (and have them take appropriate precautions) before they even walk through your doors. Can you connect with your staff at a moment’s notice? Before flu season adds to the strains of the past several months, now is the time to assess weaknesses in your communication protocols and ensure everyone on your staff receives alerts about important operational changes promptly – and understands how to adjust to new mandates as needed.
Yet another aspect of restaurant life that has shifted in recent months is the typical hour when people are consuming restaurant meals. As people have stayed closer to home – both during and after work – they have also altered the lunch and dinner rush. Even as lockdowns have eased, those changes may persist: A Datassential survey of 1000 consumers that was conducted in May found that 35 percent of respondents planned to avoid peak busy times at restaurants – even after lockdowns eased. But instead of seeing this as a negative, could there be advantages to spreading traffic out through the day and evening and not having a crowd for dinner on a Saturday night? Consumers’ perception of time has shifted with the pandemic. Can your incentives capitalize on that? Getting your customers to come in for dinner on a Tuesday or a Wednesday night instead of a weekend may be easier to sell right now. Lunch may not need to fit squarely between certain hours when people are working from home. More people may be open to picking up an extra-early dinner. Case in point: QSR reported recently that Dunkin’ had significantly grown its year-over-year sales between the hours of 11 a.m. and 2 p.m. as a result of offers to “entice guests to join, reactivate, and use DD Perks to make their transactions.” In other words, the brand effectively enticed customers to come in during once-slow periods. How can you harness your rewards program and marketing efforts to drive traffic at odd hours? If you have a lot of customers who are socially distancing now, you may be giving them just the incentive they need to support you.
The capacity to offer outdoor seating is changing the competitive landscape for restaurants right now. Datassential surveyed consumers recently about their perceived safety of a long list of places, ranging from food trucks to grocery delis to stadiums. Restaurants with outdoor seating topped the list, with 63 percent of consumers perceiving them as safe places to go when restrictions are lifted. But is outdoor seating a feasible longterm solution, particularly as the weather gets cold? Air quality has been a key factor in allowing restaurant dining rooms to reopen during the pandemic – and ventilation of indoor spaces is likely to become a growing concern for operators who want to continue to serve people in dining rooms. In Florida recently, McDonald’s unveiled its first net-zero energy restaurant, which includes a new automated energy system and passive ventilation dining room designed to circulate air and regulate temperature. Further on down the ladder, look for more restaurants to incorporate potential air quality fixes like ultraviolet lights – such as the ones installed in the grated ceiling at Marlaina's Mediterranean Kitchen in the Seattle area. The technology holds promise: NPR reports that research shows close to 90 percent of airborne particles from a previous coronavirus (SARS-CoV-1) can be inactivated in about 16 seconds when exposed to the same strength of ultraviolet light as in the restaurant's ceiling.