10 Pandemic outcomes that could actually be good for your restaurant business
The amount of time and money poured into each restaurant dollar earned this year has been ridiculous. Embarrassing even. Many of us have lost our permanent positions, and still more hourly workers don’t know where their next paycheck is coming from. The toll on many industries, human life and the education of our kids as well as the scope of personal loss during this time has been catastrophic and heartbreaking.
And yet…something good could come out of this. I am no longer kidding myself that things will ever go back to the way they were before. They can’t. And should they, really? The way the restaurant industry has been run was far from perfect, even before the current crises hit.
I am no longer kidding myself that things will ever go back to the way they were before. They can’t. And should they, really?
7 Restaurant problems that existed before the pandemic
Labor costs and the rising cost of minimum wage create significant SPMH constraints, with hardly enough people on the ground to run a smooth operation.
To offset these labor costs, some operators exploit hourly workers with few hours, split shifts and no overtime pay. This forces employees to sometimes work multiple jobs, struggling to carve out a living wage while working long hours, seven days a week.
High rent and real estate monopolies in city centers makes break-even a very big hurdle to jump in areas where the competition was already very stiff.
Even before the pandemic, new restaurants had a statistically lower chance of success than businesses in other industries, and a very high capital investment — often at high personal risk.
Inflated competition due to an investment bubble that diluted the market place with unstable competition drove menu prices down to unprofitable and unsustainable levels.
The discount rut of never-ending LTOs, a challenge for many QSRs, constantly erodes flow-through of profit.
Food safety, restaurant cleanliness and employee hygiene practices have historically been treated as secondary and less important functions by many restaurants including high profile restaurant chains.
Third-party delivery has been booming in recent years — eroding margins, customer service perception and the quality and heat of the food your customers receive.
The restaurant business has always been tough. Despite all the problems, many investors and dreamers still go all-in to give it their best shot. There has been a bubble growing that had to pop eventually. The pandemic has just made this happen more quickly. The reality is that not all businesses are going to make it, and a lot of people will scrape through this year with no jobs.
But us restaurant folk are resilient. We already know that our restaurants had to succeed despite all odds. We already had to work crazy hours, be on our feet all day, be constantly adaptable and flexible to changing environments and consumer needs. This is not new. So while this year will go down in this generations’ book as the worst on record, I do believe what comes out the other side is going to be transformative, innovative, exciting and new. What an opportunity we have to stop constantly working around the problems rife in the industry. To find ways to solve these problems and to breathe new life into the way things are done! The playing field has never been as level as it will be in the months ahead.
“Us restaurant folk are resilient”
Volunteering during the pandemic. Photo by Joel Muniz on Unsplash
10 Opportunities for restaurants to look forward to, post-pandemic
The nimblest and most agile businesses will be rewarded for their grit. Profitable restaurants who moved quickly to address the drop in sales, recognizing the needs of their employees, communities and customers, have built strong businesses during COVID-19 disruption, and will have strong local loyalty moving forward with less competition.
A form of de-urbanization (led by so many people working from home) has opened up more real-estate opportunities to choose from, with more reasonable rent payments.
There is an opportunity to move the front-of-house labor you no longer need due to lost sales or social distancing rules and covert those hours into delivery and curbside services. This is an opportunity to get back your margin and your customer experience, which may be currently eroded by third-party delivery services.
With these opportunities to use the surplus labor, there is a way to give employees back their tipped lifestyle in a different format and minimize job loss. This transformation could be how we contribute to rebuilding our communities.
Increased use of delivery and remote ordering can expand your customer base as wide as you are willing to go, which is undoubtedly wider than your customers were previously willing to travel to you.
We will be forced to innovate! Creating food and packaging that travels well, heat and texture-wise, gives your customers the experience they deserve. At the moment everyone is pretending not to mind the bad quality of food received cold and soggy hours later, but this will change. Use this as a point of differentiation — an experience that will make them order from you again and again.
Operations have to simplify. That means quicker processes, leaner teams, smaller ingredient stores of better quality, and focused menu items that allow you to execute flawlessly. Customers need to understand who you are just from glancing at an online menu. Make it easy for them.
Competing on value drivers other than price — like speed, quality and service — can create fresh approaches to these old ideas that can be leveraged before your competitors adapt.
Hygiene and food safety have become high priorities and are no longer secondary to sales and speed. This may be even a new value driver and competitive edge.
Restaurants are supporting each other and we have an opportunity to make this a habit — to become more than the sum of our parts. Healthy, successful restaurants create a healthy industry and in turn breed trust with our consumers, and a supply of good places to eat will help to bring back the demand we know is still there — creating more jobs and providing nourishment and comfort to us all as the world comes back to life.
Photo by Nathan Dumlao on Unsplash
Despite everything, this year may have been the shake-up we needed. Opportunities abound to redefine the way we do business and to satisfy the way consumer needs have changed. The challenges and solutions needed are no longer a looming specter of the unknown, waiting to be decoded — we have the answers. While we do have another wave of COVID-19 to get through, we also have another opportunity to do the right thing by our businesses and our communities, and another period to breathe in and tighten our belts before the vaccines start to have their effect. Let’s use this time to create the energy and promise that we saw when we decided to start working in this industry, and to overcome some of the problems that were previously the status quo. This is a time when hard work and foresight will make more difference than ever before in recent history, if we have the grit to seize the opportunities in front of us.