The Coronavirus pandemic has made me wonder what the restaurant industry's "new normal" is going to look like. If you've ever worked in a restaurant you probably know that even a successful restaurant can't survive forever with a reduced revenue stream. A restaurant that is barely making it financially may not be able to survive for more than a few days. They don't have unlimited cash reserves (if they even have any at all) and when things are tough financially many times the restaurant owner must inject some personal funds back into the business just to keep it going. I was in the business for a long time and I know a lot of restaurant owners. Only a couple of them were fortunate enough to make a lot of money from their restaurants and both of them didn't change their business models as the market changed over time, so they ended up putting all the money they had made back into the businesses to keep them afloat. Both of those people ended up closing their restaurants and are still paying off a ton of the debt they incurred trying to keep their places open.
As I've said in earlier posts, restaurants are not the cash machines that most people think they are. The margin of a well-run restaurant is only about 4-7%. To put that in perspective, a restaurant needs to sell about $1,000 worth of food and drink to make about $70 in profit. Depending on what kind of menu items you're selling and your price range, that can mean serving 100 or more customers.
Imagine having 100 people over to your house for and offering each of them a choice of 20 items for dinner. Once they have eaten all your dinner rolls and let their screaming kids run through your house for half an hour, they let you know what they want and tell you exactly how they wanted it all cooked. Now you have 15 minutes to get it all ready for them. Oh, don't forget that it has to be perfect and just the way they imagined it would look and taste. And by the way, because they watch the Food Channel, they are all culinary experts. If they don't get exactly what they want, you will face the backlash on Yelp forever and no one will accept your future invitations to come over to your place for a nice, relaxing dinner ever again. Would that be worth $70 to you? I would probably be willing to give each of those people some cash if they would just go eat somewhere else or, better yet, go buy some groceries and put some of that Food Channel expertise to work by cooking their own dinner at their place. Luckily, I have a small house so I guess I don't have to worry about it that much.
Ok, back the reason for my post. Restaurants have either been closed or just doing takeout/delivery for over a month. Our governor issued something called a "Directed Health Measure" that limited the number of people who can gather in one place at the same time to ten or less. This effectively closed every restaurant's dining room. Although this has been devastating to restaurant sales, I do applaud our governor for following the advice of epidemiologists and doing this. As a side note, I work at a health care organization and I know that our governor has personally been on daily coronavirus briefings with our epidemiologists since this mess started. He faithfully followed their advice until about 2 weeks ago when he finally caved in to pressure from the business community and the GOP and decided to allow businesses to start reopening while we are still on the upward side of our "coronavirus curve." I think this was a bad idea since the number of new cases here is still increasing at an alarming rate every day and epidemiologists have advised him that it would probably lead to many more infections and deaths than waiting a little bit longer.
If you own and operate a restaurant, you know that you will lose your ass if you only allow 10 people in your dining room at a time. Even with only one server, you still have a kitchen full of cooks that you have to pay just for showing up even if they only have to cook for a few people. And you have to heat or air condition the whole place. Plus, all that kitchen equipment costs a lot of money in gas and electric expenses. You can't shut it off until you get an order because it take a long, long time to heat up this stuff until you can cook with it. The equipment they have back there is not like what you have in your house. You could run your kitchen stove for a year or more with the amount of natural gas these monsters consume in only a few hours. It is simply too expensive to open your dining room if you can't serve your normal number of customers.
Many restaurants here have decided to do the responsible thing by ignoring the governor's order relaxing restrictions and just keeping their dining rooms closed for now. One of the news channels here took a poll a few days ago asking regular restaurant customers if they would go to a restaurant and eat in it's dining room. The result was that about 72% of the respondents plan to avoid dining rooms in the foreseeable future. If I still owned a restaurant, I know that this number would be very important to me and I would be considering how I could restructure my business so that it could survive in the coming months or years. If you depend on dine-in customers to make money and 72% of them aren't coming in, you are not going to make money. If this goes on for a long time, you stand to lose a lot of money. It's that simple. If 72% of your customers are afraid to come to your restaurant and you have no other way to serve them, then you are in trouble.
Luckily, customers have been fairly accepting of ordering takeout and delivery. We all know that restaurant food is better when it's served right from the kitchen, but we're willing to adjust our expectations to get it delivered to our homes and avoid getting sick. When I was a chef, we generally hated doing takeout orders. If your kitchen is geared up to serve great food to people in your dining room, it's hard to change gears and provide the same quality product packed in to go containers. With some menu items it simply can't be done. For example, there's no way to serve a good classic Bananas Foster in styrofoam. You can't serve a flaming ball of sugar, bananas, and ice cream in styrofoam. Even without the fire it wouldn't be the same when the customer finally got it. We used to occasionally get to go orders for creme brulee. Part of that dessert is it's proper presentation. Removing it from the baking dish and putting it in a to go container resulted in the customer receiving nothing more than what looked like a spoonful of Jello pudding for their $11. As a side note, I would regularly just send the whole creme brulee in it's porcelain baking dish in the to go order with a request that the customer return the dish the next day. In 2 years of doing this I would regularly find a bag containing the carefully washed baking dishes outside the back door of the restaurant when I arrived at work the next morning. I think we only ever lost one dish doing this.
Consumers are scared to death of contracting coronavirus and they should be. After all, who wants to spend two weeks in a hospital intensive care unit isolated from loved ones drowning in their own mucus until they eventually die? There's no way to spin that into a positive situation. While we have some really stupid people in this country, most people are not stupid enough to believe that a governor's order to reopen public places is going to put an end to the coronavirus. Even if infection rates eventually drop, we are going to be scared of this for a long time and it is going to affect our willingness to be in public places with other people around.
What I'm trying to say with all this is that now is the time for restaurants to evaluate how they're going to operate in the future because things aren't going to be the same. Customers are scared to go to restaurants but they still want restaurant food and they're willing to make some adjustments to their expectations in order to get it. I think restaurants should adjust their business models toward takeout/delivery instead of dine-in business. This means changing menus to offer food that works well for takeout as well as partnering with some of the emerging delivery services that we have been regularly using during this pandemic. Adjust staffing to levels and skill sets that make takeout/delivery easier and more profitable. Some restaurants will see this as a great challenge, but others will see it as a new opportunity and will start to make adjustments that will enable them to survive.