An inability to reopen at 100 percent capacity may not even be worth it for some dining establishments.
Some states across the country have reopened their dining rooms and bars to various degrees while others are still waiting for relaxed guidelines from their state. But while restaurant operators and staff members might be looking forward to the reopening of the industry, everyone involved should keep in mind that things will likely never go back to the way they were prior to COVID-19. Even if a city or state gives the go-ahead to reopen dining establishments, continued social distancing guidelines and the cost of heightened sanitation and personal protective equipment (PPE) will determine just how profitable they can be. For this reason, restaurant operators need to be strategic when it comes to their reopening strategies.
Here are five things restaurant operators should keep in mind as they consider reopening their establishments.
Restaurants may not open at full capacity based on local guidelines.
Continued social distancing guidelines will have a direct impact on restaurant reopenings. Local and state ordinances might impose reopening phases that, for example, only allow restaurants to open seating at 50 percent or even as low as 25 percent capacity and keep the restaurant bar closed in order to ensure that customers can follow social distancing guidelines.
What’s more is that restaurants may not have enough of a customer base to reopen at 100 percent. The general population might be eager to return to the status quo; however, continued fears over COVID-19 infection will likely prevent many customers from dining in. Instead, customers might opt to continue taking advantage of takeout and delivery options. Restaurant operators need to check the guidelines in their areas and get a feel for customer demand to make sure they are prepared to comply with social distancing rules and budget for menu and labor costs accordingly.
An open restaurant could signal the end of rent concessions.
Restaurant operators who benefitted from rent concessions while their establishments were closed may no longer enjoy that option if they reopen. Landlords might consider any open restaurant fair game for rent payment, even if the restaurant has reopened at a lower capacity and is generating less revenue. For this reason, restaurant owners should be prepared to pay the full cost of rent even if they are not generating the same amount of revenue as before COVID-19 due to limited capacity or decreased customer demand.
Operators might need to shift employee schedules in order to limit contact.
In addition to taking measures to protect customers, restaurant operators must also take steps to protect their employees. For this reason, restaurants might consider splitting their employees into groups in order to prevent the spread of infection. If there are two groups, for example, one group can work Monday through Wednesday and the other can work Thursday through Sunday. The two groups can switch days the following week in order to ensure everyone has equal access to the same amount of hours and pay. Grouping employees together will also limit their collective exposure to other staff members.
Restaurant operators should market their reopenings very carefully if they are unprepared for a flood of business.
While everyone in the restaurant industry is eager to make money again, operators should consider their markets and determine whether they are truly ready for a large amount of business, or whether a lower demand will even justify reopening costs. To that end, restaurant operators should carefully determine how to advertise their reopenings. They can do soft openings and simply open their doors on a Monday without any fanfare or, if they are eager to conquer large crowds, including the weekend rush, they can launch social media campaigns around their reopenings. Either way, operators should keep their staff members in the loop and be prepared for a variety of scenarios.
Contactless experiences are here to stay.
People have learned a lot these past few months about infectious diseases and how easily they can spread, which is why restaurant operators will need to do everything they can to limit physical contact at their establishments. Kiosks, for example, are a relatively new addition to the restaurant scene, but since they still require physical contact they might be made obsolete by COVID-19. Instead, restaurants may consider incorporating apps that customers can use on their own devices to request and pay for their meals. Operators can also make sure bathroom doors are easy to open and close with minimal effort. Restaurant operators will need to make visible efforts to keep physical contact to a minimum and implement sanitation tracking to show customers the measures they are taking to protect everyone in their restaurant.
COVID-19 has prompted many changes within the restaurant industry and will continue to do so over the next few months at the very least. Restaurant brands and operators will need to embrace change with open arms if they want their businesses to thrive. By making adjustments to ensure customer and employee safety and checking the demand in their markets, restaurant operators can have a safe reopening experience.
Jim Balis leads CapitalSpring’s Strategic Operations Group, supporting due diligence, portfolio management, and industry knowledge building initiatives. Jim has several decades of management and turnaround experience in the restaurant industry. Prior to joining CapitalSpring, Jim was Founder and President of RMG, a boutique advisory and turnaround firm serving the restaurant sector. Jim has directed numerous turnarounds and has acted as interim CEO or Chief Restructuring Officer for 15 restaurant companies. He began his foodservice career in high school, during which he held multiple management positions for local restaurants in New York. Jim holds a BA from Duke University.