A lot has changed in the food ecosystem since last week, leaving restaurants scrambling to stay afloat. After taking inventory of the past week, most restaurants are transacting a mere 10th of the business they were before. It doesn’t take a mathematician to connect the dots. Takeout and delivery is not enough.
Meanwhile at grocery, consumers are purchasing more than ever. Grocery stores can’t keep shelves stocked, or hire fast enough to meet rising consumer demand. They are having a rough time stymying the loss of current employees who need to stay home due to childcare issues or fear of virus concerns. The frantic search for a solution to accommodate this unprecedented demand is on.
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The distribution supply chain is also struggling. Distributors large and small are throwing away or worried about losing mass quantities of inventory. When their restaurant customers suffer, so do they. According to research by the USDA on America’s eating habits, an estimated 50 percent of all food was purchased and eaten outside of the home. An estimated 30 percent of that food is delivered directly to restaurants by distributors. There is currently an effort underway, led by business leaders at some of the largest distribution companies, in partnership with the federal government, to deliver inventory from distributor warehouses directly to grocery stores, leaving restaurants out of the equation entirely.
Small distributors and distributor solutions like Food Maven, an alternative distributor for excess food, understand the need for quick innovation and have quickly pivoted by selling food direct-to consumer right out of their warehouse.
“At Food Maven, we already know from our existing business model- of helping to link lost food into the food ecosystem, that under normal circumstances as well as at this time, that a lack of food isn’t the problem, says Ben Deda, CEO of Food Maven. The problem is inefficient channels not equipped to get products efficiently or sometimes at all to the consumer.”
It’s that kind of ingenuity that is inspiring scrappy restaurants to try and bridge the gap in innovative ways as well. Restaurants don’t have to be left out of this equation; restaurants and restaurant staff can and should be a part of the solution.
I teamed up with Michael Filippi of Spectacle Strategy in Denver to provide insights into how obvious gaps in this inefficient food ecosystem can be filled by restaurants and restaurant employees. The result is this list of five strategies of restaurant survival that includes pivoting business models, adding additive grocery offerings and even temporarily shuttering business in some instances.
“When we work with our clients at Spectacle to develop innovative growth strategies or adapt to market shifts, we invite them to challenge and even break their norms. The reality is that the norm has already been shattered in a foundational way and so what restaurants need to do now is adapt. The service industry (and many others) has to shift from a growth mindset to survival mode. Finding opportunities right now to rethink, retool, and repurpose is the key to survival,” Filippi says.
Five Strategies of Restaurant Survival:
Start with the Consumer
Consumers are looking to maintain some grasp on normalcy in this very disruptive time. Restaurants can provide that sense of normalcy and comfort by connecting directly with their valued customers via email and social media to find out what their needs are and service them.
Play to Your Strengths
Restaurants: Restaurants that are maintaining their existing strong takeout and delivery business should consider adding grocery items that consumers can grab, order ahead or have delivered. This can incrementally add to check averages. Restaurants should get guidance from distributors on what items to stock and how to price accordingly. Keep in mind that laws and regulations differ from city to city on the legality of reselling grocery items, so restaurants should get informed of their local laws.
It’s been harder for fine dining and fast casual restaurants that have pivoted to the takeout and delivery model to compete. Their competitive advantage however, is culinary prowess. These restaurants should consider partnering with local grocery stores to provide branded restaurant quality and branded meal kits and prepared foods inside the grocery store. This could be a successful way for grocery and distribution to work in concert with and assist their restaurant partners and could lead to long term successful partnerships.
Food Halls: Food halls are uniquely qualified to transform themselves into full-service ad hoc grocery stores. Their sheer size and existing retail licenses are their strength. Food halls are big enough to provide shoppers with the opportunity to socially distance, and they have experience in and know-how to re-package, label and sell at retail in the safest manner possible.
Chef Frank Bonanno, proprietor/CEO of Bonanno Concepts in Denver, is transforming his Milk Market Food Hall into a full-time grocery store with prepared foods, frozen foods, a butcher counter and a fish market.
“The easy part is converting into a grocery store; the hardest thing right now is guaranteeing pay and taking care of our employees. We’re trying to do whatever we can to pay people. We’ve even implemented a voluntary employment model where we don’t schedule people, we just offer work to our employees and whomever wants to service our customers, just shows up. This is important for our staff and for servicing our community. This isn’t about making money anymore for us or other restaurants considering the options of grocery, it’s about barely trying to cover costs and stay alive until this is over,” Bonanno says.
Start Simple, Start Small
Pivoting is hard any time but especially in turbulent times. To be successful with a pop- up grocery, or prepared foods prep, you have to simplify wherever possible. Start with a streamlined menu of either grocery items or prepared foods and focus on items that are best sellers. Prioritize comfort foods over exotic items, and consider what travels well and has longevity under refrigeration or freezer.
Move Fast and Learn Faster
In business, it’s easy to get paralyzed in the pursuit of perfection, but in situations like these, speed and agility iis critical for survival. In any venture, failing fast and adapting quickly is preferred over inaction and slow death. Things will not be perfect; restaurants should make it clear to employees, vendors and customers that they are wading into unchartered territory. Transparency and teamwork is key to getting through this together.
Chef Daniel Asher Owner of Tributary Food Hall in Golden, Colorado, is working to pivot Tributary into a grocery in the spirit of moving fast and learning faster:
“Under these crazy circumstances, you need to make a decision to pivot to potentially save your business and literally 30 minutes later you’re executing it,” Asher says. “As food service pros we are used to working under intense pressure and making sense of things in the moment and on the fly. Our biggest imperative as hospitality people is making people feel safe and happy and nourished only now we can’t do it tableside, so we’re rapidly figuring out how to do it via delivery or from 6 feet away.”
Lead with Hospitality
Keeping hospitality front and center is crucial. Customers will notice and restaurant brands that do so may emerge stronger than ever. This hospitality extends to restaurant staff. Restaurant leaders should do whatever is required in the best interest of both business and staff. Consider that this may even include temporarily shutting down operations and redirecting your staff into much needed food roles in the larger food ecosystem where they can serve the public in new ways.
Now is the time for restaurants, distributors and grocery stores to pull together to create a more holistic food ecosystem. Restaurateurs should open the lines of communication with fellow restaurant comrades to share best practices. New partnerships can be forged with grocery stores at the local level that can be mutually beneficial. Restaurants can support grocery by referring underutilized but well-trained food service staff into temporary or P/T positions at the store level to help supplement their lost wages. Working closely with distribution vendors, restaurants can create successful plans to sell wholesale items at retail to their customers. Once these relationships are solidified, these offerings of product and service can be marketed collectively, together. Because at the end of the day, we’re all in this together and that’s how we’ll all get through it.
Liz Moskow is Principal at Bread&Circus Hospitality, focused on consumer experience consulting. She provides culinary infused strategic thought leadership for CPG food and beverage development, foodservice product and menu innovation and hospitality wellness integration. Liz is a leading Food Trendologist tracking, uncovering and predicting the future of food and beverage: Author of many creative culinary publications, Liz is an Industry expert quoted in and contributing to multiple food articles in industry trade publications, and newspapers; The Wall Street Journal, The Washington Post, Forbes, USA Today and many others.
Spectacle Strategy is a creative strategy consultancy that helps their clients grow smarter and faster through branding, insights, and customer experience. Spectacle has worked with clients across a variety of industries, including restaurant chains, technology, and consumer packaged goods.