Restaurants run on razor thin margins at the best of times. Taking into account food costs, real estate, and labor, the industry average is a mere 3-5% profit, and in fine dining, much of that comes from add-ons like alcohol that have a much higher margin. The problem for restaurants is that these last few months have hardly been smooth sailing for the industry, with the end result that restaurants have struggled during the COVID-19 pandemic, and many have been forced to close their doors for good.
Luckily for those that made it through the early months of strict shutdowns and stay at home orders, summer has created opportunities for outdoor dining, which has helped many restaurants increase business and find their footing again – but in the long-term, it won’t be enough. If dining is going to become sustainable again, restaurants will need to reinvent themselves for the post-COVID era.
Cutting Staff And Changing Menus
One of the first things that restaurants did at the start of COVID was send home as many of their staff as they could, for several reasons. First, they were doing a lot less business, so they didn’t need as many workers and they couldn’t afford to pay them. More importantly, they wanted to create more space between staff in typically crowded kitchens, which meant fewer cooks. This second change may be here to stay because one of the best ways for restaurants to increase their profit margins is by reevaluating their menus so that they emphasize dishes that produce more food with less labor.
Certain types of food lend themselves well to this new model – in particular, foods served family-style, like whole roast chicken and fish, barbecue, and some pasta dishes, and some menu pivots are easier than others. Depending on available space, restaurants may consider investing in electric smokers, rotisseries, or other special, large batch equipment to support this shift.
Creating Distance While Staying Social
Social proximity is one of the most important elements of restaurant dining, or at least it was until COVID-19 struck. Now, restaurants need to rethink core aspects of customer interaction to keep staff and patrons alike safe.
Restaurants started reworking their interactions from the start of the pandemic, with high end restaurants creating takeout menus, local restaurants in digital ordering, and eliminating reusable menus in favor of paper or digital options. Meanwhile, owners also put up glass screens at counters, investing in touchless payment, and outfitted servers with masks and face shields, while cutting capacity by half or more.
Recalling restaurant profit margins, it’s clear that maintaining reduced capacity is entirely unsustainable for restaurants, even if they continue to do more takeout service and retain outdoor dining options. Some may choose to put up additional barriers between tables like they’ve placed at entries and counters, but this is likely to create logistical barriers in addition to being aesthetically unappealing. They may also choose to look for more affordable real estate, but given how closely restaurant trends mirror broader area costs, this may not work.
A Combined Approach
As restaurants reopen with more of their original service elements, they’ll have to consider a variety of strategies to ensure a sustainable business model – and, at the end of the day, they may be better off for it. A more robust foodservice model that includes meal kits or family meal offerings, curbside and delivery, and even groceries as part of food service are all likely to be part of the new normal, even for long-established restaurants. With support from local governments, restaurants may also be able to keep some of their more profitable innovations, like to-go cocktails, in play after conditions stabilize.
Ultimately, whatever comes next for the hospitality industry, restaurateurs will need to keep the lessons of the pandemic behind. They can’t afford to relaunch using a model as fragile as their pre-pandemic approach, and that means dining out will be different. No matter how much it changes, though, talented chefs and front of house staff will find a way to ensure it’s still an option.