Much of the COVID-19 conversation has focused on how mandated dining room closures have hamstrung restaurants.
It’s interesting to note, though, some restaurant chains continue to survive — and even thrive — in the current environment. I am thinking of such chains as Domino’s, Papa John’s and Wingstop, among others. Restaurants that feature drive-thru service, likewise, reduced the impact to their businesses by steering customers down that path. One full-service chain that also offers drive-thru service was also able to focus on the latter service mode to minimize the impact of the dining room closures on its business. The company was cash-flow positive at the EBIDTAR level (excluding rent).
Indeed, the key to thriving in this environment is knowing how to optimize off-premises business, including the drive-thru, as these chains show. Some of the more successful brands in this environment are those that already excelled when it comes off-premises business, while others morphed quickly into this mode of service as the current crisis grew. Many already had virtual order taking capabilities that helped expedite the transition.
To further build customer confidence, chains must clearly illustrate how seriously they take the pandemic. For example, one restaurant chain advertises how no human will touch its product once it goes into the oven. Comforting customers in a way that minimizes the likelihood of spreading the virus will increase their confidence with purchasing the chain’s product.
To offset traffic declines and make their businesses more valuable to customers, some restaurants now sell grocery and pantry items. That makes plenty of sense in specific applications when you pair the need to socially distance with the surge in popularity grocery stores have enjoyed due to the shelter-in-place requirements. In other cases, restaurants have assembled meal kits that allow customers to create restaurant quality experiences in their own homes. They even included reminding the customers that this is one way to do things with the family (touching on the emotional side), especially since we are mostly cooped up together. During the best of times, restaurants must continue to enhance their value propositions. That’s even more the case now.
In Miami, where I live, we had a concept that would deliver a roll of toilet paper with an order. Although I still don’t understand why there’s a rush on toilet paper given COVID-19 is a respiratory illness, this restaurant brilliantly seized an opportunity to meet customer needs pretty quickly.
So how can restaurant operators continue to progress as the COVID-19 pandemic plays out?
Start by taking on a continuous improvement mentality. This philosophic approach will enable operators to evolve as the business environment changes. This includes being able to adapt to regulations set forth by state and local governments to ensure the maintenance of customer and employee health as regional economies come back online.
One company that seems to embrace such an approach is Starbucks, which continues to monitor each market it serves and each location it operates one by one. The Seattle-based coffee company is taking a “monitor and adapt” approach to opening its locations.
The continuous improvement mindset also will include how restaurants execute their menus, the model of service they use in serving both off-premises customers and, eventually, on-premises guests, the dining room design, the deployment of labor, adapting to new sanitation requirements and more.
Our new normal will significantly impact how existing restaurants evolve and morph as they come out of this pandemic, both operationally and the way the spaces are designed.