COVID-19’s economic impact on restaurant operators continues to be well documented by mainstream media and trade press alike. But this pandemic and the steps necessary to hasten its end also take a toll on various members of the supply chain that support foodservice operators across all industry segments, including service agents. Like their restaurant customers, service agents have had to make some very difficult choices in recent days.
In implementing its austerity plan, Refrigerated Specialists Inc. took a very surgical approach. The company laid off 10 technicians who focused mainly on planned maintenance, which tends to be the newer techs on its team, according to Scott Hester, president of the Dallas-based service agent. “A lot of the people we let go last week handled it far more graciously than the people I’ve had to terminate for cause in the past,” Hester said. “I still expect to call them back when we get to full load.”
RSI reassigned all other service techs and installers, while salaried staff, directors and owners all took pay cuts. “Even my peers who serve other segments, they are laying off half their people. We only had to lay off 27% of our workforce,” Hester said.
Colorado-based Hawkins Commercial Appliance Service had hired 4 trainees within the past 90 days and had to lay them off. It was the first time in the company’s 113-year history it had to take such measures. “We did that with the understanding that we want to bring them back,” said John Schwindt, vice president of operations/general manager for Colorado-based Hawkins Commercial Appliance Service and current president of the Commercial Food Equipment Service Association (CFESA). “And the ones who had worked for us for a while, we had to furlough some people.”
For the remaining staff, Hawkins made some other changes, including reducing the workweek to 25 hours from 40 hours. Tech meetings now take place in the company parking lot to allow for proper social distancing. And inside staff will work split shifts, half in the morning and half in the afternoon.
As a result of these changes, company leaders like Schwindt now wear more hats. “We are actually doing ok,” he said. “Our over-counter parts sales have boosted recently.”
Hester feels the approach RSI took will help the company get back up to speed quickly once the economy starts to gain momentum. “We are poised to jump back into marketing and sales and be ready for business based on how we circled the wagons with our talent. We will be able to go back to get that business pretty fast,” Hester said. “We will have to hire for positions that are easier to fill, like administrative or warehouse roles, rather than an installer or a beer guy, who takes a while to train.”
Likely, though, it will get tougher before it gets better. “Forty-one years in business and we have not had a reduction in workforce until last Friday,” Hester said. “We are going to see a larger portion of our accounts receivable becoming uncollectable. Some projections in the area call from anywhere from a fifth to a third of restaurants closing.”
Operators and Service Agents Working Together
How operators choose to work with service agents continues to vary greatly by company, by segment and other factors.
Like 39 other states, Colorado is on a stay at home order. For a brief time, Denver’s mayor sought to shut down restaurants, bars and liquor stores, among other businesses to help curb the spread of COVID-19, Schwindt noted. But that order was reversed and now, like other states and municipalities, consumers can still order food for delivery and takeout from restaurants and bars — including liquor.
“You can pull up to a Mexican restaurant and get a bucket of margaritas,” Schwindt observed. “That gave some restaurants a boost, especially the Mexican restaurants because not everyone can make a good margarita. But overall, just like everywhere, else it’s kind of bizarre.”
Some local companies that tried to stay open by offering takeout, curbside pickup and delivery are starting to realize that’s not viable, Schwindt said. “A lot of restaurants were trying to stay open, but they were not getting it.”
Hawkins also serves a variety of quick-serve restaurant chains in its market. “All of those places are doing relatively well and that’s where we are doing most of our work,” Schwindt said.
And for those service calls Hawkins’ techs do go on, they take proper precautions, including practicing proper social distancing, wearing gloves, washing their hands and using hand sanitizer. If an operator requires a face shield, they typically provide that to the tech, Schwindt said. The operator can then sanitize and reuse the shield. “Masks are impossible to find because they are going to healthcare. You can’t even find dust masks right now,” he added. “We have not had anyone wanting us to wear hazmat suits — yet. We have not been turned away from anyone yet. A couple of the larger nursing homes have their own maintenance staff and are not allowing anyone in but that’s it.”
And some chains are using this slower period to execute planned maintenance equipment and get other pieces of equipment recertified. “It’s a prime time to do that,” Schwindt said.
Some customers have called Hawkins asking for advice on how to properly shut down their equipment and the company provides them with a checklist. “Nobody’s asked us to come in and shut down equipment yet,” Schwindt said.
Similar scenarios are playing out in the Texas market, too. “Our restaurant and foodservice customers have essentially stopped planned maintenance and routine work items,” Hester said. “Corporate feeders are going strictly to-go, and we are getting very little work out of them. Same applies for the commercial operators.”
Not surprisingly, other operators have chosen to suspend their planned maintenance programs. “Planned maintenance is usually the first thing to go,” Schwindt said. “And then they start talking about how to implement other cost savings. In times of crisis it’s tough to look to the future. It does take a couple of years to get to that point where you see a return on investment. But if you let it go too long it’s tough to catch back up.”
Interestingly, it’s not just the struggling businesses that hit the pause button when it comes to planned maintenance. “Even grocery stores, who are thriving and can’t keep their shelves stocked, are pausing all preventative maintenance,” Hester said.
RSI services both hot and cold equipment, with business for the former taking a much bigger hit than that of the latter. “I attribute that to the redundant equipment that operators will have,” Hester said. Some operators may have more than one fryer or one oven and are choosing to not have work done on one unit. “So, we are getting more action on the cold side than the hot side,” he said.
But the key word many service agents use now is “pause,” meaning it’s likely some of this business will return once the dining rooms reopen and people return to work throughout all aspects of the economy. “We have a lot of work pending, so we have to wait for this to end,” Schwindt added. “The customers have told us as soon as they see a little light at the end of the tunnel, they want us to come in to help get them up and running.”
One ray of hope in the Texas market is the fact that construction-related work continues. “We are still bidding and getting purchase orders related to construction work,” Hester said.
Factory Support and the Future
Interaction between service agents and foodservice equipment manufacturers has been mixed.
“I am happy the factories are there. Because the work that’s coming from them represents the bulk of what we are doing,” Hester said. “And when we do refrigeration work, we are picking up a few new customers due to on-site referrals. I’ve always practiced the philosophy of ‘you have to support the supply chain’ and that’s what is keeping us going.”
“In times like these you know who your partners are,” Schwindt added. “We’ve been in contact with one of the major manufacturers and they have been helpful and informative. They give you a heads up about any changes in their service and so forth. Another one shut down quite a few manufacturing facilities and did not let anyone know about it. They did let you know when they reopened, though. Others, you don’t hear a peep from.”
Nobody knows when the economy will begin to bounce back or what business conditions will look like at that time. “The startup won’t be as steep or severe as the shutdown,” Schwindt said. “Some people will want to open up, but will they have the operating capital to do so after having been shut down for a few months?”
In fact, how business bounces back will likely differ greatly market by market. “I think it’s going to snap back,” Hester said of the Dallas-Ft Worth market. “That’s my hunch. Dallas is a large eatertainement market. We don’t have mountains or the ocean. People go out to dine and sit in bars. That’s what we do around here. I am encouraged by the stimulus. It will put money in people’s pockets and that will get them to come back. We always have had the benefit of the simple fact that everyone’s got to eat. And with the majority of the meals being consumed outside of the home, that’s always benefitted us. As soon as they open the bars and the dining rooms, I am expecting it to snap back.”
Like Hester, Schwindt remains cautiously optimistic about the future. “This entire industry has been so overwhelmed for so long. Once 2012 hit nobody could find technicians. Who would have thought we would need to lay off technicians? Now everyone still has the cream of the crop working for them. Hawkins has been in business for 113 and we had never laid anyone off until this. It’s almost like starting from scratch. It’s a reset. We will come out of this stronger.”