Most people who are at least moderately familiar with the restaurant industry would probably agree it’s a tough business. And a couple of weeks back it suddenly got a whole lot tougher, thanks to the COVID-19 pandemic.
Gary Sammons provides one example of how an experienced restaurant operator is fighting the battle. Sammons is not a culinary school graduate nor was he from a family of restaurant owners. He was a teenager trying to work his way through college by washing dishes at a small restaurant. One day Sammons asked the owner if he could learn how to cook. The owner agreed to teach Sammons this skill, but he still had to wash dishes. It was a tough way to start in the business by bouncing back and forth between the food line and the dish pit but that’s the way Sammons made it.
But Sammons didn’t want to be a dishwasher, or a line cook all his life. After paying his dues in several different jobs Sammons opened his own restaurant. Now he was not traveling this road solo. Sammons had a partner named Mary, who also happened to be his wife.
Clough Crossing operates from a street called Clough Pike in an area called Anderson Township, a suburb of Cincinnati. Like most new restaurants, it was a struggle at first, but the Sammons’ were coping. In 2008 they were dealing with the impact of the Great Recession, but that struggle paled in comparison to what came next: a fire. Now theirs was not your typical kitchen grease fire that the bus boy put out with a fire extinguisher before the first fire truck hit the parking lot.
It took the Sammons 15 months to recover and reopen. But they did reopen with the aid of two special advantageous things going for them in addition to their determination and desire. First, several years before the fire they decided to build an e-mail list of their customers. When it came time to reopen the restaurant, all they had to do was send an email letting loyal customers know Clough Crossing was back.
They had another major advantage. Most people would probably agree labor represents the most difficult aspect of opening a new restaurant (or reopening one). Recruiting, interviewing, testing, hiring and training are all difficult and time consuming. And, often managers still get the wrong people.
The opposite was the case for the Sammons. They simply rehired the same staff they had at the time of the fire. That’s right. One hundred percent came back. Their old team knew their policies, procedures, the menu and the wine list. They also knew one another, and in the case of the wait staff and bartenders, a lot of the customers as well.
Clough Crossing now operates out of an attractive, historic building with bookshelves lining the dining room walls. The inviting bar area leads out to a large open deck which becomes popular when weather permits. And the restaurant has a feature you don’t see in many restaurants these days – a putting green!
In mid-March the Sammons began to face their latest challenge when their dining room, like countless others across the U.S., closed to prevent the spread of COVID-19. The Sammons had never pursued takeout and/or delivery. It just wasn’t their thing. Unprecedented times, though, require new ways of thinking. Not wanting to turn control of Clough Crossing’s food to outsiders, the Sammons got into the takeout game. It has been a challenge, but they are moving ahead.
A recent article in the Cincinnati Enquirer quoted a restaurant owner to the effect that the takeout food business is too small to be worth it. Gary Sammons’ response was he has to find away at least make some money from takeout. The Sammons have another goal that extends beyond sales. They want history to repeat itself by being able to rehire the old staff.
There is an old saying: When the going gets tough, the tough get going. The Sammons have faced tough situations before and will fight to win this one, too. And it is a safe bet there are a lot of other Mary’s and Gary’s in the business.
- As expected, the number of initial jobless claims for the week ending March 21 exploded. The total number of jobless claims hit 3.24 million, an increase of more than 3 million from the week before. This represents the highest number of weekly claims in the history of the seasonally adjusted series. The previous high was 695,000 in October of 1982.
- Gross Domestic Product grew at a rate of 2.1% for the fourth quarter of 2019, per the third estimate from the Bureau of Economic Analysis. This is unchanged from the bureau’s second estimate.
- Real Disposable Income increased 0.4% in February while Real Disposable Personal Income increased 0.1%, per the Bureau of Economic Analysis.
- Declining gasoline sales confirms a significant economic slowdown. At a time when declining gas prices at the pump should signal increasing gallons being sold the opposite is occurring, according to the Oil Price Information Service.
- The University of Michigan Index of Consumer Sentiment hit 89.1 in March, down from the preliminary reading of 95.5. In the coming months it’s highly likely the index will continue to decline as the COVID-19 crisis plays out.
- The Conference Board’s Leading Economic Index edged up in February. The sub headline in the Conference Board’s press release then reads “Improvement in Index Will Not Continue into March.” Obviously, the study was done before the full impact of the COVID-19 pandemic had been felt yet. A spokesperson for the Conference Board said declining stock prices, consumer outlook on the economy, manufacturing new orders, average work week and will all negatively impact the economy in subsequent months.
Foodservice News This Week
- Foodservice sales will decline anywhere from 11.4% to 27.1% this year, per forecasts from Technomic.
- Drive thu is no paradise for restaurants. A lot of restaurant operators had to be envious of those QSRs with drive thru operations when the government ordered dining rooms closed to try to stop the spread of coronavirus. About 70% of a fast-food restaurant’s sales come from the drive thru. Some theorized the drive thru would pick up lost dining room sales not only from their own restaurants but from closed full-service restaurants as well. But a Wall Street Journal survey of fast food restaurants found restaurants with drive thrus experienced traffic declines anywhere from 10% to 30% last week. Meanwhile, some full-service operators, like Texas Roadhouse, are setting up improvised drive throughs.
- While the pandemic creates myriad problems, it also presents new opportunities for restaurants to support their communities. When the management at Frisch’s Big Boy Restaurants learned of empty shelves in retailers, the company stepped up to meet consumers’ needs. In addition to having a source for everything from produce to 2-liter bottles of soft drinks to toilet paper, Frisch’s partners with DoorDash, Grubhub, Uber Eats and Postmates. The chain’s experience in working with third-party delivery companies should help those customers struggling to track down some pantry items.
- Some chains are adjusting payments to support franchisees during the coronavirus crisis. Dunkin’ Brands plans to ease royalty and advertising payments for its franchisees in the U.S. and Canada. McDonald’s and Subway earlier announced payment revisions for their franchisees. Qdoba has an eight-week royalty deferral to assist its franchisees, per a company release. Fazoli’s developed a plan that will spread franchise royalty payments over a 10-month period suspend monthly marketing fees.
- Vancouver-based Burgerville will furlough more than 1,000 employees in response to the coronavirus outbreak. While the company’s drive thrus, mobile ordering and delivery platforms remain operational, the chain’s CEO said it was necessary to furlough employees as long as in store dining was not in service. The chain will continue to provide benefits for eligible employees and all furloughed employees can apply for unemployment. When asked how long the furloughs might last, Burgerville’s president said, “There is no playbook for these challenging times…”
- Landry’s laid off more than 40,000 employees. Tilman Fertitta, Landry’s owner, acknowledged that social distancing is a necessity now but thinks that it should be ended in a few weeks or we have “…an economic crisis that will take us years to dig ourselves out of.” Landy’s operates dozens of restaurant brands with more than 600 locations.
- The ONE Group Hospitality reduced its work force to less than 100 people from more than 4,000 employees. The owner of STK and Kona Grill has kept some restaurants open, staffing them with 2 to 3 people to offer take out and delivery business which is generating as much as $$400,000 sales per week.
- The Golden Corral closed 35 corporate locations and furloughed 2,390 employees, per a company release. Franchised locations remain open and will continue to operate using the chain’s enhanced cleaning and sanitizing procedures.
- FoodFirst Global Restaurants said it closed all of its Bravo and Brio brand restaurants and most will close permanently if the coronavirus lock down does not end soon.
- The Cheesecake Factory stopped paying rent, showing how deeply the COVID-19 pandemic is affecting the restaurant industry. The chain’s founder and CEO, David Overton, wrote to their landlord’s asking for their patience and help.
- Comparable Store Sales: Steak N Shake down 6.9%
Please check back next week for an updated Green Sheet.