What have you heard from some restaurants regarding the package? What are some of the early questions/concerns/biggest hopes?
Restaurants that were able to access the funds were thankful. Some of our clients with businesses that fared well during the lockdowns are really thankful and their balance sheets are doing quite well.
Overall, the program helped those companies the most where ownership was organized strategically and financially and who were able to act quickly and with purpose.
The best component of the plan was the ability to keep employees in place.
Many of the people we talk to who took loans have already or are in the process of getting the loans forgiven. We’re only working with a couple that took the money and now face some potential issues.
What’s the next step?
This is a high-level outline for the reopening process our clients face:
Many restaurants have survived because people changed their buying habits and supported businesses through the lockdowns.
Restaurants need to figure out how to thank customers for their continued support, while providing an avenue to bring back those that could not.
Grand re-openings provide a chance to create attention and show gratitude for customers and to welcome employees back as well.
Customers have gotten used to ordering online or over the phone, and companies have been able to raise the bar on ordering systems and ease of use for customers. They should make sure they have similar experiences back in their restaurants and are not bogged down with poor servers, massive menus that are difficult to evaluate, and slow payment.
At home customers can reach into the fridge for a beverage. They should not wait too long for a similar service at a restaurant.
Hopefully companies have been able to retain their key staff and are ready to hire again.
Hiring and training are critical parts of a restaurant’s brand and there are no shortcuts.
Restaurants need staff but more importantly they need good staff that are ready to meet the customers’ expectations and become part of the team.
There is no real need to rehire prior employees that were just fair (or less than)—this can be an opportunity to upgrade and improve the quality of employees.
Compensation expectations need to be discussed; many restaurant employees made ends meet with the inclusion of tips. It is unclear what tips look like in the short term as we make our way back to “normal.”
Keep a limit on menus—many restaurants have limited their menus and all should think hard about wantonly adding back everything they used to have on the menu previously. They should do what they are good at and focus efforts on being great. For the near term, customers will have sympathy for limited offerings and companies should embrace it.
Cleanliness, customer and employee safety were always critical … Now it actually is. Restaurants should be seen doing the right things, like taking extra cleaning steps and visibly doing anything to make people comfortable to be out. Customers are always right, so managers and owners will need to train and support employees on how to deal with patrons that need a little help following the rules. They should be courteous and respectful but should not pontificate on safety or be obnoxious to the point of being self-righteous. As always treat others as you would like to be treated.
Restaurants should retain the profitable portions of new delivery channels. They should push take out and catering but continue to be leery of delivery companies. Domino’s CEO Richard Allison has made it a point that they have never made much money on delivery, it’s part of the service. Door Dash, GrubHub, Uber Eats and others will need to show a profit at some point and that will become more difficult as people go back to eating out.
In the restaurant industry, we tend to look at a company’s brand more as how they deliver on the customer’s experience. The customer experience has several components, the most important of which are facilities, service and products.
Facilities over the last year has moved from seats, booths, ambiance and if the bathrooms are nice, to delivery and catering. Companies need to assess their facilities with a critical eye as customers have gotten used to their nice kitchens, nice tables and clean bathrooms--or at least have been able to overlook any shortcomings in their homes. A restaurant’s facility will be immediately compared to where the customer had their product the last time, so don’t make them wish they were eating at home.
Service is a key component of why a customer comes to a specific restaurant. Elements of good service include convenience, speed, selection, variety, friendliness, and quick help. Restaurants should make sure service meshes with the customer’s expectations and price point.
Products should be limited as restaurants ramp back up. Inventory costs need to be low, but also usage will be an issue until things are normalized. Companies can die due to quick growth by running out of capital as often as they die from lack of business. Price points must realign with expectations (old or renewed).
Restaurants should ask: What does the competitive landscape look like now? Who is still in business and who has moved on?
On rents and landlords, it is an exceptionally long topic. We are looking to be aggressive with shortening terms but then adding options and renewals on the back end to mitigate exposure. Ultimately, it is a balancing act between investment into a location and exposure to lease liability. As much as it seems like a take/take relationship, now is the time to look at giving on some items to get on others. Lots of retail space is available so now might be a good time to look at options. But one should be aware that many people have the same thought right now.