COVID-19 has turned once thriving cities into temporary ghost towns, forcing the permanent closure of more than 3 percent of all restaurants nationwide. When in-store traffic evaporated between February and March, many could not sustain the financial blow. In an unstoppable ripple effect, mass layoffs quickly ensued, and restauranteurs scrambled to implement safe takeout and delivery options to stay afloat.
These off-premises sales channels represent survival in the short-term and a competitive edge in the long-term. As we emerge from COVID-19, concepts must determine which locations to reopen, and which of those are delivery and takeout worthy. They must also streamline operations with reimagined offerings and fewer employees.
If you are a multi-unit brand, let’s explore some ways you can fortify your business within the new restaurant “norm."
Off-premises sales here to stay
Between 2014–2015, a new age in food delivery emerged. Who could have known then how important the onset of third-party delivery would be by 2020. Brands like UberEats, DoorDash, and Postmates that once represented convenience have become crucial in the face of crisis—for businesses and consumers.
Although many restaurant lovers will return to physical locations someday, we expect a sizeable percentage to continue eating at home. In fact, online food orders (via app or website) are quickly gaining popularity from Gen Z to Baby Boomers. This means we can expect some locations to evolve into smaller in-store dining spaces, with leaner operations, more focused on delivery and takeout.
Simplify, Streamline & Maximize Margin
The unfortunate fallout of COVID-19 has left many brands reeling. When sales plummet and staff reductions suffocate your business, sticking to what used to work is a recipe for disaster. Get creative about your menu and processes to keep yourself afloat.
- Now is the time to rethink your strategy and ask yourself:
- Can I adapt my restaurant business for takeout or delivery?
- Which items will still be delicious and fresh when they arrive at my customers’ homes?
- Are there high-margin items that my remaining skeleton crew can prepare quickly?
- Should I eliminate my least popular offerings?
As you work through these decisions, consider the changing mindset of your customer base. When the current crisis is over, many will have gotten used to takeout and delivery. What changes can you make over the next several months to set yourself up for long-term success?
Reinforce customer habits
Closing up shop, even temporarily, puts your hard-earned market share at severe risk. Considering humans are creatures of habit, we seek stability in repetition, particularly when the economy and world fall into chaos. If you want to maintain a sense of normalcy for your customers, be available when they need you. In doing so, you will stop them from developing a new routine with your competitor.
Explore any possible option to keep customers engaged and well-fed through off-premises channels. Convenience, safety and good old comfort food will stop your patrons from going astray.
Pivot under the radar
Now is the time to reflect on what has worked well for your business and what hasn’t. If you’ve made decisions that didn’t increase revenue or profit margin, now’s your chance to adjust. If you give yourself the freedom strategically regroup, you can come back stronger than ever when COVID-19 is behind us.
If you’ve changed your menu or operating hours to capture a larger market share, but find yourself wondering, “why did I think this would work?" Now may be the time to back out gracefully. During this period of massive change, returning customers are far less likely to notice.
Winning the delivery game
Is it possible to partner with third-party delivery services without sacrificing profit margin? Before COVID-19, Chipotle had successfully pulled it off. But how?
With extremely high delivery volume, Chipotle could absorb the associated fees. They also understood that the success of their white label delivery system required operational efficiency, intuitive technology, great advertising/promotions, an option to prepay, and outstanding customer satisfaction. Additional advantages are a simple menu and a product that travels well.
If you want to win in the delivery game, get onboard with any of several third-party services offering free trials over the next one to two months. Come up with great promotions that remind customers you are still around. Also, make sure you stick to items that won’t be soggy or unpleasant upon delivery. Finally, identify which of your locations have the greatest delivery/takeout sales potential, then capitalize on them.
Act fast to restore locations
Over the past few months, countless CEOs have worried deeply for their businesses and people. But when revenue streams dried up—and survival depended on cash preservation—mass layoffs and restaurant closures (temporary or permanent) were inevitable. If you have faced these hardships, you must now ask yourself, “which locations should I re-open?”
As our nation recovers from COVID-19, begin preparing a bullet-proof strategy. When the time is right, consider how re-opening certain locations will impact the performance of others. Grow your new off-premises channels in optimal delivery markets. Identify who your most essential customers are and where you can find more of them. And, if you are among the fortunate few with substantial cash reserves, secure promising new sites ahead of the competition.
In order to act fast, bring the analysis in-house. All of this can be accomplished with modern A.I.-powered predictive analytics platforms. You can arm your real estate team, large or small, with millions of data points, accessible 24/7, to test key scenarios and make critical decisions around your locations quickly.
Hannibal Baldwin is the CEO at SiteZeus, a predictive modeling platform that helps multi-unit brands like Burger King, Inspire Brands and Checkers among many others, with location-based decisions. Whether you choose to expand or strategically downsize, understand the impact of store openings or closures on existing locations, or further strengthen delivery opportunities, SiteZeus’ A.I.-powered predictive platform can help you make the right decisions quickly.