For the restaurant industry, the year of COVID-19 was certainly unprecedented.
The global COVID-19 pandemic, which was declared by the World Health Organization on March 11, has — through a series of alerts, lockdowns and quarantines aimed at slowing the coronavirus’ spread — accelerated change, transformed hospitality and, sadly in some quarters, decimated the industry.
As many as 110,000 restaurants have closed since the pandemic was declared, according to the National Restaurant Association, and foodservice sales have fallen $255 billion in the year since.
“Restaurants now have to figure out what’s the fewest number of things to focus on in order to satisfy their customers and maintain strong sales,” said Bob Johnston, CEO of Tampa, Fla.-based Front Burner Brands, the restaurant management company for the 97-unit Melting Pot Restaurants Inc.
COVID-19’s impact on the restaurant industry was fast and deep. MarginEdge, which provides back-office platforms, analyzed sales and operational data from nearly 2000 restaurants in 47 states and estimated a drop in sales of 66% between March 11 and March 22, when most of the nation was under strict lockdown.
“While the industry has faced recessions in the past, a contraction this precipitous had never before been seen,” MarginEdge noted.
Slow recovery expected
The National Restaurant Association said the pandemic-induced economic crisis reduced restaurant staffing by 2 million jobs, or a decline of 16%, by the end of February as compared to pre-COVID-19 levels.
But signs indicate things are getting better. The U.S. Labor Department said 75% of the 379,000 jobs added to the U.S. economy in February, or 285,900 positions, were from within the food services and drinking places subsector.
“Although some operators foresee a normalizing of business conditions during the next several months, the time horizon for a recovery in the restaurant workforce will be significantly longer,” said Bruce Grindy, chief economist for the restaurant association.
Black Box Intelligence, the Dallas-based analytics company said Thursday that same-restaurant industry sales in February were down 12.6% from the same month a year ago, before the pandemic restrictions were imposed, and same-store traffic was still off by 19.1%.
“Despite poor topline results for February, there are some reasons for restaurants to remain optimistic about the continued, albeit irregular, recovery of the industry,” Black Box said in releasing the February comparisons, citing February’s long period of intense winter weather across broad sections of the nation.
Grindy of the National Restaurant Association offered some positive news.
“In recent weeks, the combination of accelerated vaccine deployment and additional fiscal stimulus boosted expectations that the 2021 economy will produce the strongest growth in decades,” Grindy said.
President Joe Biden on Thursday signed a $28.6 billion Restaurant Revitalization Fund, part of the $1.9 trillion American Rescue Plan Act, to help eateries across the nation.
“This fund is a win for the smallest and hardest hit restaurants that have sacrificed and innovated to continue to serve their communities.,” said Tom Bené, president and CEO of the National Restaurant Association, in a statement.
While earlier Paycheck Protection Program funds were open to large restaurant companies, the newest revitalization fund called for creating a new federal program for restaurant owners with 20 or fewer locations. Operators can apply for tax-free grants of up to $5 million per location, or up to $10 million for multi-location operations.
Funds from the grants can be spent on a wider range of expenses, including mortgages or rent, utilities, supplies, food and beverage inventory, payroll and operational expenses.
The revitalization fund comes at a crucial time, as restaurants have had to make investments in technology and delivery to accommodate consumers caution in the pandemic.
“Whether it be focusing on takeaway and/or delivery, even full-service restaurants had to pivot quickly to offer these to their customers,” said Johnston of Front Burner.
“Before the pandemic, Melting Pot never had a to-go program, but like the others, we knew it’d be something to implement to overcome restrictions on dining in,” he said. “To-go and delivery make up a small percentage of our sales and will likely remain a small percentage, but the pandemic has shown the importance of continuing to offer these to your customers.”
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Burger giant McDonald’s Corp., for example, sees 70% of its revenue coming through the drive-thru and, in many areas with dining room restrictions during the pandemic, that rose quickly to — and in many cases stayed at — 100%. Automation in its drive-thru lanes was a big piece of its initiatives outlined in November.
The pandemic also forced operators to streamline menus to reduce costs.
“Dining restrictions and the difficulty of maintaining staff meant having to streamline costs in order to be profitable,” said Johnston of Front Burner. “For instance, reviewing your menu offerings to see which items are the ‘stars’ while removing items that aren’t as popular in order to focus on those that drive profits.
“Melting Pot, in collaboration with our franchisees and an outside consultancy, launched a newly engineered menu that did just this and has performed amazingly, increasing our per person average sales and guest satisfaction.”
As the restaurant industry enters the second year of COVID-19 and a vaccine program rolls out nationwide, operators are preparing for the light at the end of the tunnel.
At Brinker International Inc., parent to the Chili’s Grill & Bar chain, CEO Wyman Roberts said he expects restaurant consumers to be “fundamentally changed” by the pandemic
“We don't expect a return to the old normal,” said Roberts of the Dallas-based brand, which also owns Maggiano’s Little Italy. On an earnings call earlier this year, he said “2020 fundamentally changed us as consumers. We were forced to use technology to enjoy our favorite restaurants in new ways like third-party delivery, curbside takeout, QR code menus and mobile payment.”
Roberts added: “Now that we've experienced greater convenience and control over our experience, we're not likely to give it all back.”
Mat Schuster, chef and owner of Canela Bistro & Wine Bar in San Francisco, said through a press representative:
“The main thing that I have learned is just how resilient and strong the people who make up the food and beverage industry are.
“This industry was never made to stop for more than a day or two,” Schuster said. “The expenses are just too high. So just as you see creativity in restaurant menu and decor, we have now gotten to see that creativity manifest in ways we never dreamed.
“I’ve been really inspired by the people who are making the most of the situation and using it as a springboard,” Schuster said. “There are a million reasons not to, so the ones who are thriving are impressive to me.”
Contact Ron Ruggless at [email protected]
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