Restaurant Business Model Changes in a Post COVID-19 World
Business Model Changes
We know that business-as-usual will be anything but as the industry begins its recovery from COVID-19 and begins its re-negotiation of expectations with the restaurant customer. They will be a much more wary and demanding customer, not necessarily as it relates to the price or selection, but in regard to their perception of safety, cleanliness, and overall quality. The events of this pandemic have raised alarm bells not simply within the realm of our personal hygiene and cleanliness standards, but those of our merchants, and their merchants, and their merchants. Everyone should expect that the next level of scrutiny as it relates to restaurants after the physical plant will be the food quality and supply chain.
Supply Chain Visibility (GS1 Standards)
For many years, some of the more progressive restaurant brands have preached the importance of supply chain visibility and the ability to track product literally from farm to the back-door to the plate. The technology to accomplish this exists, but the implementation and start-up time and costs to do so has scared away all but the most vigilant. The goal and the promise of the GS1 initiative is to provide a common “language” and method for tracking and reporting on all products from their point of creation (or growth) to the production facility, to the warehouse, to the broadliner, and finally to the restaurant. By identifying each container with a unique code (GTIN), we would literally be able to track down to the farmer or even the field in the event that a foodborne illness is identified in a product. The technology exists today; it simply requires significant effort on the part of the food service operators and the distributors to agree to conform to the standards, configure their systems to support GTIN numbers and to deploy. For more information on the GS1 standards visit https://www.gs1.org/standards
Greater emphasis on Food Safety Scoring and Cleanliness Standards
Staying on the topic of food safety and cleanliness, it is not outside the realm of possibility to suggest that there will be increased scrutiny and visibility into the adherence of restaurants to a higher level of quality. This may be imposed and enforced by the FDA, or possibly even a third-party or private organization that publishes this information to the community-at-large through the established social channels. We have seen this type of crowd-review behavior through many channels already such as Yelp, and there’s no reason to believe that these channels and others won’t be created and promoted to act as overseers acting “for the safety of the consumer-at-large.” As restaurant operators, it will be imperative to respond quickly and decisively to any concerns raised through any of these channels in order to avoid the stigma of being considered less-than-committed to the notion of providing a quality product in a safe and clean environment. While in the past, the only way the public knew of a code violation was when a restaurant received too many and was actually sited and closed, we may realistically anticipate that the notion of a numeric score could be enacted that would be posted on the window of the establishment creating a quantitative measurement of safety compliance against all of the other competitive establishments.
Accelerated migration from on-premise to off-premise
It is reasonable to suggest that those who offer off-premise service, whether that is delivery, catering, or pickup are likely to rebound faster in the P-C19 aftermath. For others who still depend heavily or entirely on on-premise service, the return to profitability is likely to be significantly longer. Accordingly, it is today and will continue to be important in the future to support an omni-channel sales strategy for your operations. This may mean a redesign of the menu to ensure more “transport-friendly” menu items, packaging, and an internal, external, or hybrid delivery strategy. While a number of customers will celebrate the end of COVID-19 and return to restaurants as a show of support and solidarity, about another 1/3 will be cautious and wait for some period of time, while the final 1/3 may not return to normal dining-out routines for a long time. It is therefore critical to not only be offering multiple channels but creating them with a economical business model; in other words, if you can deliver it yourself and avoid the 25% and up fees from the current crop of delivery service providers, by all means do so. Looked at a banded strategy where you maximize your profitability by making local deliveries using internal resources and only look to use 3rd parties for the longer deliveries.
Safety over Efficiency
For years the industry has looked for ways to be more efficient and to improve speed-of-service, labor efficiency, and throughput in lines and drive-thrus. We may very well see as a byproduct of P-C19 a softening of this stance with the emphasis being placed on safety, cleanliness, and hygiene even at the expense of speed and efficiency. A few examples of this could be:
- The cleaning of a credit card when handed to an employee and the cleaning of it upon return
- The cleaning of a POS terminal between transactions or when a different employee uses it
- The changing of gloves between customers or the regular use of hand sanitizer between customers
- The sanitizing of a tray prior to delivering it to the customer
- Placing items like napkins and condiments behind the counter and requiring customers to ask for them
While none of these tasks are lengthy, they will all increase the delivery times and speed of service. While this is true, it should be expected that few customers will complain, and in fact the optics of this level of care and focus on cleanliness should actually be well received by most if not all customers. In the P-C19 world, it may be that we re-think many of our current business processes to support improved safety over labor and production efficiency.
Restaurant Design Changes
As stated previously, nowhere will the impact of COVID-19 have a longer lasting impact than in the table service segment of the industry. Whereas some will come back as loyal customers and a show of support and loyalty, it is expected that a greater number will not, at least initially. Table service restaurants need to look at ways to manage the objections that will likely be raised by customers and do their best to address them immediately.
Some thoughts and strategies to overcome objection would include:
- Increased spacing between tables and/or breaking up larger rooms into smaller sections
- Greater access (and visibility) or hygienic products such as wipes and sanitizers on tables and in public areas
- Cutlery, glassware, and plates cleaned at tableside (or brought to the table packaged) for customer assurance
- Removal of salt and pepper shakers and provide either in packets or on demand
- Servers behind the counters in restaurants that offer buffets or salad bars
- Coverings over meal plates that are removed tableside
- Pay-at-table functionality to avoid passing a credit card to a server
- Offering e-receipts in lieu of paper
- Digital menu boards or tablets with anti-microbial screens in lieu of paper menus
At the time of writing, COVID-19 is still in full bloom, but we as a country and an industry recognize that sometime in the future we will be given the opportunity to get back to work. What we are returning to, however, will be a drastically different environment for our customers and employees, and those who are thinking about this today and planning will be well prepared to address the objections of a scared and emotionally unsettled consumer. The better we can be in a position to anticipate their concerns, address their needs, and fulfill their demands, the quicker that we as an industry will return to normalcy and profitability.
About the Author
Toby W. Malbec is Managing Director of ConStrata Technology Consulting. He can be reached at TMalbec at ConStratatech.com.