Independent restaurants

Mid-June, the Treasury Department and Small Business Administration released a streamlined loan forgiveness application for Payment Protection Program funding, addressing critics’ concerns that the filing process was unnecessarily complicated for restaurants that are under unprecedented economic pressure. 

Restaurant operators that didn’t reduce employee wages by more than 25%, didn’t cut back staff hours and operators that “experienced reductions in business activity as a result of health directives related to COVID-19” and didn’t slash employee pay by more than 25% are now qualified for the new EZ application. The form is two pages long, half the length of the Full Forgiveness Form, and requires less documentation and fewer calculations.

It’s the latest tweak to ever-evolving PPP standards, and could give restaurants extra breathing room as they navigate the program’s red tape. 

“The questions we’re getting now [are] more about the process of forgiveness,” Roger Weber, market president of CorTrust Bank in Sioux Falls, South Dakota, told Restaurant Dive. “Right now, someone with a $2,000 loan has to do the same process as someone [with a] $2 million loan….There is a number that I would hope people could agree upon that we simplify the forgiveness portion of this process… I know independent community bankers are pushing for $1 million and under.”

Restaurants that have received PPP funding in the first or second round already scored a big win on June 4, when President Donald Trump signed the Paycheck Protection Program Flexibility Act into law, but Weber worries that the measure is a stopgap, not a true fix. 

More cash for fixed costs

The law reduces the percentage of PPP funds restaurants are required to spend on payroll from 75% to 60% and extends the time period to use the funds from 8 weeks to 24 weeks. Restaurants also have five years to pay back their loan at 1% interest if they do not qualify for forgiveness at the end of their loan term. Twenty-five percent of the funding can also be put toward fixed costs like rent, utilities and business mortgage interest — costs that have been top of mind for restaurants struggling to balance the loan’s initial payroll requirements with keeping their lights on. 

“I think it has a huge impact for [restaurants] to be able to number one, use it. Number two, they have a higher likelihood of forgiveness. And number three, it gives them access to that other 25% [of funding] to help support rent and utilities,” Weber said. “What the wild card is, is 24 weeks is a long time, but our present environment is unknown. It buys [restaurants] time, but I don’t think it’s a fix. Because unless people get comfortable coming back out to a restaurant with present rent levels and utility costs and labor costs, the model just doesn’t work. You have to be running at full capacity.”

Mooyah Burgers, Fries and Shakes VP of Operations Mike Sebazco, who helped land 10% of franchisees loans during round one of PPP and 100% during round two, told Restaurant Dive that the program’s new funding ratios are still challenging. 

“Twenty-five percent is not enough to cover your rent and your utilities and your interest payments… rent is probably the largest single factor you have other than food costs and payroll,” he said. “It would leave you short if you’re operating at a loss. …We have been able to absorb the hits more than a mom-and-pop organization would have been.”

These changes may also come too late for desperate restaurants that cashed in on the loans without an expectation of forgiveness because of the original stringent requirements, Sebazco added. 

“If you were in a cash-poor situation and you were willing to pay a percentage back and not have it fully forgiven because you were so cash-strapped that you bought food with that money or you had a significant repair that you were saddled with, the 60% [payroll] threshold is now a cliff,” he said. “If you don’t attain 60%, none of it’s forgiven. Now granted you have five years to pay it back at an extremely favorable interest rate, but man that’s a large disparity.”

Industry groups still pushing for aid tailored to restaurants

Last Wednesday, Sen. Roger Wicker and Rep. Earl Blumenauer introduced the Restaurants Act, a $120 billion relief package designed for independent restaurants specifically. The bill follows calls for industry-specific aid from both the Independent Restaurant Coalition and the National Restaurant Association, which have said since March the PPP’s requirements are at odds with the structure of thin-margined restaurant operations. 

“The legislation has strong bipartisan support,” Blumenauer said during a national briefing call led by IRC. “The support goes all the way to the White House,” added Wicker, “and there’s a strong likelihood the legislation will be part of Phase 4 coronavirus recovery.”

The proposed legislation comes less than two weeks before PPP’s loan application window is set to close on June 30. As this deadline looms, economic consulting firm Compass Lexecon predicts that 85% of independent restaurants could close by the end of 2020 if Congress doesn’t provide direct relief. This direct aid could also give the economy a $271 billion shot in the arm and shave down U.S. unemployment by 2.4%, according to the firm. 

"Senator Wicker and Representative Blumenauer’s bipartisan Restaurant Revitalization Fund has given America’s 500,000 independent restaurants a day of hope,” IRC said in a statement emailed to Restaurant Dive. “Independent restaurants that had limited openings are now closing again. Many still wait for Paycheck Protection Program loans and are accumulating more and more debt in the process … The revitalization fund is a smart investment that would contribute more than two dollars to the economy for every one dollar spent and ensure millions of Americans have a shot at keeping their job.”

NRA echoed IRC’s praise for the Restaurants Act, noting that the bill covers many of the proposals it shared with Congress on March 18 following the start of municipal dining room closures. 

“Right now, restaurants across the country are struggling on every front,” NRA’s EVP of Public Affairs Sean Kennedy said in a statement emailed to Restaurant Dive. “They are trying to figure out how to make ends meet when they are only allowed to fill 25-50% of their seats. They owe rent and have invoices for food that are past due. They are paying extraordinary prices for the safety measures they want to put in their dining rooms to keep their workers and patrons safe. And they are wondering how they will ever find the money to pay for it all.”

This fear has kept restaurants that have qualified for PPP on the sidelines out of fear that accruing debt because they allocated their loans funds incorrectly could kill their business if it survives the tumult of the novel coronavirus. 

“Restaurants weren’t using the funds,” Weber said. “They just didn’t have the salary expense. … It made them more cautious to take out of the salary percentage they could use to pay rent and utilities because they couldn’t really stabilize the employee piece.”

But unemployment benefits, which many restaurants report has dissuaded employees from returning to work because they earn more on government aid than they do at their hourly jobs, is another obstacle that remains despite recent PPP amendments. 

“I would say about 95% of our franchisees are going to be fine [meeting 60% payroll]. What is still a concern is the full-time equivalence. We’re competing with unemployment to get employees back,” Sebazco said. He added that in some cases when the chain has reported employees that have not returned to work to state labor offices, some have chosen to work elsewhere. 

Old problems and murky results

Mooyah was careful to develop cashflow plans for all of its 80 franchised restaurants to fit their individual needs and help operators stay afloat, taking “everyone through the worst-case scenario” of what PPP could entail for them, Sebazco said. 

“We don’t have access to the capital markets, we’re not publicly traded,” Sebazco said. “We had everybody applying, and we were trying to stay local with their banks, and we were shut out [in round one]. Then we partnered with a national lender, ApplePie Capital, and they changed our strategies a little bit on round two for existing applications and were able to get everyone 100% funded.”

Still, reaching the necessary full-time equivalence amid moving goal posts has been challenging, even with the changes under the PPP Flexibility Act, he said. 

Meeting minimum payroll requirements under PPP has been the biggest pain point for restaurant borrowers since round one of the program launched. Amar Kapadia, partner of Troop and partner and CFO of Revival Brewing in Rhode Island, told Restaurant Dive that he and his business partners worked with their CPA and the vice president of their bank to create a staggered employment plan for the eight-week period of round one for Troop restaurant. 

“We calculated what the full-time equivalent was required to meet the plan’s forgiveness eligibility, and then we figured out how many hours is that over the eight-week time frame. And then we figured out if we actually stagger it a little bit in the beginning and then go heavier in the back-end, that’s better for us,” Kapadia said.

During week one, Troop brought back 11 full-time employees on payroll, including the owners that stayed working the full eight weeks, then added an additional five full-time employees the second week before putting a total of 25 workers on temporary full-time in the fourth week. 

Kapadia suggests that restaurants struggling to interpret PPP’s terms try to make a game plan with the bank they’re working with and speak with state SBA representatives for guidance and further education about the program’s requirements. 

While some restaurants are still on the fence about applying for and using PPP funds near the June 30 deadline, questions remain about how the loans have worked for restaurants to date since the Trump administration has not released SBA loan data.

“Without transparency as to which businesses received the taxpayer funded Paycheck Protection Program, it will be impossible to assess whether the program actually achieved its goals of helping small businesses and maintaining employment during the COVID crisis,” Amanda Ballantyne, executive director of small business coalition Main Street Alliance, said in a statement emailed to Restaurant Dive on June 15. “It is ridiculous that the Trump Administration would withhold this information and suggests the possibility that they have something to hide…The administration must release this information immediately, if they want to prioritize equitable results. It is a vital step to rectifying the major design flaws of this program and highlighting where we need to redouble our efforts in supporting an economic recovery.”

For now, restaurants continue to hold out for aid that’s more tailored to the realities of their industry. 

“We’re in dire need of a halftime speech because we’re only halfway through [the year]... if you look at what’s going on in this country, it’s a heck of a time,” Sebazco said. “We had crisis response stuff written, and we threw those playbooks away first thing. It’s been nothing like we were ever prepared to work with.”

Article top image credit: Fotolia

As protests against systemic racism crowded the streets in downtown Washington, D.C. the last weekend of May, Glenn Edwards was glued to his TV screen. Throngs of people peacefully chanted by day, but as evening hit, many businesses were vandalized and looted. Then, the managing director of LEON USA saw one of his restaurant storefronts flash on screen. It had been broken into, glass shattered, and people were running in and out of the building. 

“I was like what do you do? So I decided to go to sleep and just be ready to go in the next morning and pick up the pieces,” Edwards told Restaurant Dive. 

Two of LEON’s three D.C. locations were heavily damaged. The store that was most vandalized was already closed because of the novel coronavirus crisis. This restaurant, situated just a few blocks away from the White House at 14th and I Street Northwest, had all of its windows smashed. Its L Street and Connecticut NW location had some furniture and IT equipment stolen, Edwards said, adding that the damage was superficial and that the location is still structurally sound. The British fast food chain had planned to reopen the location with a limited menu that same week, but decided to board up its store instead. 

LEON spent Monday, June 1, cleaning up its damaged restaurants, but chose to stay closed the following Tuesday and Wednesday because of the city’s mandatory curfews, which have since lifted. Now, the chain’s L and Connecticut location — the only D.C. LEON that had operated throughout the pandemic — is offering lunch for pickup and delivery once again. 

But the restaurant is operating against an utterly alien landscape, one even more surreal than the once-bustling downtown’s silence and empty streets amid COVID-19 restrictions. 

“I was walking the streets of the District yesterday and there is so much military presence, and I see on the news now that they are putting more fencing up near the White House,” Edwards said on June 4. “We’re taking it one day at a time at the moment and are just being very cautious.”

Disruption from protests could push urban restaurants even further back from projected recovery, Datassential managing director Jack Li said during the Restaurant Rise virtual conference in early June, but added that it’s unclear whether this will have a long-term impact.

Restaurants in cities have been hit hard nationwide by COVID-19 disruptions, especially in markets like the D.C. area that have higher populations of workers than residents, according to Datassential research. Eleven percent of urban restaurants are temporarily closed and 3.4% are permanently closed compared to suburban businesses, 7.2% of which have closed temporarily and 3.7% have shuttered for good. 

West McLean, Virginia — about 10 miles from D.C.’s outskirts — has roughly 23,000 residents compared to 73,000 workers and a restaurant closure rate of 37.5% compared to the U.S. average of 11.5%, according to Datassential. Dozens of D.C. restaurants have shuttered since dining rooms closed in March, and it’s possible that the city’s demonstrations could further destabilize struggling businesses if they interrupt diner foot traffic. 

Impacts of downtown protests are far reaching

Radici Market, an Italian fast casual restaurant and grocery in D.C.’s Eastern Market neighborhood — about three miles away from where the biggest protest crowds gather — had its patio opening plans upended by the protests and subsequent curfews despite its distance from downtown. 

Owner Bridget Sasso opened the restaurant’s outdoor seating on Friday, May 29 as part of Phase 1 of D.C.’s reopening, and was planning to launch a special evening menu for patio dining to complement Radici’s normal offerings. 

For the first few days, Radici sat about 40 to 50 diners each day on its patio, which had reduced its seats from 36 to 20 to comply with social distancing requirements. But the quaint, picturesque market street — one that reminded Sasso of the small, European villages she fell in love with when she lived in Italy for eight years — is now far from inviting, she said. 

“Businesses all around me are either shut down due to [COVID-19] and not reopening, or have boarded up their windows so it looks, honestly, very frightening and it’s almost like a third-world country if you're sitting out on our patio,” Sasso told Restaurant Dive. “There are some regulars that are coming in that feel comfortable sitting outside, but we haven't been able to properly roll out [the evening menu].”

As the protests continued into June and the city put curfews in place, fewer diners have stopped to linger at Radici’s outdoor tables. Sasso realized that her vision of diners leisurely eating caprese salads and sipping cocktails on the patio, which the restaurant had just received a permit for, won’t be happening anytime soon.

“It has always been my intention since I opened the business… that we would actually have evening hours where we would do a more defined menu, and it has not happened over the years,” Sasso said. “They tore down a school that was across the street from us and built [these] enormous apartments and office buildings and everything, so we haven't been properly able to use our patio, in the last several years anyway, because we have construction and there was noise and there was dust and dirt… and it just wasn't conducive to a dining out situation.”

So far, Sasso says reopening her patio under Phase 1 has been only “marginally helpful” to her sales, which have dropped 40% since the start of dining room closures. At the end of each day, Sasso and her team tie up their tables, chairs and umbrellas to avoid theft and set them back up each morning, a cumbersome process that feels futile when so many regulars have stayed away due to COVID-19 concerns or have gone to the country for extended stays, she said.

“I'm afraid that small business is forever changed, that the only people that are going to be able to afford rent and afford people and afford anything going forward are going to be big businesses, which I think is cringe-worthy. So I hope we can all make it out of this,” Sasso said. 

D.C.-based Farmers Restaurant Group began opening its patios to outdoor dining on May 29, two months after it laid off 1,100 employees. Everything seemed to be going well. Customers were returning and employees and guests appeared to be happy. 

“It was great and I think it brought a lot of energy and joy to the staff and the guests,” Dan Simons, co-founder of Farmers Restaurant Group, told Restaurant Dive. “I think the guests have been so happy just to sit outside in the sun and have a cocktail.”

But on May 30, a window was smashed at its Founding Farmers location on Pennsylvania Avenue, Simons said. An employee was inside at the time, but she was unharmed. Looters didn’t get inside this location, but the next day, nearby sister restaurant Farmers & Distillers was broken into and hand sanitizer and alcohol bottles were stolen, bottles were smashed and a large 55-inch TV was destroyed. Glassware and an entryway plexiglass barrier that was installed for COVID-19 safety was also broken. 

“The only thing I can call it is a setback because maybe in normal times I would have said it feels violating,” Simons said. “But I think everybody is realizing that you have to really think about the adjectives you put on your own difficulties. Nobody’s kneeling on my neck choking me so I can’t breathe. Nobody I love is on a ventilator right now. I think this kind of damage and the difficulties of operating is a challenge.”

Boarding up DC restaurant after #DC #GeorgeFloydProtests pic.twitter.com/vWfeCKMtms

— Joy Malbon (@JoyCTV) May 31, 2020

On May 31, the Restaurant Association of Metropolitan Washington reportedly encouraged restaurants across the city to pause service — especially on patios or other outdoor spaces — to avoid risk of looting and damage. 

But just as quickly as Farmers & Distillers sustained damage, employees rallied and cleaned up the restaurant so that it could reopen three days later. 

“It’s really motivating when you have a team that you want to perform for and a community you want to try and feed so I’m feeling pretty motivated,” Simons said.

And customers continue to support Farmers restaurants. 

“The camaraderie from the guests in the community, you know, to show up to sit at a patio table in front of a boarded up window, and … spend their time and their money and their energy with us,” Simons said. “It's just awesome. That refusal to be kept down by the violence. And you know, when the sun's up and the sun is shining, and it's daytime, Washington, D.C. has been, you know, as wonderful as ever.”

Immigrant Food, a downtown fast casual restaurant located half a block from the White House, opened its patio on the first day it was permissible only to be asked to close by Golden Triangle, a business improvement district the restaurant is part of, owner Tea Ivanovic told Restaurant Dive.

The restaurant hasn’t been damaged, but its building’s windows are boarded up. Immigrant Food also canceled a series of live events, where immigrant singers and songwriters would perform at the restaurant on Instagram Live, out of respect for the protestors. 

The restaurant supports the activism downtown, sharing the following statement with Restaurant Dive: “Our country is at a crossroads, and we at Immigrant Food stand in solidarity with the pain and hurt of communities of color that live every day with abuse and inequity... So, we echo the cry of the protesters: It’s Enough. Black Lives Matter.”

“It’s a triple hurdle for us because one, when we're a brand new restaurant that just opened its doors in November, we don't have the brand recognition of a restaurant that's been in business for longer,” Ivanovic said. “And then two is because we're a fast casual restaurant, we rely heavily on lunch traffic and because we're located downtown, our customers or professionals that are in offices that come for lunch or for happy hour after work. And since there's no offices, no foot traffic to speak of, of course our business has been very impacted by the coronavirus.”

Outdoor seating still provides opportunity

But not all D.C. restaurants have had their foot traffic impacted by the protests and looting.

Napoli Pasta Bar in Columbia Heights, for example, said that patio seating has been flourishing to the point that diners are becoming too comfortable and often need to be reminded to keep their masks on and practice social distancing, owner Antonio Ferraro told Restaurant Dive. The restaurant is also located in a more residential area away from the main thoroughfare of the protests, Ferraro said. 

The return of outdoor dining has altered Napoli’s sales mix, lowering delivery and pickup transactions, which Ferraro said helps them retain money that would have been lost to third-party delivery fees. He is also happy that the return of patio service gives the restaurant — Ferraro’s first — an opportunity to put its best foot forward by providing the level of atmosphere and freshness that diners who order for delivery can’t replicate. During the first week of June, Napoli’s patio seating was fully booked. 

To be honest, 17th St. brunch looked like business as usual, just less people. At Agora, staff wore masks with face shields. People sitting on the patio did not wear masks. pic.twitter.com/7TIMx1wqAy

— Chelsea Cirruzzo ???? (@ChelseaCirruzzo) May 31, 2020

This is especially important to Ferraro because Napoli is so new to the D.C. restaurant scene. The Italian restaurant opened in 2018, and the team was eagerly awaiting a Washington Post review that Ferraro hoped would bring in droves of new customers. Unfortunately, the review ran the same week that Mayor Muriel Bowser announced COVID-19 dining room closures.

Still, Ferraro is encouraged by the level of foot traffic he has seen since opening his patio at reduced capacity. 

“Weather permitting, it will definitely help the business,” he said.

To give restaurants more outdoor seating space since they are required to operate at reduced capacity, D.C.’s government has allowed restaurants to apply for free permits to use public space like sidewalks, alleyways and parking lots to seat extra guests. Reservations are mandatory for establishments that serve alcohol, but encouraged for all restaurants. 

Similar legislation has been passed across the country in a bid to fast track restaurant recovery while still maintaining social distancing measures, but urban restaurants relying on expanded sidewalk seating to boost sales could be vulnerable to disruption from protests.

Operators juggle PPP as they adapt for a new future

As restaurants scramble to adapt to the changing tides of coronavirus restrictions, downtown demonstrations and an increasingly militarized police force patrolling the streets, they are also struggling to utilize Paycheck Protection Program funding properly so they don’t incur debt during this crisis period as well. 

In this way, the capital is emblematic — though perhaps in extremes — of the dynamic environment that restaurants across the country are fighting to survive in. 

Napoli received a PPP loan from the program’s second round of funding, and though Ferraro said the loan’s requirements — which will change as a result of the Payment Protection Program Flexibility Act that was signed into law June 5 — are challenging, it’s worth the risk.

“The changes they made to the requirements will help, definitely, but I would have taken [the money] no matter what, even if I had to give it back at 1% [interest]. Because right now if you go to the bank and ask for money, they won’t give you anything but 5%, 10% [interest loans],” he said. “We’re trying to bring the staff back. The problem is with unemployment… nobody wants to come back. I had a few people who decided they didn’t want to come back, they wanted to stay home and collect their money."

The PPP fixes extended the time period to use funds from two to six months, reduced the percentage of PPP funds used to spend on payroll from 75% to 60%, allowed restaurants that receive loan forgiveness to defer payroll taxes and delayed a June 30 deadline to rehire employees. But before these provisions were signed into law, many restaurants, including Farmers Restaurant Group, weren’t using the funds, feeling like it was “fool’s gold,” Simons said. 

Having to pay back debt that would’ve accrued if the rules around PPP weren’t met would have been impossible, Simons said. 

But even with the latest fixes, there are still a lot of challenges.

“We’re juggling several flaming knives that are all in the air at the same time,” Simons said. “The problem is everything needs a contingency. … What if the violence continues? What if the virus resurges?”

Part of that planning is becoming a more diversified food, beverage and hospitality provider, Simons said.

“I know what a pandemic can do. Once we get through this one, I’m not just going to stick my head back into the sand,” Simons said.

During the pandemic, Farmers closed all of its dining rooms and served a reduced menu for takeout, delivery and curbside. As part of its move to diversify, Farmers created a market grocery business with over 1,000 items, such as prepared food, baked goods, products from the distiller and household goods. 

“That has been sustaining us right now, but it’s a challenge to run both businesses,” Simons said. 

For Radici — which has both a restaurant and grocery permit — preparing for changing diner behavior has also led the company to sell ingredients as groceries on its website, which complements its array of heat-and-eat pastas, sandwiches and deli items. 

Napoli has taken a more drastic strategy pivot. Ferraro is currently planning a second restaurant location in Virginia, which was originally going to be the same format as Napoli, that it hopes to open in the next few months. But now with analysts projecting that takeaway and delivery will become a much more predominant sales channel for diners who are wary of eating among crowds and value the convenience of off-premise orders, the new venue will be a deli with grab-and-go pasta and sandwiches instead. 

“I think for the next couple years that’s what it’s gonna be unless there is a vaccine or unless [cases] go down,” he said. “Now with these protests, I don’t know what’s gonna happen in two to three weeks. There could be a spike… that’s what scares me the most. If there are protests now and then everyone is sick again, that’s even worse.”

Julie Littman contributed to this report. 

Article top image credit: Permission granted by Farmers Restaurant Group

In the wake of COVID-19, pivoting has taken on a whole new meaning, and few restaurants represent success in this "new normal" like Bywater in Warren, RI. For their cozy, upscale casual restaurant, takeout was "a steep learning curve," said co-owner Katie O'Donnell. "It was a lot of trial and error. The reason Online Ordering has taken off for us is we've tried to stay a step ahead."

Bywater's best practices for pivoting your restaurant in a pandemic:

• Use email and social media to establish trust with your customers and guests. 

• Keep your menu and offerings interesting: partner with other restaurants, chefs, and businesses to keep your customers ordering every week.

• Pay attention to your Pmix (product mix) on a daily basis, people want different food on different days of the week.

Building and optimizing an online ordering menu

When setting up their first online ordering menu, Katie looked at her Upserve Menu Magic Quadrant. "We went into Upserve to pull our best sellers that we knew people would come back for," she noted. "We set up our online menu so we could keep labor costs low, streamline our menu, and sell the crap out of everything to keep revenue high and costs down."

As the pandemic dragged on, Katie kept an eye on her Pmix to make sure they were constantly iterating on their menu to improve revenues. She noticed that guests preferred to buy cocktail mixers at a lower price point vs. to-go cocktails which had a smaller revenue margin. "People have vodka in their house," she said with a laugh. "So even though we can sell the whole cocktail, it made more sense financially to just sell the mixer. The profit margin is so different when you have to think about packaging."

She's also constantly testing the order and organization of her Upserve Online Ordering menu. "We run the Pmix in Upserve every night to see what's selling and look at the graphs," Katie said. "We refine the graph to just show the top five things and break it down, so I'm using the Upserve Menu Quadrant more than I ever used to."

Katie has found that they need to be more nimble because take out is different than dine-in in terms of attention span. "You get more direct feedback with to-go, especially with a pared-down menu," she said. "If you don't have the thing they want, you won't make the sale. They'll click over to a different restaurant."

Katie and her staff are using Upserve analytics to take a hard look at who their regulars are, who the highest spenders are, and how to keep both engaged through a mix of hard data and anecdotal feedback. One insight she has uncovered is that they may be switching up their menu too quickly. "We keep underestimating how popular things will be," she said. "Last week we took our fish and chips off the menu and we had a 40% drop in sales and non-stop calls about it. People want what they want! So we brought it back and sales were back up. If we were open for dine-in we'd never run a single menu item for this long."

No restaurant owner would choose to be in this predicament, but focusing purely on Online Ordering has shifted how Katie plans to run dine-in at Bywater going forward. "We're so focused on changing it up, that we've overlooked the long-term audience for certain dishes or specials," she said. "Now, only when sales start to drop organically do we take things off the menu."

Diversifying revenue and finding new customers

Looking at models from restaurants like Canlis, Bywater put together a box of local produce, wine, and treats that could be tacked-on to a to-go order. They sold out of their first run and made $13,000 in the first week – all money that stayed in her small community of business owners. 

"The first CSA boxes were huge," Katie said. "We let it be an organic, social media-driven thing which was good because we reached our bandwidth in terms of what we could produce." They quickly pivoted to special occasion boxes for Mother's Day, which quickly sold out and generated press and buzz for the restaurant. Now, they're formulating a subscription box service that would provide a curated box every month with different partners. 

Katie suggests restaurants trying on this tactic focus on an on-brand theme for each box and then work around that theme to fill it. For their Father's Day box, Bywater went for a grilling theme. They worked with a local butcher to provide prime cuts of meat, packaged alongside classic Bywater sauces. "What great wine goes with that? Is there a book about grilling that fits? It all builds around what we would do at Bywater," she says, ideally making the boxes an extension of their dine-in experience. They also promote the boxes with social media components: a video from a local pasta maker, preparation suggestions for the vegetables, or even a live wine tasting on Instagram. 

"We're trying to recreate normalcy but have fun with the fact that it's not normal," she said. "If people want Bywater in their lives, but takeout gets boring, the boxes create a way to bring Bywater in peoples' homes."  

Article top image credit:

Bywater/Jen Lial Photography

Before the novel coronavirus outbreak, delivery was barely a blip on the radar for Ivan Lee, co-owner of Hawaiian grill Aloha Eats in Chicago. The family-owned restaurant only took delivery orders over the phone, which were completed by a grassroots team of drivers who delivered for a handful of area restaurants, and diners had to pay in cash. 

But when Chicago announced its stay-at-home order, Lee knew he had to pivot to online ordering — and fast. His restaurant had already used Upserve for years as a POS provider, and now leverages the restaurant management software to accept credit cards and process online orders for delivery. 

There was one change Lee wouldn’t make, however: partnering with a third-party delivery platform.

“We’re already a high-value restaurant where we dish out much bigger portions than we really should — I thank my father for that legacy,” Lee said. “The cost of food and labor, you add it all up… we’re already hustling for that slim margin, I mean all we’re doing is breaking even. We would not have stayed in business for the 16 years we have now [with a third-party]. It’s just not worth it.”

Aloha Eats doesn’t have to pay commission fees to Upserve, which instead charges a monthly flat rate to its restaurant partners. Lee says his restaurant’s current cash flow — and lack of layoffs — is possible because there isn’t a major brand taking a cut of each delivery transaction, and he continues to work with the local group of delivery drivers instead. 

“We get a delivery and when it’s done, we call them and they come in. They’re very fast and we know their faces. Familiarity definitely helps… we know that they’re a little more invested than the random DoorDash or Postmates person, which can be a real mix of people,” he said. “[It’s] one of the many reasons why we don’t really like the idea of a third-party delivery service.”

Lack of control has always been a prime industry argument against major third-party partnerships, but now that 20% to 30% commission fees are leaching shrinking sales amid the coronavirus crisis, some critics argue that these companies are wantonly parasitic. Local governments agree, with several municipalities like Washington, D.C., and Seattle passing or mulling delivery fee caps to protect restaurants.

“Desperate restaurants might see some short-term gains, but by using these third-party interlopers they will end up sabotaging themselves,” Lee said. “They’ll go out of business if they don’t already have a [strong] volume of customers and decide to partner with someone… if they have some other way to implement their online and delivery, they might be able to last a little longer.”

But while Lee’s experience echoes a dominant narrative that has arisen as the industry continues to hemorrhage small businesses, it’s not reflective of every restaurant’s experience.

The case for third-party partnerships

Nathan Casper, the co-owner of Araujos Taqueria El Paisa, a San Jose, California taqueria brand made up of two brick-and-mortar restaurants and a food truck, has experienced year-over-year growth in March by partnering with DoorDash for delivery. In the five weeks following March 17, which is when San Jose received its shelter-in-place order, sales rose 180% on DoorDash compared to the previous five weeks, which were already 15% higher than any sales they had experienced. 

“Sales have more than doubled, almost tripled,” Casper said. “Our flagship store was… probably about 60% cash-based, and the cash business has been almost completely replaced by DoorDash. We [didn’t lose] ground year over year for the month of March. We were actually up 1%, with half of the month being shelter in place.”

The first week of shelter in place still dealt a major blow to Araujos' revenue, however, with sales down about 70% at both of its restaurants. But within about five days, cash flow slowly began to reach a new equilibrium, which Casper attributes to the tech-savvy diner base of Silicon Valley.

“I would estimate that 80% of my neighbors are still working full time at full salary because they work for tech companies. So the cash flow crunch didn’t hit here as hard as in a lot of other places in the country,” he said. 

Araujos didn’t partner with DoorDash until December 2019, a move Casper said the restaurant made just in time — Santa Clara County was one of the first municipalities to restrict dining rooms. 

“DoorDash has come to the rescue and we are using everything they throw at us,” he said. 

The delivery platform has slashed commission fees for Araujos and other independent restaurants with five or fewer locations by 50% through the end of May, which Casper said is a huge help. 

This offering is one of many discounts that major third-parties have rolled out to give independent restaurants a boost in this challenging environment. Some critics, though, say the fact that Grubhub continues to charge restaurants commission fees on pre-discount ticket totals when they offer free delivery as a promotion is unfair. Grubub has temporarily deferred commission fees for independent restaurants, and Uber Eats has nixed activation costs for new partners but its commission fees remain intact. 

Araujos has also begun using DoorDash’s automated phone system because his restaurants now receive close to 300 calls a day compared to an average of 20 to 30 phone daily phone orders before the pandemic. For now, he is able to use the service and DoorDash’s pickup capabilities at no extra charge.

About 60% of Araujos' flagship store sales are now driven by delivery, and about 35-40% at its second location. The rest is pickup, which is still generated by a lot of walk-in customers. 

This surge of delivery orders has allowed Casper to retain all of his staff, some of whom have worked with the family restaurant for more than a decade, though some hours have been reduced. Still, it hasn’t been easy. 

“We're ... weeks into a serious decline and we recognize that we're very fortunate… but we're still feeling it. We're still in our reserves,” he said. “You know, payroll didn't come out of the [restaurant's] sales, it came out of our savings account. But we’ve been saving for 10 years.”

Looking to the future, Casper predicts that diner reliance on delivery will define the “new normal” for restaurants, and that it will make his brand a bigger threat to local rivals. 

“We knew that delivery was going to grow, especially in a tech area like this,” Casper said. “We were told that 15% to 20% of [restaurant] business will be delivery in the next three to five years. I think COVID-19 just made that in the next three to five weeks… It’s opening us up to new audiences. People don’t drive deep into the east side of San Jose to get tacos, but they’ll absolutely order the best tacos in town from East San Jose and get it delivered to their more affluent zip codes.”

As delivery becomes a more primary distribution channel for diners, Casper expects to see a “thinning of the herd.”

“The tiny little neighborhood restaurants that are open because they’re convenient now have to compete with the top shops in town. They now have to be able to provide the same quality, speed and flavors that I can provide,” he said. “I wouldn’t be surprised to see a lot of them go under because they can’t do delivery… and they’re going to leave all of their equipment, and we’re ready to grow. But it’s difficult to say that without sounding like a jerk.”

On Araujos' street, six or seven restaurants have already closed completely, and Casper said that neighborhood rumors suggest at least three will not turn their lights on once the city eases dine-in restrictions. 

“This will have traumatic impacts on restaurant partners down the line,” Kevin Huang, DoorDash vice president of strategy and operations, told Restaurant Dive. “There’s not a deadline when COVID-19 is over… we are constantly evaluating how we can provide more and more services that address financial relief, grow their sales, help them operate their stores.”

Restaurants that are new to DoorDash are charged 0% delivery commission fees for 30 days, and the platform has developed guidance for navigating delivery insurance, webinars about health and safety best practices like creating dedicated parking spots for drivers, specific runners that will bring food orders to Dashers and dedicated pickup areas for customers, resources that they wouldn’t have otherwise, Huang said. 

When asked why an independent restaurant should partner with DoorDash as the industry hurtles toward a much more delivery-dependent future, rather than deploy their own direct delivery or partner with an online ordering platform that doesn’t charge commission fees, Huang pointed to the breadth of DoorDash’s offerings. 

“Two years ago, the company was a one-trick pony and only offered delivery,” he said. “[Now] if you want to have your own delivery and want us to do just pure online [ordering], pure demand generation, we want you to be able to get demand and facilitate orders. If you want to have your own website, but you need folks to help fulfill those orders — so the opposite — we can do that.” 

Restaurants that are curious about the platform can try DoorDash and its various offerings without penalty to find the right fit, Huang said, adding that the company offers independent restaurants the support they need to optimize the logistics sides of their businesses. 

“You probably didn’t start a restaurant because you like marketing campaigns,” he said.

The case for online ordering

Scott Absher, CEO of gig economy platform ShiftPixy, believes that third-party delivery companies pose a growing threat to independent restaurants given the COVID-19 climate. 

“If you think about it, who are these third-party platforms building a relationship with? They’re building a relationship with the consumer, and this is the thing we’ve been talking about from the very beginning,” he said. “Why would a brand surrender their customer experience and their customer data to one of these platforms, it’s ridiculous…. And the end result is they don’t make any money on these tickets anyway.”

Absher said ShiftPixy has experienced a deluge of inquiries about the company’s direct delivery capabilities, which does not include commission fees on individual delivery orders. The company is also helping restaurants that have received Paycheck Protection Program loans shift their employees to delivery drivers to meet the federal aid’s 75% payroll requirement. The company can get a new customer set up with online ordering and self-delivery in as little as 48 hours, including a driver management platform that has an onboarding process to keep commercial insurance features activated and maintain driver data, proof of insurance and motor vehicle reports. 

Upserve provides similar services for its restaurant clients, which are almost 100% small, independent restaurants, but CEO Sheryl Hoskins told Restaurant Dive that a portion of these restaurants are still too intimidated to launch their own delivery because of the red tape of insurance and fear of diminishing control of the brand experience. Instead, many of these partners opt to offer takeout through Upserve as a means of avoiding third-party delivery, and some of these operators have returned to their pre-COVID-19 revenue with this strategy, she said. 

Upserve is currently offering free online ordering to its partners, along with social media marketing campaigns to drive diners to restaurants’ online platforms and make consumers aware that these businesses are still operating amid dining room closures. 

“We found that the average ticket has increased dramatically online versus when [restaurants] were [dine-in] so here's another advantage of just having… online ordering modulars:  they don't have to be open,” Hoskins said.

Wing Zone CEO Matt Friedman told Restaurant Dive he “feels for” restaurants that are relying solely on third-party because they are missing out on what he believes to be a powerful competitive advantage.

“It’s ultimately why we continue to push harder in managing our own delivery,” he said. “It’s more profitable. We’re collecting the customer’s data, which is invaluable… and at the end of the day, it’s just a better experience. With what’s going on right now, people are looking for safe delivery that they can trust.”

The Atlanta-based chain partners with Grubhub, DoorDash, Uber Eats, Bite Squad and Waitr, but has always offered direct delivery, which makes up 75% of its delivery orders compared to third-party tickets. 

The restaurant brand, which operates in 15 states, was already well positioned to survive the coronavirus crisis because dine-in only drove 10% of its normal business, Friedman said. During one week in March Wing Zone was up 10% in sales compared to 2019, which is significant given the fact the chain had the marketing opportunity of March Madness in 2019. The chain hasn’t had to lay off or furlough any employees, and is actively hiring new delivery drivers to keep up with demand. 

Taco Bamba, a restaurant chain with five locations in the Washington, D.C area, has turned to offering delivery drop-offs by neighborhood as a way to reach consumers that may live too far away from its restaurants to want to order pickup. 

The idea built on lunch drop-offs Taco Bamba was already doing in local office buildings before the pandemic hit, chef and owner Victor Albisu told Restaurant Dive. Beyond these lunch programs, Taco Bamba had never offered delivery and had no plans to do so, wanting to focus on the dining room experience instead. 

Now, diners can select the neighborhood location closest to them on the restaurant’s website, which includes a description of each dropoff point and accepts 15 orders per time slot. Customers are also prompted to fill out a description of the make and model of their car if they would like their meal to be delivered to their car directly at the dropoff point. 

Taco Bamba’s own employees are driving the orders to these locations, and all hands are on deck — staff ranging from bartenders to chefs are fulfilling neighborhood delivery Monday through Friday. The chain has also partnered with Grubhub, but Albisu said that the chain is experiencing a higher volume of orders for neighborhood dropoffs. 

With delivery all but guaranteed to be a more primary channel for diners going forward, Dan Fleischman, vice president of growth equity investor Kitchen Fund, is interested to see how the relationship between third-party delivery providers and restaurants evolves in a recessionary setting. 

The fact that independent restaurants are losing money on the very delivery promotions that are meant to save them, Fleischmann argues is bringing a long-standing problem into sharp focus. He calculates that Grubhub’s $10 discount would leave a participating restaurant with only a 6.7% gross margin on a $30 order compared to a 40% gross margin otherwise. 

“There are struggles on both sides of this. Uber Eats was losing $3.36 per order before coronavirus and has been moving out of markets where it isn’t in the top one to two tiers of delivery providers,” he said. “Restaurants aren’t making money either… but it’s not like third-parties are running away with huge cash flow from this. Something is broken there.”

Article top image credit: Permission granted by WIng Zone

No storm has been too strong to close a Waffle House. Customers could get a hot meal at most of its locations during Hurricane Florence. Kitchens continued cranking out eggs and hashbrowns during the catastrophic 2011 Joplin, Missouri tornadoes. It’s famous for toughing out the biggest natural disasters, to the point that a former FEMA administrator created the Waffle House Index to gauge the impact of storms. But on March 26, the novel coronavirus turned the index red when the chain closed over 420 restaurants and shifted the remaining 1,500 locations to delivery and takeout only.

When Georgia and Tennessee eased dine-in restrictions starting in May, Waffle House initially reopened a handful of locations in the states. But the chain didn't immediately return to normal operations.

“It is unrealistic to think that restaurants will be able to return to pre-COVID19 operations at this time,” the Georgia-based chain said in a statement emailed to Restaurant Dive.

As bars and restaurants prepare to reopen, they will have to comply with strict state-issued guidelines. Georgia has 39 rules specific to restaurants, such as allowing only 10 patrons per 500 square feet, no self-service drinks, encouraging the use of disposable menus and discontinuing salad bars and buffets. Tennessee requires restaurant employees to wear gloves and face masks and have their temperatures checked before each shift, operate at 50% capacity and allow no more than six diners at a table. Front-of-house surfaces will also need to be cleaned every two hours. Alaska allowed restaurants to reopen while Oklahoma began easing restrictions May 1. Just about every other state eased dine-in restrictions since May or are allowing outdoor dining. 

“The people who are making decisions about how we’re going to reopen have zero knowledge of what it takes to actually operate the restaurant,” Jim Collins, CEO of Kitchen United and founder, owner and operator of Town Kitchen and Grill in California, said during a Kitchen United webinar on April 23. “But they are making their best decisions on what they know on public health. It falls to us in the restaurant community on what [reopening] means.” 

Restaurants will have to reopen in stages, with stage one being the “safe at home stage,” where much of the country has been, Collins said. This is where people have stayed home and restaurants that are able to have offered to-go and delivery only. Stage two will likely include social distancing, where dining rooms are allowed to reopen, but at a percentage of capacity to ensure proper social distancing. 

“Stage two to me is almost more frightening than stage one,” Collins said. “Most people know that the only thing worse than a closed restaurant is a half full restaurant.” 

Experts have also said that fully opening dining rooms isn’t likely to happen until COVID-19 cases are at almost zero or there is a vaccine, which wouldn’t happen until a third stage, Collins said. He understands why restaurant operators are opening up now because this is a business decision and none of these decisions are easy, but he urged restaurants to have a plan.

“The more we sit back, take a deep breath, absorb some of this stuff and then start figuring out what it means and how it’s going to work, the better prepared we will be as we go from phase to phase,” Collins said.

And many Atlanta owners and chefs appeared to be echoing this thinking, taking their time to bring back dine-in after the governor eased resctions April 27. 

“The general consensus among that group is that they are not going to open [right away],” Bo Peabody, co-founder of online reservation platform Seated, which works with casual and fine dining restaurants, told Restaurant Dive. His platform partners with about 100 Atlanta restaurants. 

Peabody added that he would be surprised if more than 25 or 50 restaurants in Atlanta are available to book on Seated Monday night. Many Atlanta restaurants posted on social media that they wouldn't opening on April 27 and many have called the governor’s decision to reopen “irresponsible” and “unsafe,” according to Eater Atlanta. Restaurants told The Washington Post that they are unsure that they could ensure the safety of their staff and customers. 

“But there’s also the feeling that the ones who are ready and are willing [to open] will teach everyone else how to do it,” Peabody said. “I think everybody knows, whether they’re admitting it or not, that the pressure to open is going to … increase as every day goes by.” 

Landlords will want rent payments, guests will want to return to their favorite spots and open competitors will start to get business that a closed business isn’t getting, he said. 

Operators will have to move up their reopening date, Peabody said. 

When it comes to diners returning, Peabody said he expects there to be a continuum where people who are less comfortable with the idea of going out will wait a bit. But by the time these other customers come out, restaurants will be really good at maintaining necessary coronavirus safety standards, he said. 

“Hopefully that will play itself out that way,” Peabody said. “That would obviously be ideal.”

How chains are gearing up to resume operations 

It will likely be easier for large chains to more quickly develop and deploy new dine-in strategies. Restaurants with 30 or more locations, larger chains and even franchisees of a larger organization are a little more hopeful about the future, David Bagley, managing director at Carl Marks Advisors, which provides financial and operational services to companies in the middle market, including the restaurant sector, told Restaurant Dive. Compared to small mom-and-pop restaurants, these organizations have more resources and better connections with vendors. 

“These people it sounds like have a lot more of a hopeful feeling, looking for that turnaround and can’t wait to get back open and are really positive about what’s going to happen over the next period of time,” he said. 

Pret A Manger, which closed its 86 locations nationwide on March 17, began opening select New York City locations on April 28, according to an email sent to Restaurant Dive. It adjusted its hours to serve customers from 8:30 a.m. to 3 p.m. for takeout and 10 a.m. to 3 p.m. for delivery through Grubhub/Seamless. The company opened additional restaurants in New York City and Washington, D.C. on May 12.

Employees at these reopened were paid an additional $2 per hour through May 28. It also implemented several safety precautions, including no more than six customers — who must wear masks — inside the restaurant at a time and six-feet spacing outside the location as others wait to enter. The company also installed shields at the counters, put out hand sanitizer for customer use, and placed all cutlery behind the counter and passed out upon request. Only contactless payments, such as Pret App, Apple Pay or credit cards, will be accepted. 

In May, McDonald's implemented 50 process changes and increased training for restaurant crew members and provided a 59-page dine-in reopening guide to franchisees. It previously added wellness checks to determine if employees are fit to begin their shifts; employees answer different questions such as if they have any symptoms associated with COVID-19 or if they have been diagnosed with coronavirus. The company also added employee temperature checks, as well safety shields at drive-thrus and cash registers at the front counter. 

Starbucks reopened restaurants starting May 4 on a community-by-community basis during what it called a “monitor and adapt” phase. The chain deployed different methods, depending on the location, that it tested in over 300 stores in the U.S., such as contactless service, entryway pickup, curbside delivery and home delivery. It also encourargedemployees in high-risk demographics or who live with healthcare workers to work with their team leaders to find lower risk environments to work at, like at a delivery-only location. 

Chipotle, has been considering keeping condiments, like Tabasco, behind the counter and sanitizing the bottles in between customer uses. Cutlery could also be removed from the beverage stations.  

Prior to takeout-only restrictions, Waffle House was already formulating a protocol to keep employees and customers safe, the company said. The waffle chain incorporated CDC guidelines to emphasize social distancing and limited its dine-in capacity while following food safety, enhanced sanitation, stringent personal hygiene practices and screening employees. 

“We understand that we must continue to weigh each step while reviewing the number of factors such as the flow of customer traffic,” the company said. “Any ramp up in business will be gradual, including the return of jobs, so that we can make sure that our business accurately reflects the realities of customer decision-making.” 

Many analysts expect to see a new normal in the coming weeks and months, one where dine-in occupancy levels will be restricted and employees will be masked and gloved. There will be several restaurants whose doors will be permanently shuttered, but the industry isn’t going away. 

“It’s pretty hard to imagine an America without crowded restaurants and crowded bars and live music events and live sporting events,” Peabody said.

Article top image credit: "The Image" by Elvert Barnes is licensed under CC BY-SA 2.0

Alex Smith, CEO of Atlas Restaurant Group, had already formulated a plan for reopening with social distancing restrictions. The co-owner of the group of full-service restaurants, most of which are in Baltimore, planned to bring back his employees seven days before Maryland’s governor allowed dining rooms to reopen at the end of May, Smith told Restaurant Dive.  

“There are all these new normals that we’re going to have and our employees are going to have to go through training to make sure that our guests’ safety and employee safety is No. 1,” Smith said. 

Atlas Restaurants, which employed 1,000 people before the pandemic, furloughed 900 team members and closed 14 of its 15 restaurants following dine-in restrictions, Smith said. The company retained key managers and corporate officers, which allowed it to keep an infrastructure in place to make it easier to reach out to employees and get organized once it is ready to reopen, Smith said.

“Our goal is survival,” Smith said. “Our goal is getting our Atlas family back to work.” 

Once Atlas’ employees come back, Smith’s company provides a training program to get people oriented to what that new normal will look like for his restaurants, which includes front-of-house staff wearing masks and employees wearing gloves, he said. 

The restaurant group have hand sanitizing stations separate from the bathrooms and will arrange tables so that they are six feet apart, with no more than six people seated at each table, he said. 

As more states ease dining room restrictions, restaurants will need plans like these to properly bring their employees back and ensure they minimize employee and diner exposure to COVID-19.

Restaurant Dive spoke to several restaurant experts on employee and food safety issues that operators should keep in mind before and after they bring back furloughed employees to make sure they stay safe.

1. ​Reassess payroll practices and compliance

Operators should think of this time as a reboot, and take the opportunity to review payroll practices, policies and procedures for legal compliance, Alden Parker, co-chair of Fisher Phillips Hospitality Industry Group, told Restaurant Dive. 

That could mean reviewing how restaurants treat meal and rest period compliance in states that have guidelines for these periods, he said. Operators could use this time to ensure they have the correct classifications for employees, such as whether assistant managers are properly classified as exempt or if they should be hourly and qualify for overtime. Now is also a great time to review tip pooling policies to make sure those are in compliance as well, he said. 

One of the biggest things operators should be taking a look at is whether they should institute an arbitration agreement with a class-action waiver, he said. 

With restaurants essentially starting back up like new businesses, employers have time to consider creating a system where employee issues would go through private arbitration versus leaving it open to potentially become a class-action case that goes through the court system, he said. 

“It’s an excellent time to revisit those [policies] and put some effort into that before you start hiring people and putting them back on the books,” Parker said.

2. Set up policies for rehiring

Rehiring could be particularly troublesome because it could open up operators to charges of bias, according to Law360. One way to prevent this from happening is to rehire based on seniority by bringing back servers and other staff that have been with the restaurant the longest, Parker said. Los Angeles is even considering a mandate requiring individuals to be rehired based on seniority. 

Owners should also be tracking offer letters and whether employees accepted or declined their offer, Parker said. That way if the offer is passed on to a less senior employee, there is documentation backing that move, he said. 

Many operators are concerned that the $600 per week that comes through unemployment benefits will be difficult to compete with when it comes time to rehire employees, Parker said. 

“Restaurants and other small businesses are having trouble because … with the way that the unemployment benefits are, there are people who literally have to make a choice whether to go back to work and take less than they are getting right now or stay home,” David Bagley, managing director at Carl Marks Advisors, told Restaurant Dive. Carl Marks Advisors provides financial and operational services to companies in the middle market, including the restaurant sector.

“Restaurants are going to need to be on the front of that because they’re going to need to get their people back. … And they’re going to need to potentially recruit [former employees],” Bagley said. 

Rehiring will be easier for larger restaurants and their franchisees because hiring is much more standardized by these organizations, whereas a small restaurant may not have the resources to easily hire someone and get them up to speed, Bagley said. 

Some operators might need to increase pay for a short period of time to make up for the difference from what they could potentially get on unemployment, as well as changing operating hours or, as a last resort, increasing menu prices and calling it pandemic pricing, Bagley said. Chains like Starbucks, Chipotle, Darden and Domino’s have instituted short-term pay increases and/or bonuses for employees that are still on the job. 

But maintaining increased wages long term would be particularly difficult and could force restaurants to employ fewer people, which could make service suffer, Bagley said. There are also fixed costs like rent and food that can’t necessarily be decreased to make up for higher labor costs, he said. Increasing menu prices could also be tricky with so much competition coming from people who are cooking at home, he said. 

How restaurants approach this issue will be a case-by-case basis, Bagley said, adding that there really isn’t one answer for everyone.

3. Develop training for new sanitization, social distancing standards

Training will be key to bring employees up to speed with the many new social distancing and sanitization regulations that states and municipalities require.  

This might look like a mandatory post-pandemic training session for employees before they return to work, according to a Streetsense Restaurant + Bar Relaunch Toolkit emailed to Restaurant Dive. These trainings should have clear, redefined and systemized new sanitation procedures that should be reinforced on a daily basis. Teams could make this into a fun process with things like games or small rewards for compliance with the new standards to help reinforce these guidelines, according to Streetsense. 

Training should include strategies that help employees maintain social distancing from each other and customers, review coughing and sneezing etiquette, proper use of face coverings and gloves, and provide an emphasis on hand washing, Chris Boyles, VP of food safety at Steritech, told Restaurant Dive. Steritech conducts over 300,000 assessments a year in the areas of food safety, service excellence, workplace safety and guest experience. 

 “The proper cleaning and sanitizing practices always required in foodservice operations have not changed; it is the increased attention these practices are receiving that will ultimately make them embedded in the food safety culture of restaurant operations,” Boyles said. 

4. Set up daily cleaning protocols

Ongoing cleaning procedures will reduce the risk of exposure for employees and customers. Cleaning should include disinfection of high contact surfaces in the front- and back-of-house including, but not limited to, door handles and frames, countertops, POS equipment, headsets, buttons on equipment and any shared items on a table top, Boyles said.

These kinds of cleanings should be done between seatings, and silverware and preset tables should be replaced with single-use items, the National Restaurant Association said in its COVID-19 Reopening Guidance emailed to Restaurant Dive. 

Operators should train and designate employees for extra disinfection duties, but make it an important role and not just a janitorial task, Boyles said. These employees should receive personal protective equipment and supplies. Restaurants should also consider a third-party cleaning and disinfection service periodically. 

Food surfaces in the back-of-house should also be cleaned and sanitized, but if a disinfectant is used on these surfaces they should be rinsed before food touches the surface, he said. 

Restaurants should keep in mind the added cost regular disinfection will have on their operations since disinfectants will be used more frequently, Boyles said. Operators also will have to take the time to evaluate and select new products if their current disinfectant isn’t designated to work effectively against COVID-19, Boyles said. 

“Added labor costs may be necessary to have designated persons responsible for the more frequent disinfecting process, so this needs to be considered when planning for labor needs,” Boyles said. 

If a restaurant has to close due to contamination of the premises due to a COVID-19 positive person and is ordered to close by the health department, there may be added costs to hire a third-party disinfection service as well, Boyles said. 

5. Monitor employee health 

Checking employees’ health and fitness should be among the top priorities to ensure that employees aren’t coming to work ill. Many restaurants are doing temperature checks and using health questionnaires, Parker said. While this would normally be considered a medical examination by the Equal Employment Opportunity Commission, the agency has relaxed that standard during the pandemic allowing screenings to occur so long as they are job-related. Other restaurants, such as McDonald’s, created health questionnaires to monitor their employees on a daily basis to see if they have symptoms. 

If employees are sick, symptomatic, exposed or confirm they have a food borne illness or COVID-19 they should not report to work, Boyles said. Employers should also work with HR to develop or modify their sick day policies so that employees are not afraid of losing their jobs if they get sick, he said. 

If an employee does contract COVID-19, they should get a return-to-work notice from a healthcare professional, Parker said, adding that is a danger point if a restaurant denies allowing that employee to work out of an abundance of caution even when they are cleared.  

“The other side of that coin is someone that gets COVID-19, goes through this 14-day period of time, and the doctor doesn't clear them,” Parker said. “Many employers will read the 14-day guideline and say, ‘Okay, you must be over it. Now let's get back to work.’ And if a healthcare professional is saying, ‘This person is still symptomatic or still susceptible to it.’ … If that’s the case, then the employer is going to have to consider … whether additional leave can be offered to the person.”  

There will be plenty of ways to provide sick leave to employees, as well. Emergency paid leave granted under the Families First Coronavirus Response Act and additional paid leave under the Family and Medical Leave Act carry through the end of the year, he said. Employees in states with paid sick leave provisions would also have their sick day banks restored if they were furloughed and rehired, Parker said. 

If employees that get sick on the job and COVID-19 exposure is traced to the workplace, employees would be able to file a workers compensation claim if the operator followed all the safety precautions, Parker said. However, this could become a serious and willful claim allegation if an employer ignores safety guidelines set by the Occupational Safety and Health Administration and the Centers for Disease Control and Prevention. Employees can then claim that the operator created an unsafe work environment. That can result in increased workers comp penalties or this could be taken out of workers comp and filed as a civil action in some states, he said.

 It’s also important for operators to understand that despite their efforts, there may not be a way to completely protect employees from exposure. 

“To a certain extent there’s going to be some risk borne by the individual,” Parker said. “There is going to have to be if anybody’s ever able to get back to work.”

For more information on strategies and procedures for reopening, check out National Restaurant Association’s COVID-19 Reopening Guidance and Streetsense’s Pandemic Relaunch Toolkit for Restaurants + Bars. 

Article top image credit: "The image" by Tony Webster is licensed under CC BY 2.0

When customers return to their favorite restaurants, dining rooms are going to look a lot different. Tables will be further apart, fewer people will be allowed in seating areas and servers and staff will likely wear masks and gloves as they take orders and pass trays.

It won’t be easy for restaurants to establish this new normal, given that the core of the industry is a people-to-people business. 

“The customer piece of this is a really complicated area,” Alden Parker, co-chair of Fisher Phillips Hospitality Industry Group, told Restaurant Dive.  “We don’t have a lot of guideposts at this point on how that’s going to work best … because there will be periods of time where people will have to interact at a distance closer than six feet to potentially take orders … that will naturally occur even with reduced capacity.”

Just like operators need to create a plan to bring back their employees, they should also develop strategies on how best to interact with customers while upholding social distancing standards. This could include requiring masks or checking temperatures as diners enter. Restaurants should also constantly communicate the efforts they’re taking to keep customers safe, experts told Restaurant Dive. 

1. Plan around social distancing standards

Small retailers deemed essential, such as convenience stores, provide clues at how a business can function with social distancing measures, Bo Peabody, co-founder of online reservation platform Seated, which works with casual and fine dining restaurants, told Restaurant Dive.

“If a restaurant goes through the proper steps to ensure social distancing, they can make sitting at a restaurant no less safe than going to a liquor store or a convenience store,” Peabody said.

The National Restaurant Association recommends in its COVID-19 Reopening Guidance that restaurants should update floor plans in dining areas to make sure seating arrangements are at least six feet apart and to limit party sizes to no more than recommended by the CDC or what is approved by local or state governments.

Restaurants will likely have to bring out utensils in a paper bag and hand them to a customer instead of allowing them to use silverware that has been sitting at the table, David Bagley, managing director at Carl Marks Advisors, told Restaurant Dive. Carl Marks Advisors provides financial and operational services to companies in the middle market, including the restaurant sector. 

“Little things like that just make the customer feel more comfortable,” Bagley said.

Technology like waitlist systems or even in-house text-based systems can help keep customers from congregating in a waiting area as well, Peabody said. If possible, a separate entrance and exit could be a good idea to eliminate people getting close in a door frame.

Strong traffic for pickup and delivery is unlikely to abate, so operators will also have to figure out how to properly separate diners coming in for takeout, Jim Collins, CEO of Kitchen United and founder, owner and operator of Town Kitchen and Grill in California, said during a Kitchen United webinar on April 23.

2. Set up for reduced capacity

In addition to following social distancing standards, states are restricting the number of customers allowed inside at once. While these restrictions have been eased, a majority of states still have some kind of capacity in place as of June. Texas, for example, originally mandated that dining rooms are capped at 25% of their original capacity, but has since increased capacity to 75% as of June 12. Georgia is allowing 10 patrons per 500 square feet while Tennessee is keeping dining rooms to 75% capacity. 

While these limits may not impact operations as much in the middle of the week when traffic is typically down, it could be an issue during weekends, Bagley said. Most restaurants often do 60% to 70% of their business Thursday through Saturday nights, he said.

There is also a cost to reducing table capacity. A lot of restaurants have fixed tables or fixed booths that can’t be removed, Bagley said. And when the holidays come and capacity increases, an operator would have to put these tables and booths back.

Social distancing won’t be as difficult for restaurants in suburbs and rural areas where dining rooms tend to be a little more spacious. More compact urban restaurants, many of which often have 15 to 20 tables, would have to deal with significant drops in the number of customers allowed, impacting revenue, Bagley said.

“Those are the types of places that are really going to struggle. How do they overcome that? … By showing... that you care about the customers and their health by taking the steps, providing people with what looks like a standard sanitization program … that they can see and be aware of to feel comfortable,” Bagley said.

With social distancing and reduced capacity, restaurants will have to rethink their menus and how they use them, as well. The National Restaurant Association recommends cleaning and sanitizing menus or discarding paper menus after each use. Technology also could be used to reduce person-to-person interaction, such as using mobile ordering and menu tablets and providing contactless payment options, NRA said. 

Instead of providing mixed cocktails, for example, bottled beer, wines or nonalcoholic drinks that can be poured into a cup could reduce exposure, Peabody said. Having a short menu or prix-fixe menu will be helpful for margins, since it can reduce dependence on a restaurant’s supply chain as well as decrease the amount of products and labor needed. Menus could also be written on a chalkboard as a replacement, Peabody said. 

“From the guest perspective, it’ll just psychologically feel better to have to make fewer choices,” Peabody said. “And it’ll make payment easier.” 

3. Understand the impacts to customer experience

While these social distancing strategies will help improve safety for employees and customers, they will also have a dramatic impact on the customer experience. Speed of service could worsen due to extra precautions being made in the back- and front-of-house, especially with fewer lines or POS positions open, Boyles said. Restaurants could also direct guests to pick up their food from the counter without having wait staff handle it, Peabody said, which would also impact the server-guest relationship. 

“The face of your brand is the server, who works with your customers, knows your customers and remembers what they ordered last time,” Bagley said. “How is that going to be if the server is wearing a mask and having to wear gloves every time they come to your table? It just seems so foreign to us, and how do you work your way through that and kind of reinvigorate that connection with the customer.”

Social distancing standards will put additional burdens on the employer to make sure that a server isn’t interacting with a customer for over 10 minutes, per the CDC, especially since interactions between server and customer are likely to be less than six feet apart, Parker said.

“[This is] a business based on service of customers. That’s what ... restaurateurs love to do and that’s why they got into the business … because they love people,” Parker said. “Here there are barriers to being able to express that feeling toward other individuals. That’s just a real tough long-term impact on the industry.”

There are also concerns over what might happen if a customer does contract COVID-19 and traces it back to the restaurant even if all the standards are met. There could be a potential for lawsuits, similar to a slip and fall or some other injury sustained on the property, Parker said.

“We don't know from a liability standpoint, what those claims look like, or what they could conceivably be seeking, other than the generalized emotional distress of having COVID-19 and potentially some wage loss from that person,” Parker said. “It's very challenging to sort of crystal ball and see how you think that's going to all unfold.”

4. Communicate with customers about new safety procedures

Restaurants should also use social media as a way to stay in contact, remind customers about what they love about their brand and what operations will look like when they return. 

Restaurants could provide behind-the-scenes looks at what work has been done to protect customers during their dining experience, according to Streetsense’s Restaurant + Bar Relaunch Tool Kit emailed to Restaurant Dive. For restaurants still planning their new dining rooms setups, they could also use customer polling to figure out what guests would be most comfortable with and use real-time feedback to make adjustments. Once a restaurant has a reopening date in mind, they can create “coming soon” messaging to let guests know the restaurant will be back in business. 

A marketing strategy could include reminding customers of all the good times they’ve had at their favorite restaurant, such as birthdays, anniversaries and other special occasions. 

“Re-creat[ing] that long-lost feeling is ... a marketing program that I think everyone is just waiting to roll out,” Bagley said.

But communication shouldn’t stop at the reopening. Customers will have high expectations for food safety practices, such as frequent sanitizing, glove use, restroom cleanliness and contactless hand sanitizers, Boyles said. Restaurants should include visual cues, such as signage or the presence of hand sanitizers or wipes for customers, and promotions on what the restaurant is doing front-of-house and back-of-house to keep employees and customers safe, Boyles said. 

Restaurants should make sure they are sharing how they are complying with local regulations as well. Some cities and municipalities will have more strict standards, such as requiring servers to wear masks and gloves, while others may not, Collins said during the webinar. Different municipal regulations could cause confusion among diners who are expecting stricter standards and may think operators are creating an unsafe environment even when they are in compliance. 

One way to avoid this is by printing out the webpage of city or county regulations and paste it to menus or in plain view to show that operations are in compliance, Collins said.

5. Understand new customer dining habits

While a marketing strategy will be key to getting customers back into the dining rooms, operators also need to understand how much dining habits have changed since before the pandemic.

“Customers may not come back at once for inside dining,” Boyles said. “They will want to see what others experience first. ... Due to the economic downturn, the customer base may change. People may scale down from fine dining to fast casual, etc. They may not go out to eat as often or purchase as much.” 

Drive-thru, carryout, mobile ordering, curbside and delivery will likely make up a greater mix of sales compared to pre-COVID-19 days, and customers may try these options before returning to dining inside, Boyles said.

“It’s a tough time for America, but it’s a particularly difficult time for restaurants and other hospitality employers because the consumer mindset has changed a bit,” Parker said. “Their approach to dining out and dining in has changed, and we don’t know the long-term impact of this.”

Low gas prices could incentivize more people to start to travel and take vacations once restrictions are lifted, which could naturally increase dine-in sales, especially in the summer months, Parker said.

“We just don’t know … what the new normal is for this summer’s sales, and whether there’s going to be some sort of impact,” Parker said.

For more information on strategies and procedures for reopening, check out the National Restaurant Association’s COVID-19 Reopening Guidance and Streetsense’s Pandemic Relaunch Toolkit for Restaurants + Bars.

Article top image credit: "The Image" by spurkar is licensed under CC BY 2.0

Dinners at Portland, Oregon-based fine dining restaurant Beast are an event. A typical six-course dinner takes two and a half hours, and diners indulge on food like Wagyu beef tartare, squid ink chitarra pasta, black garlic-glazed pork belly and a sprouting broccoli salad. But the novel coronavirus has forced the James Beard Award-winning restaurant to grind to a halt.

For the first time since it opened over 12 years ago, chef and owner Naomi Pomeroy made the difficult decision to temporarily close her restaurant and nearby cocktail bar Expatriate in March, laying off 30 employees and herself. 

Pomeroy and her staff join millions of workers that have since become unemployed following state-mandated closures and stay-at-home orders. Other prominent chefs have been forced to shutter their doors as well: Union Square Hospitality Group laid off 80% of its staff; Tom Colicchio closed all of his Los Angeles and New York City restaurants; David Chang’s Momofuku shut its doors in New York City, Los Angeles and Washington, D.C. until further notice. 

“Running a restaurant always feels a little stressful,” Pomeroy said. “If it wasn’t a national crisis, it could be like an individual one. … I would say it doesn’t feel that dissimilar from just normal day-to-day operations, except the big difference here is that … the virus doesn’t discriminate,” Pomeroy said. “It’s closed the French Laundry. It’s closed Cafe Boulud. Your mom and pop is closed.”

Every owner that has spent years building up their restaurants with loyal staff and customers now face an uncertain future, one where they don’t know when they will be able to open and if they will be able to get their employees back.

Pomeroy considered switching to takeout and delivery, an avenue many operators have taken, but realized everything would have to be a la carte and the volume of meals needed to keep operations going wasn’t feasible, she told Restaurant Dive. Most importantly, there was no easy way to ensure the safety of her employees during the outbreak, she said. 

“A lot of people have responded, like ‘hey why don’t you just reach into your coffers and … pay employees while you’re closed?’” Pomeroy said. “I think one of the things that comes to light through all of this is we, as restaurateurs, owe it to the larger community and ourselves to sort of explain the trials and tribulations of running an independent restaurant.”

She said 90% of the money that comes into Beast goes to employees, vendors and the overall cost of staying in business, adding that she and her husband don’t take a paycheck from the Expatriate cocktail bar to make sure it goes to her employees, she said. 

“It’s easy to get in your own mindset and just be like, ‘Oh my God. I have to save my business,’” Pomeroy said. “We have to remember … our whole job is just being a cool place that also employs a bunch of people.” 

During the crisis, Pomeroy has remained connected with her staff by sending messages on Slack to share information about unemployment and just stay in touch. She said she has always been transparent with her staff, explaining when months are slow that it would have to tighten operations. 

To help take care of her workers, the last checks her restaurant issued had 100% of workers’ accrued sick time, which was about a double paycheck, and her restaurant will continue to pay for health benefits as long as it has funds, she said. Beyond that, the restaurant’s financial future is up in the air, but she is certainly not alone. 

Making difficult decisions 

In the San Francisco Bay Area, one of the first regions to issue strict stay-at-home orders, restaurants faced similar challenges. 

The fine-dining restaurant Agave Uptown in Oakland, California, was able to pivot to delivery and curbside pickup, but chef and owner Octavio Diaz told Restaurant Dive he still had to lay off 60% to 70% of its staff because the restaurant didn’t have the financial resources to keep a full payroll. The restaurant needs to have $180,000 to $200,000 in the bank in order to cover its monthly costs, including utilities and other expenses for its 4,000-square-foot restaurant, he said. Fortunately, his landlord waived rent for three months, which has helped give Diaz energy to keep fighting for his 4-year-old restaurant. 

“I've been trying to stay positive, but it still hasn't settled in my head or my heart and ... it doesn't look very good for restaurants, everything just shut down, all restaurants, hotels, transportation. Everything stopped from one day to the next,” Diaz said. “We want this pandemic to go away so we can go back to our normal lives, but it’s devastating. I feel more for our staff, for our day-to-day hourly employees that have to depend on a check to pay the rent and put food on the tables for their families or make a mortgage payment.”

Just a few minutes away, Homeroom, a restaurant that predominantly serves different macaroni and cheese dishes, also closed its dining room. Fortunately it has a second location dedicated to delivery and takeout only, which allowed the restaurant to keep some staff on, Erin Wade, CEO and founder of Homeroom, told Restaurant Dive. Laying off employees was a little bit easier since several employees just didn’t want to work during the outbreak and volunteered to be let go, she said.

“Everyone who wanted to continue working, we have provided a job,” Wade said. “Some of them have had reduced hours. … If our whole staff had wanted to work, I don’t think we would have laid off anyone. We would have just reduced hours for everyone and found a way to keep everyone partially employed.” 

At Homeroom, top executives, such as director of operations and director of marketing, took significant pay cuts as well since it no longer had the sales of two restaurants, Wade said. 

“We decided in order to make the labor work, we were going to have to really dramatically alter what we were doing,” Wade said. 

The company also had to trim menus since it couldn’t afford to have as much inventory. It reduced its menu from about 14 mac and cheese dishes to about eight now, and limited its dessert menu from six items to two, Wade said.

“I think for anyone who’s closing their doors right now, I’m worried they [will] never reopen, and so for me, it’s been a huge priority to stay open. Even if we’re just not making money, we’re just slowly losing money or breaking even. … I think that we’re one of the few sort of beacons of hope that can bring joy into people’s days right now or even just a needed hot meal.”

For its remaining restaurant staff, it increased hourly wages by $3 to show gratitude to its employees who are still coming out to work during the scary time, Wade said. Even with the additional wages, the company is carefully monitoring costs, especially since it still has overhead for two locations even though revenue is coming from just one. 

“We’re managing and obsessively watching and we’re tracking every labor dollar every day … because the line between hemorrhaging money and being able to operate is very thin — thinner than it’s ever been,” Wade said.

While QSRs are better equipped to handle the dramatic shift to off-premise operations compared to full-service restaurants, independent franchise operators also have limited funds and have had to take dramatic actions following reduced traffic and revenue in certain areas. 

Chicken Shack franchise owner Damon Miller, who owns a handful of chains in Central California, said he had to reduce his staff in his Fresno locations. Typically he has seven to eight staff members during lunch, but now has three. However, business at his Hanford, California, location has been constant and Miller said he has offered Fresno employees hours here although it is about 45 minutes away. 

“We’re just trying to do the best to protect our staff,” Miller said. 

Homeroom, Agave Uptown and Chicken Shack are also developing apps with the help of Ordrslip to allow customers to order directly through their online channels to remove the commission they have been paying to third-party operators. Making these channels cost less to operate also means they can have more revenue available to keep staff on, but it’s becoming painfully clear that more needs to be done to ensure these companies survive. 

Federal funds could help pay staff, but confusion remains 

Another way restaurants are hoping to pay staff and bring laid off employees back, is through the Paycheck Protection Program, a provision in the CARES Act that would provide forgivable loans if a small business rehires laid off staff and use a majority of that funding to pay payroll, with the rest allocated for rent and other operating expenses. 

While there have since been revisions to the program, which launched in April, the initial rollout didn't go very smoothly, and caused a lot of confusions, restaurant owners said. 

“People don’t have any idea about how this is working,” Pomeroy said, adding that she and several chefs as part of the Independent Restaurant Coalition, which she founded with Tom Colicchio and Kwame Onwuachi, did an Instagram Q&A and restaurant workers were piling on questions, such as whether they should apply for it and how it works. 

“It’s very confusing,” Diaz said. “Two or three banks haven’t yet given us a complete answer so we’re waiting, but we’re optimistic that if we get the loan, we can get … 100% of our staff back.” 

Miller, on the other hand, had very few issues with applying for the program since Bank of America already sent him a link and pre-filled most of the information because BOA already had his information. Miller said he hopes to use this program to help with payroll at each of his Chicken Shack locations. 

“If I’m overstaffed, I’ll be overstaffed,” he said. “A lot of these people are paycheck to paycheck and they need the money to survive and I’m just trying to do whatever I can to keep money going to them.”

Pomeroy was originally concerned that even though operators can get this money, there hasn’t been a lot of direction as to when the funding starts, such as when they receive the money or when they reopen. She said restaurants can’t just reopen when they want since operators such as herself have to pay vendors and landlords and reconnect with suppliers. Most major cities are also still under stay-at-home orders.

“When we open again, which is TBD, [we have] to keep 90% of those people employed or this turns into debt,” Pomeroy said. “It's scary, because you don't really know if we're only going to be 50% as busy. We have to keep 90% of our staff. … The top-line profitability is 10% of a restaurant, [and] just went into the red. … Just using this program could actually cause problems for some people if we can’t figure out the timing of it.” 

On April 27, President Donald Trump signed a $484 billion coronavirus relief bill into law, which will add $310 billion in federal aid to the Paycheck Protection Program funding and in June the president signed the Paycheck Protection Program Flexibility Act, which addressed many of the issues restaurants faced. It reduced the percentage of PPP funds restaurants are required to spend on payroll from 75% to 60%; extended the time period businesses have to use the funds from two months to six months; extended the time restaurants have to pay back their loans; allowed restaurants that receive loan forgiveness to defer payroll taxes; and delayed a June 30 deadline to rehire employees.

Mixed attitudes about the future

While every operator is counting down the days until they can reopen, a lot still needs to be done before they can go back to normal operating procedures. For Agave Uptown to fully reopen, it would first need to get approval from the health department and then gauge the level of business. Before the pandemic, it was a high-traffic lunch spot for corporate businesses Monday through Friday and popular for dinner, especially among consumers coming from San Francisco and the East Bay picking up food to take home, Diaz said. 

Pretty much everyone on the restaurant’s roster is rehirable, and the company has a good crew that is loyal to the restaurant, Diaz said. 

“Hopefully they haven’t found other jobs because they have to work, but if that’s the case, we have to rehire people and we don’t know if that same workforce is going to be there or not,” he said. 

Miller of Chicken Shack remains optimistic about the future of his restaurants. 

“I think when this is all said and done, and the virus calms down and people are back out, the restaurants are going to be busier than they were before,” Miller said, adding that business has already seen a shift as people get tired of cooking at home and are ordering out more. 

“They’re ordering a lot out and getting food for delivery,” he said. “I think those third-party delivery services are really essential right now.”

Full-service operators don’t necessarily hold the same optimism and are doing what they can to support their fellow restaurateurs. 

“I hope that we do get to reopen and hire everyone back. Although the truth is I don’t even know when that’s going to happen,” Wade said. “I think restaurants as they were will be shut down for quite some time.”

With that prospect, Wade said even restaurants that have closed down should try and sell something, even if that means a head chef selling a meal kit. She has offered to support other female entrepreneurs and would pay her staff to help set up third-party delivery for other chefs and owners to get their food to consumers. 

“I wanted Homeroom to be a hub for other businesses that wanted to continue to have food distributed via delivery … and be a hub for any business that couldn’t afford to keep their doors open,” she said. 

For Pomeroy, supporting restaurant workers and fellow owners and operators means becoming more politically active, and the Independent Restaurant Coalition has been pressuring Congress to provide more aid to restaurateurs and their employees. In addition to lobbying Congress to fix PPP, it also unvelied a relief plan in June that would focus on providing assistnace to not just restaurants, but also vendors and small producers that supply indpednet restaurants and could inject up to $271 billion in relief. 

“What’s happening is we’ve got a bunch of people who are used to working 16 hours a day at work, [who] are all unemployed now,” she said. “So we’re going to be shaking things up a bit. I can guarantee you we are an active community, a vocal community and are really passionate about our work.”

Article top image credit: Permission granted by Beast Restaurant

It happened on a Tuesday. Juliet and Peregrine, restaurateur Joshua Lewin’s Boston-area sit-down restaurants, were suddenly forced to close their dining rooms in compliance with Massachusetts’ coronavirus restrictions. 

Lewin knew he had to create a new revenue stream — and fast — to protect the brands and keep their 50 employees working as orders plummeted. On Wednesday, he and his team began developing plans for a zine called Bean Zine that offers advice for cooking in quarantine. Just 10 days later, the Juliet + Company restaurant group launched another initiative, a “TV” channel streaming on Instagram and YouTube that offers content like how-to cocktail videos. Both are free, but customers are encouraged to donate on Venmo.

“It’s unbelievable how quickly the lives of ourselves, as the business owners, and our entire staff were changed. We needed a safety net,” Lewin told Restaurant Dive. “Instead of laying people off, we said it’s important to continue to connect with our team and use this opportunity to grow.”

The strategy is working. Donations began rolling in as soon as Lewin shared a preview of the zine and video content with the brands’ email lists. Though both restaurants are still operating at an extreme deficit, the restaurant group hasn’t let a single staff member go — 100% of proceeds go straight to its labor budget.

“We require the support of the public… but this [project] allows us to say we need you, but we’re working for you,” Lewin said. “We’re paying a lot of attention to the engagement with the videos…  so we are able to offer more of what [customers] are looking for and be in partnership with them as far as how the television evolves past our pilots.”

The restaurant group has shared several tutorials online, including ones that go beyond cooking demonstrations, behind-the-scenes looks at how their businesses run to help budding restaurateurs, and skillshare-style videos celebrating the talents of its staff, like ballet and tai chi. The team is starting slow, with plans to produce two videos a week.

Though producing videos and a zine would be a stretch for most thin-margined restaurants to produce at a moment’s notice, publishing is actually central to Juliet + Company’s ethos. The restaurant group has published a magazine, called “of Juliet,” three times per year for two years. The group also launched a cookbook called “our market season” summer 2019 that focuses on how to cook seasonally. 

“We’ve never produced this level of video content beyond basic social media advertising,” Lewin said. “But we do have a media presence that at least our core guests expect from us.”

Bean Zine, which focuses on how to cook creatively with what you already have in your pantry, is available to download for free online, but the restaurant group is also selling paper copies for $10 that the team assembles, prints and staples themselves. 

“[Our customers] are used to a certain kind of standard of elegance and put-togetherness in the core of our work,” Lewin said. “But it’s like we stepped into an alternate reality here and have to be a little bit more scrappy and return to our roots… it’s an exercise in learning to evolve in the moment.”

While Juliet + Company employees aren’t required to participate in the production process, the platforms allow staff to make money on the books and show off their talents in a new way, Lewin said, whether by planning production schedules, editing or starring in videos on a one-off basis.

Employee hours have been reduced roughly 60% so staff can access Massachusetts’ WorkShare Program, which allows staff members to claim unemployment benefits even if they are still working. “Our basic expectation for staff right now is that they’re available for telemeetings and various trainings that we’re putting together related to the core of their work,” Lewin said. “But that only amounts to so much… there’s very, very little restaurant work to do.”

Neither Peregrine nor Juliet have ever offered delivery, via an in-house team or third-party partner, and Lewin doesn’t plan to start now. Instead, both restaurants are offering takeout, but at a major loss — pickup orders have replaced 8% of the restaurant group’s revenue, and it’s running 40% of its labor budget. 

“This is why I’m focusing so much attention on how we can reach people through alternative methods,” Lewin said. “[Media] was never supposed to be our primary business. It was a hobby business on the side that our staff was involved in whenever they wanted to be… but in this reality, the foodservice is making almost nothing.”

The restaurants’ takeout menus change daily so meals can utilize perishables that are already in-house. Each brand creates an updated web store once a day where diners can order meals for pickup during specific windows of time. 

The group is trying to avoid staffing cooks all day long since traffic is so reduced, and has also streamlined operations to try to prevent the spread of the virus in the community, Lewin said. 

“It’s obviously a huge business choice to limit the operations in that way,” Lewin said. “But we feel like the public health is actually at risk from trying too hard to capture too much takeout, having too large of a menu, too large of a pickup window… These are tough questions that we wrefstled with almost every morning. It’s like going to the Situation Room and figuring out how we’re going to survive the day.”

Though Lewin is excited by the support Juliet + Company’s videos and zine have received so far, he said what his restaurants really need to survive the coronavirus crisis is government aid. Massachusetts recently created a $10 million small business loan fund to ease the financial pressure of shutdowns, and Lewin thinks that the government’s $2 trillion coronavirus stimulus package is a good first step for restaurant support, but that foodservice needs more targeted relief. 

“We’re trying to support and sustain ourselves for as long as we can, but restaurants around the country, ourselves included, really need some comprehensive government support,” he said. “Restaurants employ millions of people, people that really need those jobs. If restaurants close permanently, those jobs won’t come back for a long time.”

Still, Lewin is determined to continue flexing Juliet + Company’s editorial muscle to make informative, entertaining content for customers and to keep his staff employed as layoffs sweep through the restaurant industry. 

“We’re working as hard as we can. We’re trying to be as creative as possible and offer quality from our company,” Lewin said. “Fifty people are affected here… we’re just trying to wake up every day and remain a part of their lives and careers, [and] give them the security of knowing that work is still here, and that our company stands for something."

Article top image credit: Mcphee, Alyson. (2018). [Photograph]. Retrieved from Unsplash.

When you visit the website for Chicago-based All Together Now, you’re met with a new homepage created just for pandemic times. It lists the hours and its current services, but it’s also emblazoned with the words: The Social Distancing Edition. With one more click, you get the business’ menu of options, including “CDC-approved methods,” like carryout and delivery, of getting its products — except there’s a catch. 

What’s the catch? “JK. We didn’t bother to get CDC approval, but we’re pretty sure they’d sign off if they weren’t otherwise occupied,” it reads.  

“We like to say … our food and wine are serious. We are not,” co-owner Erin Carlman Weber told Restaurant Dive, adding she takes full responsibility for most of the bad jokes on the restaurant’s website.

Levity and light-heartedness have always been a part of All Together Now’s business, which is a mix of a small restaurant, specialty grocery, and wine and cheese shop, but it has become more to its customers during the pandemic.

“People have made it clear to us that they’re coming to us for an escape, a bit of a break from their work, the news, whatever,” Carlman Weber said. “We’ve heard time and time again, ‘Thank you so much for being open. Thank you for providing a sense of normalcy.’”

While its 25-seat dining room was closed due to state-mandated closures, the company offered pickup and delivery of popular items, including red, white, sparkling and rose wines. It also has a wine and cheese hotline to answer the all-important questions of what wine pairs with which cheese or meal. 

“I think our diverse mix of activities did set us up better than if we had just been only a wine shop or only a restaurant,” Carlman Weber said. 

Adjusting labor needs 

While All Together Now has maintained a bulk of its operations during the coronavirus outbreak, it is functioning with a staff of nine as opposed to 12. Those who are currently uncomfortable coming into work do not have to worry about losing their jobs permanently, Carlman Weber said.

The team adjusted the work schedule to be as lean as possible to allow employees to maintain a distance of six feet from one another. In the kitchen, Chef Abigail Zielke will have people come in later or on an off day to prep so that the tiny kitchen of 125 square feet isn’t packed. 

Remaining staff was shifted to help with pickup and other forms of customer services, she said. 

“Customer service is customer service and people who are good at it … in one context with us are generally good at it in all of them,” Carlman Weber said. “People are still taking care of guests … in terms of meeting their needs and accommodating them. It just looks a little different.”

Providing much-needed libations through off-premise

The idea for her shop came to Carlman Weber long before she opened her shop in December 2018 with co-owners Derek Herbster and Chris Radtke. Her career had her working in charcuterie at a specialty food shop, a cheese monger, and doing sales, marketing and events for a specialty chocolate company. Those jobs came together in the launch of All Together Now. 

“We joke around that when we opened up All Together Now … that we put our favorite things to eat and drink in a room that we wanted to hang out in and hoped that people would go in for it, which is not all that far from the truth,” Carlman Weber said. 

Nowadays, customers can’t come into the establishment to shop or eat, but instead can pick up orders through a window in the front of the restaurant. Cheeses, wine or other items they would normally be able to shop for at the store, such as tinned fish, olives and cultured butter and baguettes remain available, Carlman Weber said.

These items can be ordered online or through the wine and cheese hotline, where customers can pay for their selections ahead of time. It’s also offering a limited menu of items as well as beer and wine through Grubhub, which it had been working with previously.

It did pare down its menu to offer only bestsellers, which helps streamline kitchen operations and the ordering process. 

“That’s kind of doing the same thing that we had been doing before, but just via different channels,” she said.

While it offers many of the same items for delivery as it does pickup, Carlman Weber said she’s noticed an increased popularity in wine orders, especially as the day progresses. 

“We definitely see a few sandwich orders every day, but we can tell right around the time people start getting thirsty,” she said. “We’ll get the Grubhub tablets dinging like three bottles of wine for this order, a bottle of wine and a cheese board. … We can kind of tell people’s moods by the Grubhub orders that come in.” 
 

Feeding families each night

Its biggest shift has been the addition of nightly dinners to provide comfort food that people can pick up and pre-order for family dinners, she said.

Weber called the first week of processing these family dinners “a pain in the ass” as the staff tried using Google Sheets to take orders. They ended up switching to Tock, a reservations and to-go platform for delivery and pickup orders.

The week’s meals are updated on Sundays. A recent menu offered mushroom lasagna with ricotta and Swiss chard, baby greens with crispy artichokes and yogurt dressing and middle brow seeded sourdough with cultured butter. The meals cost $16.25 to $18 per person depending on the party size of two or four guests, according to its website. 

In the first two and a half weeks of offering these meals, there have already been return customers that have ordered two or three times, Carlman Weber said. The meals are capped at about 30 or so, however, and customers have to reserve a meal online ahead of time. 

The restaurant’s wine director also offers nightly wine pairings and about half of the dinner orders have selected wine, which is providing another way for the restaurant to maintain connections with the things All Together Now offers, Carlman Weber said. Guests can also order cheese and meat boards and dessert. 

While it had been experimenting with this idea for a month before launching it full-scale — with dinners originally available only on Sundays for carryout and dine-in — the offering is something that Carlman Weber said she could see the restaurant continuing post-crisis. 

“We would love nothing more than people to stay in with us and enjoy [the family dinners],” she said. “I don’t know when we’ll all feel comfortable or that it’s safe to actually engage with people the way we have been before. I’d really like maybe once the vaccine is available and widely distributed … to have a big hug party,” Carlman Weber said.

Article top image credit: Permission granted by All Together Now