Restaurant reopenings are all around us, but many businesses are not in the clear yet. With lowered capacities, limited cash flow, and consumer fears, some restaurants are still struggling to stay afloat and profitable. David Hopkins, president of The Fifteen Group, shares his expertise on how restaurants can strengthen their business in the post-COVID world.
Making the most of the federal wage subsidy
One of the best things to come out of the COVID crisis is the huge opportunity afforded by the federal wage subsidy, Hopkins said. For most restaurants, labour costs are huge, but the fact that the government is subsidizing them by 75 per cent makes a difference to what restaurants can do when they reopen.
Restaurants are facing capacity restrictions and they will need to raise prices. But, because of the federal wage subsidy, labour costs them next to nothing. “If putting on an evening shift used to cost $80, now it’s $20. This is an opportunity to elevate the guest experience and put prices up, and knock it out of the park, creating a complete wow experience! It doesn’t cost us much, and it enables us to raise prices by $2 to $3.”
Earned trust and health and safety
When it comes to the new cleaning protocols and consumer confidence, trusted operations will do better than untrusted ones. Brands and chains may have an advantage here, but independents that have built trust will come back faster.
“You want the environment to be very comfortable,” said Hopkins. “Now, customers would not even remotely consider going to a restaurant that wasn’t sanitary. This is a huge positive result for well-branded chain franchises and independents if they are well-respected. Ma and Pa restaurants will be more challenged. In the hotel space, the hotels themselves play a role.
“For me to dine in a hotel restaurant, that hotel has to earn my respect. If it is understaffed, with mediocre food, and if it didn’t looked polished, and didn’t have a hostess, I wouldn’t want to risk it.
“The bottom line is that there will be a lot more emphasis on earned trust and health and safety.”
Sanitization is now the fourth pillar
It used to be that successful restaurants were based on three pillars: quality, service and atmosphere. Now there is a fourth pillar, sanitization.
Hopkins maintained that in a typical restaurant, the current wage subsidy on its own will offset capacity and cleaning restrictions — that there is a new budget and profit model with the wage subsidy. “There is an indication that the wage subsidy will continue in some capacity to the end of December,” he said. “This is an important factor to consider, and will allow businesses to strategically raise prices.”
The cost of increased staffing to implement cleanliness protocols can be offset by the fact that 75 per cent of wages are covered. This will help offset the cost of PPE itself — hand sanitizer, disposable menus, etc. Many restaurants aren’t implementing plexiglass barriers — the costs of cleanliness don’t have to be astronomical.
Another important consideration is how much of the hotel restaurant’s business comes from inside the hotel itself and how much is external. “Sit down and model it out,” Hopkins says.
Take a diligent, planned approach
Restaurateurs need to take a diligent, planned approach to reopening — an approach that goes beyond table spacing and physical distancing. Does the restaurant need a decimated person for clearing dishes or will servers serve and clear? The Fifteen Group has a lot of processes, checklists and methodologies that can help. For their document titled From Plexiglass to Disposable Menus: The Restaurant Relaunch Checklist, click here.
It’s important to think about what is put on the tables — most restaurants are going with nothing on the tables, just bringing what the guests need while they are sitting there.
“You do need to think through the entire process, and find a profit model that will work for the next six months,” said Hopkins.