MRM EXCLUSIVE: Four Easy-to-Implement Strategies to Weather COVID-19’s Impact
3 Min Read By Lil Roberts
As the COVID-19 pandemic continues to significantly impact and disrupt businesses in all sectors, it has become clear that the restaurant industry has been one of the hardest hit by the crisis. Data from OpenTable projected that one in four restaurants won’t reopen after the pandemic.
However, even as the restaurant industry faces daunting challenges triggered by COVID-19, the restaurant sector remains resilient and optimistic about the future. A survey by restaurant management software company Upserve found that 64 percent of respondents were either slightly or very optimistic about the future.
Restaurants that are nimble and able to quickly pivot to new operational strategies in response to today’s rapidly changing business environment will have the most reason for optimism. Here are a few strategies restauranteurs can adopt to stay afloat in the challenging COVID-19 environment:
1. Revamping the Menu
Food costs are one of the highest costs for restaurants, ranging anywhere from 20 percent to 40 percent, according to point of sale system provider TouchBistro. Restaurant operators should take time to analyze their menu and determine where ingredients can be used across multiple dishes to better manage food costs. Creating menu items that share the same ingredients allows restaurants to order ingredients in bulk, which can significantly cut costs.
Simplifying the menu streamlines operations, making items faster and easier produce while also saving on labor. While changing the menu will yield cost savings, the good news is that this operational change is not likely to significantly deter customers. According to Datassential, 76 percent of people have no problem with restaurants offering a reduced menu upon reopening.
2. Strategically Cutting Back on Hours
Labor costs fall within the top three highest costs for restauranteurs, cutting into their razor thin margins and continuing to rise. In 2019, labor costs averaged 31.6 percent.
Restaurant operators can reduce these costs by looking at when orders peak during the day and determining when it’s absolutely necessary to bring in staff to start preparing the food. Simply reducing prep time by one hour can save a restaurant thousands of dollars in wages each month.
Operators can also save on labor costs by analyzing their customer demand and adjusting scheduling appropriately for off-peak hours.
3. Setting up Proper Technology
Adopting the right technology can help restauranteurs drive traffic, boost revenue and sustainably resume operations.
First, make sure restaurant websites and web listings are updated with the current menu, hours of operation and phone number. Restaurant operators should then work on implementing and optimizing a user-friendly online ordering system. In today’s environment, consumers expect restaurants to offer digital ordering and payment platforms for convenience and safety. The NPD Group reported that digital restaurant orders increased by 63 percent in March 2020 alone.
The National Restaurant Association also highlighted other technologies restaurant operators can adopt to resume business and provide a safe dining experience. These include contactless payments to decrease person-to-person transactions, electronic menus to replace plastic and paper options to lessen the surface area where germs live, and self-order kiosks to shorten lines and give customers a minimal-contact way to pay for their meal.
Restaurant operators can also turn to technology for financial management, which is critical to restaurant survival in normal times but takes on added importance in this environment of uncertainty. Restauranteurs can use cloud-based accounting platforms for cost control and financial monitoring. These platforms connect into bank account and credit card transactions to help restaurant operators track expenses and cashflow, providing a clear picture of financial performance to better inform restaurant business strategy.
4. Starting with Loyal Customers
One of the best ways for restaurants to drive business and stay afloat is to reengage with loyal customers. Scanning reservation systems and takeout orders for customer emails and phone numbers will allow restaurant operators to connect with customers, keeping them updated on critical information such as restaurant re-opening dates and hours of operation. To increase customer confidence in the safety of dining at the restaurant and/or delivery and pickup services, restauranteurs should also clearly communicate the safety precautions and measures the restaurant is taking to keep diners and staff safe.
Modifying and updating operations can help restauranteurs weather the current crisis and more effectively sustain operations. Consulting firm McKinsey noted: “the actions that restaurant operators take now will go a long way toward preserving their business through the crisis and equipping their restaurants to serve customers, not just during—but also long after—the recovery.”