Update: To view the replay of “The Secrets to a Successful Reopening,” click here. Use code “REOPEN_WEBINAR” for a discount on 7shifts!
Four industry experts convened this week to share their thoughts on the future of restaurant operation and tips for reopening.
Jordan Boesch, CEO of employee scheduling platform 7shifts, hosted Doug Radkey, president of KRG Hospitality; Doug Zeif, principal in Next! Hospitality Advisors and managing partner of High Dive in West Palm Beach, FL; and Rainer Zinngrebe, vice president culinary, corporate chef at Marriott Luxury Brands International.
7shifts, in response to the coronavirus pandemic, is focused on employee health checks, easy team communication, and integrating POS and payroll. According to Boesch, 7shifts, which is used in more than 13,000 restaurants, has helped prevent hundreds of employees who are infected from punching in for work. The platform’s approach to simplified team communication addresses a stark reality of shutdowns and reductions in workforce: company culture is impacted negatively when a venue must close or can’t operate at full strength. Regardless of the scheduling platform an operator uses, they need to ensure clear, transparent, and easily executed communication with their team members.
On June 17, 7shifts presented “The Secrets to a Successful Reopening.” Boesch and the trio of experts, which boasts several decades of experience, discussed takeout and delivery, challenges facing operators during the pandemic, the state of the industry, and more.
Reset the Industry
The coronavirus pandemic brought with it shutdowns, restrictions and legislation. It also highlighted major problems with the hospitality industry, particularly in relation to restaurants and bars. The inarguable fact is that the margins are far too thin.
Zeif made the point that moving forward, operators need to focus on their core menus. Providing an example, he said that a burger place doesn’t need to have pasta on their menu. Twenty percent of menu items, said Zeif, generate 80 percent of a restaurant’s revenue. Adding menu items that don’t relate to a specific restaurant only increases costs, inventory and labor being just two examples.
In Zeif’s opinion, one solution is for operators to do more with less. Using his example, consider an item like carrots. If they’re just going to be sliced and diced, they don’t need to be “Whole Foods” quality and appearance—they can be purchased for lower prices. Services like ArrowStream offer commodity forecasting for food suppliers and distributors so operators can anticipate the market and make informed decisions.
Radkey agreed with Zeif, stating the average margin for restaurants in Canada is between three and five percent (similar to the profit margin in the United States). Addressing the importance of a an industry-wide reset, Radkey said that margin needs to reach 12 to 15 percent.
Speaking about the future of the industry, Zinngrebe pointed to the need for operators to learn about and get involved with food manufacturing and technology. He identified energy labor costs as two major P&L factors that restaurant owners have no control over. Coming together as an industry to become more involved with areas of control, such as food manufacturering and smart tech, could help reduce costs and increase profits.
Of course, an industry reset involves more than inventory and streamlining operations. Radkey, Zeif and Zinngrebe agreed that operators need to become better businesspeople. Radkey identified several areas that operators must address during an industry reset: fixing toxic work environoments and company cultures, supporting diversity, zero tolerance for harassment, and fixing the problems of uneven shifts and minimal pay.
It may seem strange to some given the current reality of severely reduced traffic (or zero traffic for restaurants and bars that remain fully closed), but Radkey said that operators should be using this time wisely to attract A-level talent. Zinngrebe’s sentiments supported Radkey’s statement: he said that savvy operators will need to think about how they can compete against other industries to build highly skilled teams. Passion is great, he said, but developing a great business sense is just as important; it could be more important moving forward.
Zeif read the situation similarly, pointing out that the staggering numbers of layoffs and furloughs means there’s opportunity to grab the most talented people. He made the point that becoming a better at business should be every operator’s priority now.
The Battle Over Delivery
The trio may have agreed on the need for an industry reset, increasing margins, and being better at business, they didn’t see eye to eye on delivery.
Zeif opened a venue that enjoyed only four to five weeks of operation before the pandemic hit. The business hadn’t offered delivery before it was shut down due to COVID-19. Since adopting third-party delivery, Zeif’s experience has been positive and the venue has seen good margins.
Radkey, on the other hand, isn’t a fan of third-party delivery. He pointed to the costs associated with offering delivery through a third party. Decreases in brand perception and communication with guests, along with some services not sharing guest data with their restaurant and bar partners, make third-party delivery unappealing to Radkey. He also said that many people aren’t comfortable with a third party handling their orders.
In Radkey’s opinion, takeout and curbside pickup are better options. However, he did concede that delivery is here to stay and will become a larger part of a restaurant’s sales mix. It is, he said, a crucial operations element.
Operators using third-party delivery services should attempt to renegotiate their fees, said Boesch. Those who are just now looking into offering delivery should try to negotiate reduced fees before signing with any service. Speaking about those fees, Radkey pointed out that many consumers helped support the operator pushback against third-party delivery. When the fees were exposed, many consumers were upset because they thought more of their money was going toward supporting their favorite restaurants.
Do More with Less
When Zeif needed eight employees for a limited reopening, he had difficulty luring some team members back to work. Some employees are genuinely concerned about their health and safety, or the risk of infecting an at-risk person among their families and friends. Some, as we know, are making more money on unemployment.
Eventually, Zeif brought back a small team. Adding responsibilities to each role has helped the business accomplish more with a reduced workforce. This can mean different things for different operations. Maybe sous chefs expand their roles. Perhaps servers also act as hosts. Each operator will need to reassess their teams, traffic, days and hours of operations, and menus to see what will work best for them.
Radkey, for example, posed the idea of keeping delivery in-house by leveraging servers, bartenders or other team members as delivery drivers. Zeif said he was concerned about liability issues Radkey’s idea could present. Again, operators will need to consider both approaches and make an educated choice.
In assessing the best practices for handling reduced traffic and keeping guests and team members safe, Zinngrebe suggested implementing separate lunch and evening seatings. Operators offer two or three seatings for different dayparts, setting time limits of 90 minutes or two hours per seating. Limited menus can be considered alongside this strategy.
Part of navigating new regulations involves purchasing and using more sanitization products. To defray this increased cost, some operators have added a “hygiene fee” to tickets. In some cases, operators give their guests the option to have the fee removed, making it voluntary.
Zinngrebe seemed supportive of such charges. He said the fees wouldn’t necessarily become a long-term industry standard.
Radkey and Zeif, however, opposed the idea. Pointing to social media posts and conversations, Radkey said he’s seen negative responses from consumers toward extra charges.
Zeif explained that basically everone around the world has been quarantined. Layoffs, furloughs, terminations, reduced hours, and reductions in pay mean people don’t have the income to support increased menu prices or additional fees.
Perception and Guest Comfort
Operators who have been able to reopen are doing so under restrictions and enhanced sanitization requirements. Keeping things clean, sanitized and organized shouldn’t be new to anyone who works in hospitality, so new rules and regulations shouldn’t be too challenging for any operator.
However, dining out is now different for guests. Many are unsure what operators must do to ensure their safety, so there’s a level of discomfort they’re bringing with them to restaurants and bars. The key to success, said Zeif, is making guests feel safe and comfortable.
Zeif has embraced QR code menus, a topic we addressed here. But he still has physical menus that have been laminated. This is, in part, so that guests can see team members sanitizing menus. Showing guests that menus are being wiped down and sanitized serves to make them feel safer.
He has also placed three-minute timers on tables. When guests complete their visit and leave, the timer is activated. The team has three minutes to wipe down and sanitize the table. This tactic lends to the guest perception that the business is taking sanitization seriously and holding team members accountable.
Boesch presented participants with several polls throughout the duration of the webinar. One of these polls asked the following question: “What is your biggest fear around re-opening?” More than half of respondents, 52 percent, selected this answer: “Re-opening then having to close down again because of a second wave.”
On top of deciding the best path forward for reopening their businesses, operators have to weight the very real possibility that some states may once again shut down restaurants. That could be the nail in the coffin for even the best-prepared operators in the industry. Already facing significantly reduced traffic (or zero traffic) and battling to keep their heads above water, operators may incur the costs associated with reopening just to have their doors forced close again.
“This is going to be a long and painful road until there’s a vaccine,” said Zeif.
Whether a person believes we’re still in the first wave of COVID-19, entering a second wave, or seeing spikes that will disappear, the fact remains that some governors may decide to reinstate stay-at-home orders and mandated shutdowns. The overall situation is made even more difficult to predict due to, as Zinngrebe pointed out, every jurisdiction implementing different regulations and restrictions, and opening in different stages at different times.
Operators are, unfortunately, not tasked solely with creating the best possible reopening plan. Hospitality venues, from coffee shops and dive bars to chain restaurants, hotels and casinos, are forced to made educated guesses for the best strategies while dealing with constantly shifting guidelines and developments. Now more than ever, operators need to band together to strategize and protect the industry.
Neither the author nor Hospitality Villains received compensation, monetary or otherwise, from 7shifts, KRG Hospitality, High Dive, Marriott or any other entity in exchange for this post.
I’ve been studying and writing about the hospitality industry since 2006. Like so many people, I started my journey in this business by working as a host, server and bartender. I was introduced to nightlife in Chicago, learning the ins and outs of nightclubs and after-hours hot spots.
After moving to Las Vegas nearly 20 years ago, I both co-owned a valet company and helped promote the club it serviced. That led to me taking on the role of editor for a Las Vegas hospitality industry publication.
A few short years later, I continued along my journey of hospitality industry reporting. I went from contributing to a major industry outlet to taking on the role of editor and content curator.