Restaurant Survival Amidst a Global Pandemic

NOTE: This was originally written for Entrepreneur.com (Article Here), but has continually been updated with examples, links & helpful resources during this time of uncertainty.

COVID-19 is driving the hospitality industry into the ground right now. I hate it, you hate it, suppliers hate it and customers hate it. Restaurateurs aren't wired to sit and watch things happen from the sidelines, which is why I hope this helps some entrepreneurs to be set up for success when things turn around! 

I’ve spent the past month(s) working with some of the most amazing entrepreneurial minds in the tech world, restaurant space, and elsewhere, trying to figure out ways to "beat" this pandemic. The bad news is that for local restaurants built around serving customers between their four walls, there is no “hack” or amazing idea that keeps the doors open long term. However, the tactics listed below can be acted on immediately to increase the chances of survival, and hopefully they are helpful to you.

The restaurant industry is notorious for small margins, which is a large part of why we're having such a hard time dealing with COVID-19. Decent margins might be 10%, but the reality is that many restaurants are running at 1-3% – enough to survive and allow the front and back of the house to make a living for their families – NOT enough to build cash reserves and survive closing the doors for a month or more. The harsh reality is that a local restaurant can survive a week, maybe 3 with some ingenuity, in a situation like this. 

This Texas Monthly article interviewing restaurant execs provides a glimpse into the reality of the situation. 

The Eater article titled “What Restaurants Need Right Now to Actually Survive” (“Rent abatement, tax deferrals, and immediate unemployment benefits are at the top of the list.”) is the unfortunate truth. By the time this article is published, operators are knee-deep in my first point below about driving short-term sales. There are a lot of things restaurants can do in the short, medium and long-term to survive and build brands for when things turn around (when they turn around, they’ll come back aggressively). These are the three things I believe are most important (and helpful) right now, with resources included. 

1.) Short-Term Sales 

At this point, all dining rooms are closed, necessitating the obvious move is to optimize to-go and delivery sales ASAP. Most restaurants have done this by now, and are unfortunately realizing it’s not sustainable. Most sit-down restaurants weren’t set up to be to-go businesses, that’s just the way it is.  That said, it’s still important and might be the difference in survival and bankruptcy! Here are a few things that all restaurants should be doing: 

• Email + Social Media:  Communicate with customers and make the ask! Hopefully restaurants have an email list in place and a social media presence, so use those to get the word out. Remember that all consumers don’t work in the hospitality business, so  communicate the current situation and laws with them briefly. Once you’re setup operationally to execute, email offers every few days explaining how your pick-up/delivery works and include a slight discount if you can to show appreciation. This is a great time to sell gift cards for future use, and to encourage them to share your message with friends and family. If you’ve treated them well in the past, they’ll help you as best they can. If you need help setting up a website to sell gift cards, contact me ([email protected]) and I’ll guide you through the process. 
• Community & Media Relations: Make sure you’re reaching out to local media (city magazines, news, etc.) as well as your chambers of commerce and all other entities that are incentivized to help your city thrive. For example, Addison, TX, a city on the outskirts of Dallas, is doing a great job of maximizing their resources to help local businesses. They’ve already (as of 3/18/20) put up a billboard that drives people to their website where you can find all the restaurant offers and deals (link here to a Facebook post showing the board). 
• Guerrilla Marketing: Ultimately, owners have to do what it takes! The very basic steps fall back into email marketing and social media above, but that should be taken to the next level if it’s your livelihood! Put together “Taco Tuesday” family packages with every add-on you can imagine like EJ’s Eats & Drinks in Little Rock, AR. Bottle your best-selling drink mixes in mason jars (or sell the drinks directly if your state allows). Also, check out Rapscallion in Dallas and their “Baller Survival Kits” for $150 (Warning: you will become very hungry). Call on the local celebrities that you know like your place, get a meal in their hands and ask them to share the love online.
• (*sub-bullet of "Guerrilla Marketing"*) Live / Online Shows: Chef Joe Baker launched a Facebook Live series called Quarantine Cooking With Joe the Baker. The Chef at Red Stix Asian Street Food also started a Quarantine Cooking Show.
• (*sub-bullet of "Guerrilla Marketing"*) Aggressive Pivot: Dan Simons co-owns Farmers Restaurant Group in Washington, DC, and announced that his restaurants will become “Founding Farmers Market + Grocery.” They’ll be  delivering and offering curbside, “the things you’d want from your favorite corner bodega. We are spinning up the new biz right now … think eggs, chicken salad, paper towels, booze,”. 
• Delivery Partners: DoorDash, Uber Eats, GrubHub and all the other players have networks of people looking to order food that your restaurant has probably never been in front of! There are fees involved, and it takes a couple hours to get your menu on their sites, but it’s worth getting out there ASAP for both short-term sales and longer-term brand awareness. A few helpful updates and announcements on that front:
• (*sub-bullet of "Delivery Partners"*) GrubHub announced Friday (3/13/20) it was "waiving delivery fees,” but there are major caveats. First, it’s worth noting that restaurants must commit to partnering with GrubHub for an additional year. Second, this is a deferral of fees, not to be confused with fees actually being waived. These would take effect after the deferral period has ended, which could be two weeks after the Relief Period, “no later than March 29”. At that point, restaurants will begin paying their contracted commissions but will be given a two-week grace period to begin repaying their deferred fees. After those two weeks, restaurants will continue paying their contracted commission rates and will begin repayment of deferred fees, to be broken into four equal installments over four weeks. After those four weeks of repayment, restaurants will resume payment of their agreed-upon commission fees.
• (*sub-bullet of "Delivery Partners"*) UberEats announced Monday (3/16/20) they're waiving delivery fees charged to more than 100,000 independent restaurants across the U.S. and Canada. They're also giving restaurants the option to get paid daily on all orders instead of its typically weekly billing cycle, which is helpful (but only so much if no revenue is coming in at that point).
• (*sub-bullet of "Delivery Partners"*) DoorDash isn’t cutting fees necessarily, but is contributing in its own way with the #OpenForDelivery campaign that launched last Friday (3/20).

2.) Long-Term Brand-Building 

It’s hard to think this far ahead, but we’ve gotta be ready! While it’s tempting to beg for sales and ask people to help you stay afloat, think about what you do when you make it through (with no money to spare) and need customers’ help to ramp back up. As alluded to above, a huge percentage of local restaurants won’t make it without assistance. I’m not saying to “give up”, but be honest with yourself! Once you’ve taken the steps to contribute to congressional bills and change.org petitions (Texas sales tax petition with 78,000+ signatures here), an important next step is communicating as much as possible with customers! Let them know your story, details about the staff, and all of the things you’re doing to make this work – all so you can continue to serve them in the future and ensure your team can provide for their families. Be honest, be grateful, and use this as an opportunity to build a relationship that will be extremely beneficial in the future.

A great way to build goodwill is to find ways to give back to emergency workers, elderly communities and others in need. This costs money, I get it, but the stories here about Dallas restaurants that have taken these steps will get you fired up! If you’re REALLY set on brand-building and being there when this is done, there’s not a better way to set yourself up for success than helping others when you can! #PeopleHelpinPeople. 

• Front Burner Restaurants launched Furlough Kitchen non-profit to feed the hospitality industry. Within a couple of days, Walk-On’s Sports Bistro partnered with them to launch a Baton Rouge, LA extension of the non-profit. 
• Pecan Lodge launches Dinner Bell Foundation, which will provide direct financial assistance known as “bridge funding” to struggling small restaurants that have been forced to close their doors due to the pandemic. The organization will also help support Pecan Lodge’s ongoing work preparing free meals for healthcare workers and their families. 
• A roundup by CultureMap Dallas on Dallas Restaurants Doing Good Deeds outlines the great things so many restaurants are doing to help their communities, while facing the most difficult times most of them have ever seen.  

3.) Longer-Term / Sustainability

The ideas above are helping hundreds of restaurants pay the bills right now, and that’s amazing! However, we can’t ignore that the single biggest fixed liability is rent. With this sudden lack of income, rental assistance might be the most crucial support restaurant operators can find. Unfortunately, landlords aren’t all like Madison Partners in Dallas, TX, putting out a release like this:

This COVID-19 situation is unprecedented and creating a lot of uncertainty for people we care deeply about. For our business owner partners and those that are passionate about the future of Deep Ellum and Lower Greenville, please know that Madison partners will be working with our small business tenants on rent during this period. We are focused on what is best for our community and the long term health of our businesses over short term rent considerations. We will get through this together."

• YOU HAVE TO ASK!  Take the time to sit down with your landlord ASAP and work through this. They don’t want to have to find another tenant after this when the whole hospitality industry is clawing its way back (and it will). Set the meeting, explain your situation and long-term plan, and the odds are good that you’ll be able to work something out. 
• Government Assistance: I’m extremely impressed with the speed in which our industry has submitted proposals, bills and recommendations to Washington D.C. A few of them have been approved, and many more are in the works. Rather than list them all here, I highly recommend you follow Nation’s Restaurant News to stay up-to-date. They will provide updates on governmental action, tips on what other restaurants are doing, and ultimately serve as a resource to navigate through these crazy times. 
• National Restaurant Association -- Employee Relief Fund: This fund -- click here for information -- was created to support the 15.6 million restaurant employees in the U.S. that have been affected by the recent COVID-19 pandemic.

I’m fighting the urge to include cliche quotes about “Perseverance” and thoughts around how we’ll all get through this together. The restaurant biz survives and thrives partially due to how straightforward and not mushy it is! The current situation sucks, and will unfairly rattle hundreds of sound, well-run businesses. 

All we can do right now is make the best decisions possible for our businesses given the information at hand, and bust our butts to be the ones that are there – serving our regulars and all the new customers we’ve found – when this turns around in the coming months! I have surrounded myself with some of the smartest people there are in the restaurant business, so PLEASE reach out to me with any questions, ideas or to vent if you need to. We’ll all get through this together!  #PeopleHelpinPeople