Restaurant management

The restaurant industry after two years of COVID | modern restaurant management

The restaurant industry continues to navigate the COVID-19 pandemic which is still infecting more than 20,000 people and killing more than 1,000 Americans every day. With the presentation of proof of vaccination and some of the other more unpopular protections put in place by health agencies now having been lifted, the restaurant industry faces new challenges. These challenges include rising operating costs, labor shortages and unpredictable shifts in customer bases.

Cost increase

According to the Wall Street Journal, food prices are expected to increase by an average of 5% in the first half of 2022, while other sources point to a 7% increase by the end of the year. This estimate will likely be well below the price increase as fuel costs continue to rise. In California, Proposition 12 banned all sales of breeding pigs, laying hens and veal calves from farms not meeting new containment standards. This law took effect on January 1, 2022, but was suspended for six months by a California Supreme Court judge. Bacon costs in California are expected to rise by more than a dollar per pound if and when this law goes into effect.

Labor shortages

Labor costs were already set to rise on January 1, 2022 in 21 states that have enacted minimum wage increases. It was already a cost restaurants were anticipating, but labor shortages have forced restaurants to raise wages to compete for workers. Restaurants that sought to retain or hire executives or other salaried positions faced much higher salary demands and stiff competition. This became even more difficult for restaurants during the peak of Omicron where many positive cases temporarily depleted the pool of workers. Restaurants have been forced to limit their operations or even close during these peaks.

Customer base

Food deliveries and outdoor dining have been a big hit for many restaurants located in neighborhood communities. However, restaurants located in financial, commercial or manufacturing districts have not experienced the same success. Many restaurants that rely on these businesses’ customers have suffered disproportionate losses for restaurants located even just miles from downtown and manufacturing districts.

Additionally, restaurants that relied on major events such as stadium or conference attendance were forced to pay increased rent for locations that had no customers. Back-to-office policies have proven to be a work in progress rather than an actual deadline that restaurants can count on. This is especially difficult to predict for restaurants that rely on the tech industry.

Possible solutions

Most restaurants that have survived COVID-19 have taken advantage of programs available through the Restaurant Revitalization Fund (“RRF”) Paycheck Protection Program (“PPP”) and emergency loan programs. Economic Impact Disaster (“EIDL”). RRF was industry specific while PPP and EIDL were available for other industries. The restaurants that I advise that have been able to use the RRF have been able to position their restaurants for future growth. Restaurants that weren’t eligible or didn’t use these funds missed out on a great opportunity. Unfortunately, hopes for additional funding for the RRF were dashed when it was removed from the spending bill. It seems that, for now, government aid has dried up. There are other actions restaurants can take to survive and thrive during COVID-19 and beyond.

Two successful strategies implemented by restaurants have been to use extensive outdoor dining and food delivery services. Many local governments have dedicated “parklets” that remove curbside parking to make room for outdoor dining. Some communities have even made these spaces permanent. This solution works well for restaurants in areas with warm climates, but even areas like Chicago have given millions of dollars in grants to community groups to redesign parking spaces for restaurants to use. This is very good news for restaurants because in most cases the restaurant lease does not charge rent for the patio or outdoor spaces.

Food delivery apps and other services have worked very well for many restaurants, but some restaurants have found that the costs take away any profit. In response, many restaurants created new “pamper package” options on their menus that included family-friendly portion sizes to take the guesswork out of ordering a menu that wasn’t on a shopping platform. delivery. For example, at a barbecue restaurant, a pampering package included a rack of ribs, a whole chicken, a pound of pulled pork, a liter of beans, coleslaw and mac and cheese, cornbread, and a six-pack of beers. These take-out-only off-menu options have been very successful in retaining a customer base because it was easier to order a care package directly from the restaurant than ordering off-menu through a delivery app. More importantly, it enabled a restaurant that couldn’t afford the food delivery app’s services to reach take-out customers only.

Some restaurants join or even form trade associations to increase purchasing power and reduce costs through economies of scale. Local restaurant associations also use their influence to lobby their local governments to change policies that make it easier for their restaurants to operate. This involvement in local government as well as statewide business associations extended to lobbying states to continue offering temporary services such as take-out cocktails. These organizations will continue to impact how future government regulations are implemented within its communities, including permitting and planning policies.

The restaurant industry will need to continue to adapt to temporary and long-term changes due to COVID-19. The only certainty is that restaurant owners who expect a return to pre-pandemic operations will fail.