Across the United States, everyday life is being upended by the coronavirus COVID-19 pandemic. Due to a combination of strong advice from health officials for all Americans to practice social distancing measures, and similar laws and directives from state and local governments, businesses are being forced or called upon to shutter their doors for the foreseeable future. The restaurant industry—an industry especially dependent on daily cash flow and known for operating on low profit margins—is on the front line of this crisis, directly and instantaneously feeling the widespread ramifications of the current crisis.
In this unprecedented time, restaurants are looking to creative solutions to help blunt the impact of this pandemic on their businesses, employees, and communities.
Below are some strategies for consideration:
- Shift to/promote take-out or delivery: In many jurisdictions, this may be the only option in the face of laws prohibiting dining in. But restaurant owners should know that demand for this option is there, particularly as the grocery supply chain faces unprecedented demand.
- Convert waitstaff into delivery drivers: With decreased (or altogether vanquished) labor needs in the front of the house, a creative solution to enable these workers to continue working is to convert them into delivery drivers. Of course, employers must be mindful of the various legal complexities inherent in allowing employees to drive on the job, including assuring auto insurance coverage, safe driving records, and the fulfillment of timekeeping obligations for non-exempt employees running these deliveries.
- Reduce menu offerings: Scaling back menu offerings and, instead, offering a limited menu of the most popular items, or items with the ingredients most readily available, or items that transport well via take-out or delivery, is a method to save substantially on food costs.
- If dine-in is still an option, cut down on high cost, disposable items: Many restaurants use expensive and disposable menus. One tactic we have seen is that these restaurants have decided to abandon the use of higher cost “novelties” and have instead embraced less expensive alternatives. In times like these, restaurant patrons understand and are eager to support their favorite establishments—even if presentation may not be up to par.
- Consider offering incentives: As mentioned above, we understand that restaurants already tend to operate on a low profit margin. However, this may be an attractive option to lure diners temporarily.
- Communicate with diners and dining apps: Although many patrons may be confined to their homes, with e-mail lists and social media, it is still possible to remain in touch and inform them of take-out and delivery options, provide status updates, and ask for help. Further, many dining and delivery apps are working closely with restaurants during this time and continue to offer guidance on this downturn.
- Promote gift cards and merchandise: Even if many restaurants must cease most operations for the foreseeable future, these shutdowns will one day end—and diners will be eager to get out of their homes and eat at their favorite restaurants. Many consumers will gladly purchase gift cards to provide an immediate cash injection now so that they can use the gift cards once business is back to normal.
- Remain vigilant of federal, state, and local relief measures (and applicable deadlines): Federal, state, and local governments are working feverishly to develop emergency relief and assistance plans (including emergency relief funds) for many businesses—specifically small businesses. Many restaurants may qualify for relief under these measures, and restaurant owners should continue to monitor these developments and their deadlines so that they do not miss out on these opportunities.
We are here for and fully committed to the needs of our clients in the restaurant industry during this time. We are all in this together.
For the latest updates, please visit Blank Rome’s Coronavirus (“COVID-19”) Task Force page.