7 Things Restaurant Entrepreneurs Must Do to Survive and Thrive During the Great Pandemic Depression Proven tactics that have helped restaurants stay open and even prosper during the industry's most challenging time.
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The Great Pandemic Depression has taught us that there are two nonessential things that our society can't live without: toilet paper and restaurants. Both were not considered survival essentials in my The Survival of the Richest book (2016); that is, we can technically live without them. Yet, at the beginning of the quarantine, there were actual fights over toilet paper in supermarkets all over the world.
Where toilet paper takes the cake for products, restaurants are the winners in the service industry. With the new heavy governmental restrictions in place to combat Covid-19, our society has come to realize how dependent we are on restaurants to serve us food. But we don't need restaurants to survive—we have been cooking our own food since humans learned how to make fire. Actually, dining at restaurants by the masses is a modern phenomenon. For an interesting read on the history of restaurants, please visit When Did People Start Eating in Restaurants? by Dave Roos of History.com.
Although there have been so many restaurants that have went out of business in the past few months, there are some that have pivoted and are prospering better than ever. However, I would guess that the majority of small entrepreneurial businesses that are still open are hanging in there by a thread.
If you are a restaurant entrepreneur, here are seven ways that you can fight to stay alive and thrive.
1. Ensure that your business is "Covid Clean"
In the Pre-Covid-19 environment, cleanliness was always a priority for the average customer. There are very few people who would encourage the cook to pile dirt on their burger. If the slightest hair was found in someone's food, the customer usually expected to have their meal comped.
What is Covid Clean? Covid Clean means the highest levels of cleanliness of the old restaurant standards applied exponentially. To accommodate the Covid Customer, you must understand the expectations and fears that they bring with them. You can make good money if you can demonstrate that you have raised the bar on cleanliness to the point where customers should have the same amount of risk or less of catching the virus in your restaurant as in their own home. Sparkling floors, sanitized kitchens, the best air filtration systems with top of the line filters replaced often, masks worn by all employees, plastic barriers where needed, tables seated at least six feet from each other, hand sanitizer stations, and the strictest hygiene requirements for all workers — this is Covid Clean. If you can hand deliver it, you will be miles ahead of the competition and can make serious money.
2. Ensure that you maintain your maximum legal occupancy rate
Depending on where you are located, you are probably having a different restaurant experience. While some areas are still keeping restaurants closed, many have allowed them to open but on certain conditions. One of the major restrictions that have been put in place is the maximum occupancy rate. In some major cities like Philadelphia, the maximum indoor occupancy rate is only 25%. This means that you can't have any more than 25% of the normal occupancy in your restaurant at one time. Although most locations are allowed to open with a 50% occupancy rate, this is still a hard pill to swallow for many restaurant entrepreneurs.
Assuming that your only service offered is an in-dining experience, even a 50% occupancy rate means that at best your sales will be cut in half. In other words, even if you have the maximum amount of allowed customers every minute that you are open, you still could only make half of what you would have earned under normal maximum capacity. Since these restrictions could starve out businesses that are not financially prepared to wait the Covid-19 out, it is extremely important that restaurants at least try to safely strive to keep their tables legally full all of the time. This might sound like common sense, but there are many restaurants that are amazingly still open without dine-in options. Assuming that you are Covid Clean, keeping your indoor dining service closed at this point of the pandemic is begging for death to come soon to your business.
In my recent article called How Long Can Entrepreneurial Businesses Stay Alive Without Survival Essentials?, it was concluded that under the strictest assumptions entrepreneurs and their businesses generally cannot live more than thirty days without their immediate survival essentials. Based on this conclusion, businesses that are still operating at this point of the Great Pandemic Depression are only doing so because they had an emergency reserve, are receiving income from somewhere else (for example, unemployment or SBA loans), and/or are making at least enough money to pay the bills.
Considering how low the legal occupancy rates are at this point, restaurants have to offer other products or services too besides dine-in services to survive and thrive. However, that does not mean that you should waste the opportunity to retain the indoor dining portion of your business to the fullest. Dining-in also keeps jobs for some of your employees so that they will still be around when it is time to scale-up. Employee flight is a major problem for many businesses now. Many restaurants that opened after a few months of closure sadly realized that their best talent is now working at other companies that were hiring, for example, at Amazon or their local supermarket. Lost talent might never be fully replaced.
Finally, it is important to utilize all outside seating available as much as possible. This generally is not included in your maximum indoor occupancy rate. Thus, any extra seats that you can add are all additional potential revenue. This point works well for warmer days, but might be more difficult as the winter starts approaching. This is where you might need to be creative and invest in resources that can keep those tables filled up safely and comfortably for the customers (for example, by using heat lamps and proper tenting).
3. Pivot—adjust products and/or services if needed
In combination with the above two points, if restaurants wants to survive and thrive in the Great Pandemic Depression then they will need to think outside the box and offer products or services in ways that they might not have done before. For example, restaurants that were 100% dine-in only could now offer take-out and delivery. These are completely new skillsets that have to been learned and mastered.
You will need the right people and technology to do a take-out and/or delivery pivot though. There are many delivery services that you might want to consider partnering with to outsource this service. The main idea here is to increase your revenue to compensate for the loss of dine-in revenue. As noted above, a 50% maximum occupancy rate means that you will need another platform to make up at least half of your business. Take-out and delivery could be the solution. Inevitably, it is up to the entrepreneur to find her or his best pivot.
4. Treat your customer right
This point is summarized clearly through Principle 13 from The Most Important Lessons in Economics and Finance book: "Businesses must keep the customer happy at every encounter" (Criniti, 2014, p. 44). Many customers might be grumpier than usual right now. When you combine this with the unusual amount of stress that you might also be experiencing, it is tempting to backlash at them. This is not the right long-term approach to making money in the restaurant business as it will lead to depletion of your customer base.
This does not mean to compromise your own morals and allow disrespectful customers to run your business for you. However, it does require entrepreneurs to have a heightened awareness to how valuable customers are, especially in the service industry. They are the lifeline of your business and must be treasured. No customers equals no income.
5. Take advantage of government funding available
There are multiples sources of funding that can help you get through the Great Pandemic Depression and build your business back up. In particular, the U. S. Small Business Administration (SBA) has various forms of assistance for small businesses due to Covid-19. Please see this link for more information: https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources. Entrepreneurs might also qualify for Pandemic Unemployment Assistance in your state (PUA).
It is the owner's duty to find these resources for help to get through this crisis and keep her or his business alive. The customers can only go so far to support local businesses, even if their existence has sentimental value to them. This point is summarized clearly through Principle 2 from The Most Important Lessons in Economics and Finance book: "It is the owner's responsibility to ensure that her or his business survives, not the customer" (Criniti, 2014, p. 33).
6. Stay open as many hours a week as you can
This is an important one that every reader probably can relate to. How many restaurants went from a full schedule to being open only a few hours a day and a few days a week? You cannot control the legal maximum occupancy rate that might already be hurting your business, but you can control your personal businesses hours (as long as it doesn't interfere with legal curfew laws, etc.). If you reduced your hours, you might have upset loyal customers who attempted to eat at your restaurant when you were closed. They might try again another day, or they might not. This is the chance that you took. Opening up more helps to continue the branding of your business. Further, this can help you add more customers; something that you will probably need right now since the pandemic might have naturally reduced many of your original patrons.
7. Learn about finance
Finally, this is an important time to improve your overall business skills by learning one of the most important (arguably the most important) subject in academia: finance. As stated in my first book The Necessity of Finance: "Ignoring the lessons of finance equates to welcoming a lifetime of financial struggles for an individual, a group, or an organization" (Criniti, 2013, p. 48). You might have more free time than normal during this crisis. It is the perfect time to learn about how to manage your wealth. Even if your business does not succeed, you will learn knowledge that can be applicable to any business that you enter for the rest of your life.
For whatever reason you originally decided to become an entrepreneur in the restaurant business, it is a time to reflect on whether or not you still share the same purpose. If you still are passionate about owning a successful restaurant, then you might want to use this time to restrategize. Eventually this crisis will pass and you will be even smarter in your industry than before. This pandemic has taught restaurateurs (also called "restauranteurs") better ways to serve their customers like none in history. Humans are social animals; we will eventually return to sharing good times while dining out more frequently — together with family, friends, and the good company of like-minded strangers.
Remember—if you open up your business to the maximum extent of the law, there is always an extra risk of getting coronavirus while at work. However, there is also a huge risk of getting the Financial Coronavirus if you don't open at all. Many businesses right now, especially restaurants, are stuck in the middle of two potentially deadly choices. The optimal solution is to keep open as long, and as safe, as humanly possible. Incorporating the seven ways above into your business strategy could help you and other restaurant entrepreneurs get through this mess, and not only to survive but to thrive during and after the Great Pandemic Depression.