OPERATOR CHECKLIST & CONSIDERATIONS DURING COVID-19
By: Larry Reinstein, Founder, LJR Hospitality Ventures
The major topics to date for operators:
- Cost reduction and developing a cash strategy
- Making decisions on the viability of pivoting to an off-premise business through delivery, curbside, drive through and pickup and how to promote these services.
- Handling employees, lenders, investors, suppliers, landlords and franchisees.
- Applying for business interruption insurance, looking at restaurant leases as well as force majeure clauses and applying for various loans from SBA and the Federal Gov’t.
What does the future bring?
None of us has a crystal ball but every day we get closer to understanding various possible outcomes and how they will affect the restaurant business. Quickly developing a 90-180 day financial and operation plan will be critical to future success. Some of the Questions to be answered in building this plan are:
- What is your cash position and is there currently a weekly cash burn?
- What will your cash position be in 30/60/90 days and how will that affect your ability to open the restaurant locations that you would like to reopen?
- How long will it take to reopen each location, bringing back the people and all of the products and services required and >> How many openings can your organization handle properly in a day/ a week/ or month?
REMEMBER we will be making new first impressions on our guests and it is essential to provide a great experience.
- What will be the incremental costs to reopen based on modifications to be made to each restaurant?
- What do you expect the sales ramp up period to be and how will this affect the profitability of each restaurant and even more important cash flow?
- What kind of payment terms will you have with your suppliers? Returning to your original terms will most likely have you paying at a rate significantly faster than your new sales would provide for.
- How will you deal with restaurants that will not be profitable going forward? >> Will all your restaurants reopen?
This will require discussions with professionals: Lawyers, accountants, landlords, lenders, advisors, investors.
What is your vision for short-term/ 3-6 month and longer term /6-18 months for the way your restaurants will operate?
What types of short- term changes will you make in the restaurants when they reopen?
- This will depend greatly on your clientele and how they have used your restaurants in the past, BUT even more important what they feel will be important going forward.
- How do we make them feel comfortable when they return and excited by their experience?
The general consensus is there will be growth in off-premise including mobile ordering, delivery, curbside and pickup
This will account for a higher % of overall sales.
What kind of tactics can you put in place to compete and excel in this area?
- If all of your restaurants are closed, can you open 1 and begin implementing these services? This provides an opportunity to learn these areas and be better prepared for reopening, bringing back some key employees and providing services to guests and the community at large.
- If you are operating some or all of your restaurants, now is the time to begin thinking about how you reevaluate labor hours, and re -allocate kitchen and front of the house space to handle the increase in off premise.
Can you set aside parking spaces for curbside and find an easier way to access those spaces for your kitchen?
NOW IS A GREAT TIME TO FIND AND IMPLEMENT NEW TECHNOLOGY
- Guests will be looking for frictionless solutions, eliminating virtually every touch point
- Kitchens will need fully integrated mobile ordering that eliminate labor and mistakes.
- Restaurants will benefit even more from having guest data that enables you to provide the types of products and services tailored to each individual guest.
Another expected change is a focus on sanitation and hygiene so people feel safe
- Hands free soap and towel dispensers
- Automatic flushing mechanisms
- Doors with foot opening capabilities will become important
- Proper sanitizing of all surfaces
What approach will you take with cleaning tables, chairs, menus, items like hot sauce bottles?
- Will you eliminate reusable menus?
- Will you eliminate reusable bottles?
- Contactless payment through apple pay, google pay, and tap and pay credit cards
Does your restaurant include any element of self service?
- guests will most likely be cautious using self-service beverage bars and condiment bars.
- which items can be brought behind the counter and what type of additional labor expense will be required to make this a hands-free experience?
- what type of role will 6-foot social distancing play over the next 3 to maybe 12-18 months?
Historically a busy restaurant has been a happy restaurant! But will guests want to be packed together??
What is the right seating arrangement and capacity for your restaurants that will make guests feel comfortable?
- What kind of space is available for waiting areas?
- Will this affect the way you take reservations?
- How should bar seating be arranged?
- How will standing guests order at the bar?
How will queuing areas in fast casual and QSR be set up?
- Will you put in tape marks with 6-foot guidelines similar to supermarkets at checkout?
- Will you add more line busting staff with tablets to compensate for having less cueing area?
How will you protect your staff from covid-19?
- From other staff members?
- From guests?
- From boxes and packaging?
With lower expected revenues for most full service and fast casual, does a smaller, less labor-intensive menu make sense? What will be the new staffing requirements?
Long term success will come from leaders who:
- Have a short term and long term well thought out plan
- Project confidence and strength …. we will come out of this
- Are careful about making short term commitments to investors, landlords, suppliers, lenders and employees. There is much unknown and you may not be in a position to meet those commitments.
- Show compassion and interest in those same employees, investors, landlords, suppliers, lenders
- Are resilient, having the ability to adapt quickly to a constantly changing environment.
- Lead the way with transparency and are right on the front lines with their teams
There will be a future and we all can be an important part of it. Stay strong, stay focused and be safe.
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