Rewards Network recently surveyed 400 restaurant owners to determine what, if anything, they were planning on doing as fall and winter bring on colder weather. Their response revealed that, though many are fighting through with delivery and alternative patio options, others are uncertain just how long they can keep their doors open in this current COVID-19 environment.
The State of Reduced Capacity
As we know, most restaurants are still faced with reduced capacity restrictions. The few states allowing normal capacity (at the time of writing) include Alaska, Florida, Indiana, Iowa, Louisiana, Missouri, Nebraska, Oklahoma, South Dakota, Wisconsin, and Wyoming. Most of those incorporate social distancing mandates and many states decide restrictions on a county-by-county basis. State-by-state regulations can be found here.
For those restaurants that are unable to operate at full capacity, almost half that responded to the survey said they would not be able to remain open for a year, and 28 percent said they could only last somewhere between four and six months. On the small upside, 29 percent said they could keep their doors open indefinitely.
With our current COVID-19 surge, it’s hard to imagine many states will be changing their pandemic regulations any time soon. Even those that are allowing full capacity may have reversed their decisions by the time this article hits the World Wide Web. Restaurant operators are, however, hopeful, noting that, despite the reduced customer demand, 50 percent said that they could remain open indefinitely should their state return to no capacity limits.
Restauranteurs are a scrappy, resilient, creative breed. And it is for this reason that many have been able to ride through the raging pandemic, grabbing on to rocks and tree branches in the form of delivery, meal kits, and cooking lessons.
And then there are those that have closed their doors permanently or the many more that have temporarily closed until restrictions are lifted. Recently, a popular East Aurora restaurant in New York, Kodiak Jacks Bar, Grill and Grove, closed after weather limited outdoor dining. They are still open for drop-off catering and private parties.
With the weather changing across the states, can we expect more of this scenario? Some restaurants are trying to extend the patio season by weatherizing.
Restaurants Get Creative with Outdoor Dining
In this same survey, owners that operate in areas where weather permits outdoor dining for 9 months or less every year were asked about winterizing. Over 50 percent said that they had plans to make the outdoor area climate-controlled for the winter.
Some restaurants are tackling this project with tents, outdoor heaters, fire pits, and even igloos. Many are thinking out of the box.
Nomad World Pub, in Milwaukee, asked the city for permission to shut down a street for outdoor dining…and got it. The Active Streets for Businesses program expedited city approval for restaurants to use sidewalks and even streets for their outdoor dining areas. Mike Eitel, the owner, told USA Today, “Oh my God, it saved our (butts).” He’s planning on making the outdoor area usable through the cold Milwaukee winter months.
EastEats, in Detroit, created an outdoor space that consists of 12 heated geodesic domes. Two restaurants in Ohio also came up with creative solutions. Sandy Springs Brewing Co. opted for heated igloos and Main Street Deli and Baking Co. converted their patio by building a wooden pergola.
Other restaurants are closing dining areas all together and switching to curbside pickup.
Restaurants Holding on by Switching to Delivery and Takeout Model
Rewards Network’s survey reported that 27 percent of restaurants have started their own delivery service due to pandemic restrictions. Though third-party delivery platforms make for an easy entrance, they also come with high fees that can limit profit margins.
When asked how profitable these third-party delivery services were for those that had opted to join forces with companies such as DoorDash, Grubhub, and Uber Eats, the response was a little bit more positive than expected. Please note the emphasis on little. While only 6 percent noted that they were very profitable, 48 percent responded that they were somewhat profitable, and 31 percent found that they broke even.
For operators that chose in-house delivery services, the average cost to start the service was $1,923, with figures coming in as low as $0 and as high as $10,000. For some, the switch over is minimal due to existing labor and POS capabilities. Even for those that have a greater initial investment, in our current delivery-frenzied environment that isn’t going away anytime soon, long-term benefits may outweigh short-term sacrifices.
Consumer Response to Restaurants Raising Prices
When Rewards Network asked operators if they’d raised their menu prices, almost 42 percent responded in the affirmative. Considering the reduced capacity and customer demand, it’s surprising this number was not higher.
The good news was that most of their customers did not seem to mind. Over 45 percent said that customers either hadn’t noticed or commented on the increase, while 42 percent said that their guests understood the need for increased revenue. Only 12 percent complained about rising prices.
Like true believers and unrelenting optimists, only 8 percent of operators and owners were “very unoptimistic” about the business environment through the fall and winter, and almost 70 percent were optimistic. If this survey concurs with the majority of those in the restaurant industry, creative solutions to outdoor dining and taking a close look at the financial impact of in-house versus third-party delivery options may be the key to continued perseverance.