Operations

Restaurants Post COVID-19

Where do we go from here? More appropriately, where do we go from there? Of course, we don’t yet know where “there” is, nor the approximate time at which we’ll be, well, there. The existential question facing the restaurant industry is not only terrifyingly real, it is not playing favorites.

It’s long (in quarantine years) been surmised that independent restaurants and modest, mom-and-pop eateries will face an incredible struggle to not only carry on in the unknowable aftermath of protracted closures due to the COVID-19 pandemic, but to simply reopen. There was never any doubt that these concerns were well founded. However, if the rumblings from the most prominent corners of the industry prove accurate, the fallout could be worse than even the most pessimistic forecasts.

In separate interviews with The New York Times and NPR, two of the industry’s leading lights, Momofuku founder David Chang and Crafted Hospitality founder and head Top Chef judge Tom Colicchio, each recently sounded alarm bells for just about every restaurant in the industry, irrespective of profile or track record. Both men stated, emphatically, that, in the absence of government assistance, the viability of the entire service industry could come under threat.

As Chang, who launched his revolutionary Momofuku Noodle Bar in Manhattan in 2004, and has since opened more than a dozen restaurants worldwide and hosted a pair of food-focused documentary series on Netflix, succinctly stated: “If aliens showed up and the only thing they wanted to do was destroy restaurants, this is what it would look like.”

Across the industry, establishments have had little choice but to let hourly and salaried employees go, while paying whatever severance – both in terms of direct pay, as well as health insurance – they can afford. Most employees that were retained have been asked to accept reductions in pay for as long as restaurants remain closed.

A very real concern, according to Colicchio, is that a couple of months of payroll – about the most that many restaurants can reasonably afford to pay out in the absence of revenue – “doesn’t get us to when our doors are open.” As a double-whammy, restaurants that are proactively trying to soften the blow to their employees during this time face an increased risk of being undone by the liquidity concerns.

It’s well-known that, thanks to significant overhead, volatile supply chains and an inventory that must be monetized or discarded within days, even under normal circumstances restaurants operate on the slimmest of margins. An unsurprising consequence is that restaurants across the industry tend not to have much in the way of cash reserves. Throw in an earth-shaking event that both disrupts the ability to merely operate in the short-term and casts doubt over the simple act of social congregation in the medium term, and suddenly the issue of solvency is a concern – across the board. According to reports, Momofuku, along with iconic names such as Le Bernardin, along with the revered restaurants of Daniel Boulud and Danny Meyer face some exposure and are scrambling to bridge that liquidity gap. In a worst-case scenario, the ripple effects extend far beyond the restaurant, to the hugely-intertwined and symbiotic supply chain, impacting purveyors, farmers, delivery companies.

With renowned, financially-backed culinary institutions facing such challenges, what of the new restaurant with neither big financial backing nor name recognition, or the modest mom-and-pop shop? According to Chang – rightfully, it should be said – small culinary businesses face an uphill battle even getting their voices heard by the government, let alone receiving any type of meaningful aid. An unfortunate consequence could be that big chains will dominate the ranks of surviving restaurants. Beyond the obvious financial toll, another casualty of such a shift would be the craftsmanship and diversity that’s pervaded the restaurant scene over the past decade-plus, dealing a blow to the United States’ once-growing awareness and appreciation of culture and diversity through food.

Against such a backdrop, it’s become abundantly clear to industry leaders that drastic and innovative steps are needed in order to to preserve the financial health and vibrancy of U.S. restaurants. Colicchio, a longtime activist on issues related to restaurants and their suppliers, as well as on those pertaining to the eradication of hunger, is a founding member of the Independent Restaurant Coalition, a restaurant industry group that is lobbying Congress for relief for the industry. Coliccio say that the group is seeking a “stabilization package” that provides protection for service workers on the front lines, and beyond. He says that such an aid package should enable “income replacement that will go to cover employees, or pay suppliers, and sustain us through the losses that we’re going to incur for the next at least eight months to a year.”

Coliccio also provides examples of supply chain challenges brought about the pandemic, and an opportunity to allow the industry to productively weather the storm. He points out that the facilities of many food producers are set up to do certain things, and that pivoting, to the extent that it is possible at all, requires an infrastructural shift that is simply not feasible for individual businesses.

An example is that he provides is of a milk distributor, which purchases milk from dairy farms and produced milk for institutions — college campuses, hotels and the like. Perhaps the producer’s product is a 5-gallon container with a plastic bladder. With virtually all of these institutional customers closed, this producer no longer has a market into which to sell its product, which in turn hurts the dairy farmers that are their suppliers, who are now forced throw out their milk, as well as the logistics providers that enable transport of raw materials and finished goods along the supply chain.

Similarly, he notes that animal farmers grow their livestock to a targeted size. The farmers don’t slaughter the animals. They just grow them and send them to the slaughterhouse. In many cases, these targeted sizes are designed to accommodate producers’ infrastructure, to produce specific cuts of a certain size. With the closures of slaughterhouses, there’s suddenly a growing number of animals that have reached (or are approaching) a particular size that now have nowhere to go.

Coliccio suggests that, rather than simply discard these food items, take a loss and potentially create food shortages and supply disruptions, producers continue to move forward with those items that can be still be produced, supplying them to temporarily shuttered restaurants. He suggests that restaurants, rather than attempting to provide their regular menus, temporarily begin producing simpler, more streamlined menus, based on most readily available foods, resulting in restaurants serving as community feeding centers, offering less expensive menus for delivery, and for food pantries and distributors.

This would serve as both a means of survival in the leanest of times, and help to provide food to those in need. Additionally, there’s a good chance that, for at least a while in the aftermath of the pandemic, the in-restaurant experience will take on a different feel, with reduced seating, bartenders and servers likely wearing face masks, and relatively quick turnover of tables, so that everything can be fully disinfected prior to the next party being seated.

These factors, combined with lingering nervousness on the part of customers and the newly-learned proclivity for in-home convenience are likely to accelerate a shift in the restaurant business model. In his comments Chang notes that the transition from in-restaurant dining towards a more delivery-centric model is not a flash in the pan. It might not have felt as urgent or inevitable six months ago, but the matter of enabling customers to enjoy a broader range of culinary experiences in their own homes was always going to have to be addressed.

Obviously, the expectation would have been for a more gradual evolution, but the current crisis is forcing restaurants to embark on a more spontaneous implementation. The stage is set for another convergence of of art and science, as restaurants strive to preserve the sensory experiences we crave, while turning to technology for increased efficiency and scalability. From the most casual of fare to the high-end, the issue will no longer be whether to offer delivery, but how to deliver higher ticket dishes to diners at home with out sacrificing the quality on which reputations have been built.

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