The Unseen Effects of COVID on Restaurant Management

The COVID-19 pandemic, and the economic downward spiral it’s invoked are affecting the hospitality industry in such a detrimental way that I don’t think a professional at any level of the industry could have ever imagined. Every few years, droughts spike produce costs. E-coli will induce a recall of some type of produce a couple times a year. You are always at risk of an unexplained infestation that may or may not get your establishment shut down by the local health department.

But this is obviously so different.

It’s now the end of August. For about six months in 2020, restaurants all over the world have had to adapt on the fly, just to stay open — which (and this cannot be overstated) was already a struggle for most restaurants in normal times. I’m impressed with every restaurant or hospitality establishment that’s managed to stay open.

By this point, everybody is very familiar with the superficial changes that bars and restaurants have had to make in response to the pandemic. Indoor seating is limited and spaced out (if even allowed at all) — and there’s no lingering from your chair anymore, unless going to the bathroom or leaving. Outdoor seating has spilled into parking lots and side streets, often under tents or behind ropes or ribbons, and I fear how the impending cold weather will impact that. Menus are disposable (or in some cases, totally digital), masks are mandatory for the employees, and curbside pickup now represents a major percentage of each restaurant’s income. Not to mention, as you leave, you can turn around and watch the staff obsessively sterilize everything you just touched. All of these things would have seemed more than a little curious a year ago, but we’re all accustomed to them now.

Then there are the changes that aren’t so apparent or obvious to the casual diner. Countless decisions dictating business strategy have been made — and continue to be made — by every owner or proprietor of a hospitality establishment, sometimes on a weekly basis. You might not realize it, but almost every restaurant operates on a very strict and calculated business plan. Let me try to paint a broad picture: it starts with establishing how much revenue needs to be made in a month, between expenditures (product, labor, utilities, bills, etc.) and what type of profit the owner wants to see. Then you take that revenue number and divide it by the average “cost per head” (the average amount of money each customer spends on food and drinks, before tip), and that’s how many customers you need to have in a given month to hit your fiscal goal. The more guests you have above that number is extra profit to the owner(s), but fewer than that, and you’re in the red.

Once restaurants were permitted to reopen (with conditions), all of those numbers needed to be re-established, based on how many guests you anticipate on a given night. For instance: let’s say a good Friday night used to have 130 guests, and would require a manager, two bartenders, five servers, two busboys, two food-runners, six chefs/cooks and two dishwashers. Now all of a sudden, a good Friday night is probably only going to be 30 guests. That means you’d probably only need one manager (who will also serve as the bartender), two servers (who will act as the bussers and food-runners), and maybe two guys in the kitchen (who will also act as dishwashers). That’s 15 staff that you aren’t having to employ now due to adapting to COVID-19.

The good news about that, you might say, is that those are 15 employees whose pay comes off the overhead. Most front-of house employees make their money on tips, and the guys in the kitchen aren’t usually making much more than minimum wage, so labor is not a big expenditure for most restaurants. But you still need to have the lights on, the water running and the gas for the stoves, so your utilities aren’t getting much relief. Presently, I’m not aware of much in the way of relief in rent/mortgage either. So overhead doesn’t come down that much, except in the way of perishable food product, but that’s meant to generally pay for itself (and chefs react to that on a day-to-day basis anyway). But you now have to pay for extra cleaning products, PPE for your staff, and picnic tables for outdoor seating. And at the end of the day, you’re still looking at a head-count less than a quarter of what it once was — ergo: a less than a quarter of your usual revenue stream.

So how do restaurant managers and owners pivot their business model to accommodate a constantly changing situation? Prior to the pandemic, owners never knew how many people were going to be ordering food from them on a given night of the week — but they had an idea. In the example above, Friday nights might not always give you 130 guests, but you could safely rely on between 100-140. Now, most places have very little idea of what their demand will look like each day at all.

With many people out of work, the scope of how much people are willing to spend on a meal has totally changed, which means that needs to be reconsidered within the budget. The always omnipotent threat of being shut down by a health inspector is now coupled with threats of being shut down for not abiding by COVID code, and the threat of a spike in local cases, requiring all businesses to once again shut their doors.

Just like everyone and everywhere else, the survival of a restaurant will depend on its ability to adapt to this new, alternate reality in which we find ourselves. Even that might not be enough for some, as while most of these places have managed to slow the rate at which they are sinking, they are still drowning. As someone who spent the last twelve years cooking food, I hold restaurants and the people who make them tick, in the highest regard. And I want to encourage all of them to continue to do whatever it takes to get through this.

In this regard, many places probably need to consider a total overhaul of their business plan and concept goals. Restaurants typically thought of as “fancy” should probably change their menus to offer a smaller selection of more affordable options. I know most owners open/design their restaurant with a very specific idea of what they want it to be, and work very hard to get to that place. I know that chefs are stubborn and prideful people, especially when it comes to their food, and they’re not likely to abandon a carefully crafted, budgeted and curated menu. I get it.

But we’ve all been making sacrifices. I may sound like a politician feigning compassion, but restaurants are in crisis mode. Nobody likes wearing the masks. Nobody likes being cooped up in their homes or apartments all day every day. We all want normal back. But right now, everyone is doing what they need to do to get by, and restauranteurs and chefs need to accept that in this instance, they are no different. Adaptability, now more than ever, is key.

Postscript: On a personal note, before being laid off, I was an employee of Bon Apetit, a subsidiary of Compass Group, working as a salaried sous chef at the central corporate HQ of Air BnB in San Francisco, CA. Air BnB deserves to be recognized for what they did for the entire food team of upward of 160 people, both hourly employees and salaried managers alike (but none of whom worked directly for Air BnB): despite shutting down their campus, and sending us home the second week of March (one week before California declared shelter-in-place orders), Air BnB continued to pay every member of the food team their normal weekly pay until the end of June. In addition, Air BnB has agreed to pay for every food team member’s benefits (through COBRA) until the end of April, 2021. And after employees were officially terminated in July, Air BnB funded a grant of up to $3000 available to every laid off full-time employee or contracted employee of the company. Not enough can be said about the compassion extended by one of the most significant tech giants in the world to their employees, doing all they could for as long as they could, even amidst their own economic collapse.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s