One of the things that has occurred during the pandemic is that we have had to look at new delivery systems and new approaches to making money in restaurants. An idea I have recently been following is the reconfiguration of restaurant space. Restaurant spaces that are designed just for a small, intimate experience are having problems because of the restriction on the number of customers in the restaurants and also complying with social distancing.
And then there are other restaurants that have too much space that requires more rent and probably does not lend itself to the kind of ambiance restaurants need right now, particularly in light of the spacing. There is nothing quite as uninviting as going into a restaurant that normally has 20 tables, but now has 7 tables in a huge space. It just doesn’t seem to be the kind of feeling that restaurants are trying to provide to their customers. Something I have seen being done is taking these larger spaces, and they do not have to be that large, and converting them into either multi-concepts or new concepts with other retail.
Let me give you an example. If you have a normal 4,000- to 6,000-square-foot restaurant space and in the past, you could seat 100 to 150 customers, what you might look at is to convert the bar area to a casual-dining space. We are definitely seeing a trend towards casual dining—call it polished-casual dining—where it is somewhat upscale, but it is still counter service, or better yet, mobile application service. It will provide a dining experience up to the guests’ expectations, and you can get per-check averages up because you are serving a higher-end, fast casual experience. You are also hopefully getting some alcohol sales with the food and you can also keep your labor down because, again, it is delivered to the table rather than table service. This also fits in with the new normal of touchless service due to Covid.
Additionally, this kind of approach allows you to use some of the additional space for grab-n-go. It also may allow you to have a separate area for a takeout window or for assembling delivery orders, which, again, is a great revenue source. So if inside you can do $1 million and you can do $500,000 in grab-n-go and takeout, it is a $1.5 million restaurant. If you have even more space, you could use it creatively. I have seen gourmet grocery items, supplementing the prepackaged grab-n-go. Items. I’ve also seen more broader-based retail, unique artist-type items, such as pottery and unique kitchen gadgets. Now you have three spaces: the fast-casual inside dining space, the grab-n-go space and a small retail space, all within 4,000 to 6,000 square feet.
In order to generate more revenue, it’s important is to try to capture as many meal parts as you can. The nice thing about fast casual is you normally can capture at least two meal parts. Depending on your menu and guests, you can orient your dayparts more towards breakfast and lunch or lunch and dinner. Another idea is to convert your bar into a coffee bar in the morning and have grab-n-go items. Or have a full fast-casual menu for the morning if you are in areas that have high office concentration—or I should say will have in the future. Before converting, however, run the numbers to ensure the revenue can equal or exceed what the revenue was for these restaurants pre-pandemic.
An added bonus is that these multi-concepts under one roof give you much more flexibility in your labor costs and also your food costs because you are less dependent on filling the restaurant and you can then pretty much predict, after a few weeks, what kind of traffic you will have at the various times. It also lends itself very well to happy hours, if we can get back to happy hours in the future.
In these slower times, it makes sense to reevaluate your space, look at the options and think outside the big box.
Dennis L. Monroe is a shareholder and chairman of Monroe Moxness Berg PA, a law firm specializing in multi-unit franchise finance, mergers and acquisitions and taxation in the restaurant industry. You can contact him at (952) 885-5999 or firstname.lastname@example.org. For more information, please refer to www.MMBLawFirm.com.