"In some ways, this is like when the meteor hit the planet and destroyed life as you knew it if you were a dinosaur," said Fred LeFranc, CEO of Results Thru Strategy regarding the pandemic’s impact on the restaurant industry. "We don’t want to be dinosaurs. We want to be able to adapt."
LeFranc was the moderator of the Franchise Times webinar titled "Rethinking, Reimagining, and Reopening Your Restaurant." Other panelists included Chris Simms, founder and CEO of Lazy Dog Restaurants; Zach Kuperman, senior vice president of insurance broker Hub International; Jim Balis, managing director of CapitalSpring; and John Hamburger, president of Franchise Times Corp.
"People are having to be creative about patios—restaurants with smaller or no patios are setting tables up in parking lots for social distancing," Balis said. "Managing wait is also a bit of a challenge with social distancing because people are coming out in droves."
The pandemic has also sparked technology conversations for most companies, Balis said, including app-based digitization and QR codes in parking spaces for customers to scan when picking up food. Though Balis has noticed the labor efficiency is especially strong with restaurants operating off-premises, another challenge with reopening dining rooms has been getting employees back in full-service spaces.
"We’re trying to get as many people back as we can, but if they’re making X on unemployment, they’re thinking, why would I go back to work and struggle through it?" Balis said. "But we are finding a number of people are getting bored, getting itchy to do something, so we’re picking up some staffing levels from that."
Hamburger described the stimulus checks and increase in unemployment money as a double-edged sword for companies. "It’s making people not want to come back to work, but also giving them extra cash to spend in restaurants."
Lazy Dog Restaurants, a casual dining concept with 38 locations in the U.S., opened its restaurants in the Texas market at 25 percent capacity for two weeks, and found the effort "surprisingly worth it," Simms said. They’ve managed to do about 70 percent of the usual sales volume, and as capacity allowances increase, Simms expects this number to rise.
"The biggest difference right now is kids aren’t in school, and parents aren’t going to the office, so people are eating all day long," Simms said. "We’re seeing the same behavior in guests—it’s a lot of pent-up demand."
Simms also noticed an increase in alcohol sales, even without bar tops open yet. And though there's a wait for patio seating all day long, he's also seeing a lot of people OK with eating indoors.
Lazy Dog Restaurants pivoted to single-use menus and contactless payment systems, which in the past only saw about a 1 percent adoption rate, Simms said. The goal is to hang on to all the takeout and delivery sales built over the past couple months while dining rooms are opening up.
For Kuperman, he said the diversification of revenue streams at restaurants with off-premises and their move to in-house delivery will be good for the health of the restaurant industry in general.
"People in the restaurant industry are always willing to share what works, and people are better for it," Kuperman said.
Meanwhile, Kuperman predicted that in a few months when people come off of unemployment, real estate will be cheaper and labor will be easier to attain for companies.
Hamburger added that though he expects the traditional lending market to be slow for a while, companies that were financially sound going into COVID-19 will be better off after and will see more opportunities for site locations. He highly recommended partnering with good operators.
"Sometimes landlords have more debt than tenants do, so if a tenant is interested in staying in a location, they have to get involved, sit down with their landlords, open up their books and show them what’s going on," Hamburger said. "Deferrals are the way people have worked it out so far, but we’re going to have to take it on a one-on-one, case-by-case basis."
Check out the full webinar here.