Dec 31, 2020

3 Ways Restaurants Are Getting Creative During COVID-19

With start-and-stop lockdown measures, lack of federal support for rent forgiveness, and public fears around COVID-19, 2020 has been brutal for restaurants.

Average revenue in March and April dropped 50%, though larger chains and quick-service restaurants adapted to a takeout-only model fairly quickly. Sales recovered nearly 25% over the summer, with many cities opening up regulations to allow for sidewalk cafes and parking lot seating. As temperatures drop, restaurants will have to get creative.

“What’s going to be difficult is we have to close our doors and windows and we don’t have places to put these people,” chef-owner of Cafe Sante Kyle Marshall told Eater. “That’s when the money dries up.” 

Moody’s, the bond rating agency, predicts that restaurant operating profit will decline by 30% overall, changing the industry outlook from “negative” to “stable” in October 2020. “This year, for the first time in a long while, the number of US restaurants is expected to decline, reflecting the devastating effect the pandemic is having on the industry,” Bill Fahy, Senior Credit Officer at Moody’s, stated in a press release. “And more closures are likely, depending on how long this operating environment continues.”

Operating in survival mode can be scary. But even if traditional takeout or restaurant models aren’t working, here are 3 ways restaurants around the country are generating income.

1. E-Commerce and Merchandising

Offering multiple types of products online can help to recoup some of the losses from diners staying home. New stores on Shopify, a popular e-commerce platform, grew 62% between March 2020 and April 2020 compared to the prior 6 weeks with an explosion of food, beverages, and tobacco products, which doubled during the same period. 

Consumers know that purchasing gift cards is one way to help their favorite neighborhood restaurant. These kinds of micro-loans from customers to business owners give restaurants a bit of grace and are an easy option to add to an existing website. “Gift cards…were an immediate Band-Aid,” Valeria Taylor, owner of Chicago’s Loba Pastry and Coffee, told Eater. “They were going to help me finish a regular payroll period for now and have something to look forward to in the future.”

 

 

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Merchandising is another popular option, especially for cult-favorite or destination restaurants. The food culture agency Care of Chan created the Save Restaurants Collection, featuring cool-kid items from New York City restaurants Dimes, Cafe Kitsune, Chez Ma Tante, and more. If you’re going to create your own merchandising, make sure to:

“Some places try and be too kitschy,” Nashville-based restaurant owner Austin Smith told OpenTable. “We want to sell not just souvenirs but items that people can actually put into their wardrobe and throw on any day of the week.” 

2. Marketing Trademark Food and Wine

E-commerce opens up other avenues, too. Restaurants with signature items can sell them online. Milk Bar, chef Christina Tosi’s award-winning dessert chain, normally sees 75% of their revenue from physical stores selling cereal milk ice cream, birthday cake truffles, and more. Once the pandemic hit, they pivoted to selling online and distributing baked goods to grocery stores

“We’ve been working towards bringing our vision to grocery stores for quite a while. Never in a million years would I have thought that come time for launch the world would be facing what it is right now,” Tosi told Bloomberg. They’re making packaged cookies as 20% of their revenue moving forward and have plans to expand beyond their signature cornflake chocolate chip.

 

 

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Even if you don’t have the power of Milk Bar’s marketing engine behind you, selling signature food items—through your own website or through popular food delivery service Goldbelly—can bring in some extra cash. 

Diners are hungry for their favorite foods from around the country. Goldbelly nearly doubled their traffic in the last year, adding big-name restaurants like Shake Shack, Momofuku, Lou Malnati’s, and more—so people can try New York bagels, Philly cheesesteaks, and Chicago deep-dish pizza anywhere in the US. “Many partners who were interested but somewhat reluctant have now embraced giving the platform a chance and said to us that they couldn’t believe they hadn’t done it sooner,” CEO Joe Ariel told CNBC. “This year, it’s going to be a different level.”

3. Virtual Cooking Classes 

Famous chefs from around the world have turned to YouTube and Instagram to deliver cooking classes in lieu of takeout and delivery. It’s a great opportunity to showcase back-of-house talent and build employees’ personal brands, whether it’s offering a virtual wine-and-cheese tasting or quick how-to videos for some of your iconic dishes.

Massimo Batura, a famous Michelin-starred chef, started filming folksy videos during lockdown when Italy closed its borders. He started answering cooking questions and offering easy demos, calling it Kitchen Quarantine.

 

 

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 “This is not a cooking show,” he said via Instagram. “It’s just a way to share with people from all over the world…we just want to be part of the world. There’s a beautiful sentence in Italiano from a poet, Franco Arminio [that translates roughly to]: yes, we are here, home, but we are talking with the whole world, so we are sharing with the whole world.”

Recovery Will Take Time

The restaurant industry won’t recover easily from 2020. 

Graph showing the recovery for casual and fine dining

Source: https://www.mckinsey.com/industries/retail/our-insights/eating-out-side-restaurant-dining-in-the-next-normal 

Restaurateurs should focus on 2 key areas right now:

  1. Providing a safe and positive experience with increased health and safety measures and communicating them clearly to customers 
  2. Developing a long-term economic plan for recovery, focusing on new initiatives that drive revenue

“In light of virus resurgence, anxious consumers, and continuing uncertainty, US restaurant operators have little choice but to become more agile and resilient than they’ve ever had to be,” writes Stacey Haas for McKinsey. “The sooner [restaurant owners] acknowledge and plan for the industry’s new longer-term economics, the better their chances of surviving the crisis and thriving in the next normal.”

About the author

Kayla Voigt
Kayla Voigt
Always in search of adventure, Kayla hails from Hopkinton, MA, the start of the Boston Marathon. You can find her at the summit of a mountain or digging in to a big bowl of pasta when she's not writing. Say hi on Instagram @klvoigt.

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