Industry Update
Opinion Article11 June 2020

10 KEY TIPS on re-opening your restaurant post pandemic

By Paul Sarlas, Founder/CEO at Savvy IQ

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It's been difficult for many operators and the only past experience we can use to best understand how to come out of this situation is the learnings from past recessions or economic downturns. And common sense would tell you that starting a business in hard economic times is a bad idea. As the current situation has caused businesses to close and now needing to re-open, this is no different to starting a new business during hard times. Something one would normally advise against. Overcoming this challenge will truly define the entrepreneurs amongst us.

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Although I refer to restaurants in this article, the relevance of the below can be applied to many different types of businesses.

How to re-evaluate your strategy to assist with the re-opening.

1. Re-visit your market research.

Initially when you opened your business, you would have/should have completed a market study that gives you an understanding as to why you chose that particular location for your business. These factors would have included what the demand generators are around you (cinema, tourist attractions, universities, malls, corporate office etc). However, these may have now changed. Some offices will have reduced their manpower in size, universities will not have as many international students, tourist attractions will not have the same volumes and it will take some time for malls and cinemas to become full again.

The first approach would be to look at diversifying your customer base. During an economic downturn, consumers become nervous and begin to cut back on non-essential expenses. For those who had experienced the last recession, you would have seen the wind down in spending at the early signs of an economic downturn. In this instance, this was happening during the lockdown. Therefore, a restaurant would require a larger market segment or audience capture than before. It's time to look for a wider audience. For those with a marketing team, they now need to re-evaluate the target audience and which new demographic they can now attract, above and beyond the past target audience pre crisis.

2. Win the competition's customers

You must continue to expand your customer/client base if your business is going to prosper in tough times. This means drawing customers from your competition.

Consider offering more value or differentiate your product compared to what your competition or neighbouring businesses are offering. Research your competition and see what you can do to entice their customers into becoming your customers. How are your competitors advertising? Visit their business locations and find out what their consumers like or don't like about those businesses, then tweak your own business practices accordingly.

  • With the above in mind, evaluate the following:
  • What demographics have changed in your segment/locality?
  • Who can be your new target audience and how do you maintain past audience that is remaining?
  • Will you change the menu offering considering the consumer changes?
  • What will be your new price point and value propositions?

Many new businesses are well-matched to succeed in economically challenging markets. However, even if your business is not ideally suited to a market slowdown, you may be able to modify your value proposition to conform to the realities of the market. For example, during the pandemic the home delivery model has kept businesses sustainable over this period and the home delivery service will continue to be heavily relied upon for the coming months. Therefore, adding home delivery to your business model, if you previously did not have this is an ideal addition. When survival becomes an immediate goal, products that help businesses weather near-term economic storms become especially attractive.

In addition, your initial market study findings would have defined your product offering and the price point that was based on the demographics and surrounding demand generators. The direct and indirect competition in the area would also determine your price point together with the value for money proposition you offered. Ask yourself the question now. Is your price point correct and what changes need to be made?

3. Re-evaluate your menus

Menu engineering is "cracking the code" in getting the most perceived value from the food you sell. This allows you to set a price that pleases both your guests and your bottom line. More than ever this is required. How have people's dining habits changed during the lockdown? I am certain that people will be eating much less of the food that was commonly available via home delivery during the lockdown as they have probably had more than enough. In addition, home cooking has become more prevalent during this period giving consumers the understanding of two factors. 1) The work it takes to deliver restaurant food and understanding the skill required; 2) the actual cost to make particular dishes. Therefore, create dishes that were not readily available over the lockdown and items that were too complex to cook at home and most probably would have been missed over this period.

Adapt your menu in order to generate more profit by analysing the new customer demand, sales, margins, and theoretical vs. actual food costs. Re-engineering recipes so that you use lower cost ingredients without compromising the taste can increase your bottom line. For example, if you use goat cheese in a recipe, experiment with swapping this ingredient with a mix of cream cheese and plain yogurt or sour cream for an inexpensive substitute that does not greatly change the flavour profile.

4. Re-evaluate your suppliers

Once your market study is complete, your menu is re-defined and your price point set, start negotiating with your suppliers whilst you have the power to ensure you obtain the lowest prices before suppliers start to ramp them back up. Suppliers are in the same position as the restaurateurs. They equally need to discount and offer increased service to ensure their business recovers. Therefore, make the most of this period to negotiate and find long term commitment.

Be sure to build strong relationships with several suppliers so you are not left in limbo should they go out of business over the coming months. Also, consider local suppliers/markets as many of the large supply companies may keep prices high as their overheads are still high.

5. Focus on your team and operations

Re-visit your operational systems before the re-opening. How you run your restaurant should always tie back into serving the needs of your target guest, however we are now aiming to find a wider demographic coupled with the added tasks of more stringent hygiene standards and implementation of new policies.

  • Standards for cleaning the front of house, kitchen, restrooms and general area that people constantly touch
  • How food is handled and rotated
  • How guests are greeted and seated, with the post Covid situation in mind
  • Order flow and how orders move from the guest, to the server, to the kitchen
  • Training standards and re-training the teams on product knowledge
  • Consider the technology and software systems that need to be updated to keep up with contactless capabilities such as no contact ordering, pick up and / or payment.

With most businesses reinventing online ordering and improving technological presence, people rapidly acquired skills to take advantage of these features and feel much more comfortable with online ordering, contactless app payments, virtual cook-a-longs and even happy hours.

6. Think about the team cohesion

This situation has unfortunately placed more people out of work, with businesses closing and redundancies constantly being made. For the businesses that continue, there will be more talent available in the market which will give the ability to recruit the 'A' team you have always been looking for.

However, before considering replacing your existing team, one thing to note is that 'great war stories create a loyal team'. Adversity brings teams closer together. It has been proven that the more arduous your collective journey, the stronger your team's cohesion. The more adversity a person endures, the greater value they associate with the experience and the higher their degree of loyalty to the team with whom they shared the challenges.

Make the most of the situation and bring the team together. Work as a unit to overcome the situation and create targets to be met with rewards for both the business and the team members over the coming months. Unify yourselves and boost morale by constantly speaking about success and the future.

7. Train the team and increase productivity

In the past, restaurants have had such a high staff turnover rate and it can sometimes feel like wasted work to train your restaurant staff, however this can be nothing farther from the truth, especially during these times. The most important element you can add to your business is to ensure consistent delivery of a high-quality guest experience by re-training your team to the specific standards of your brand.

Through good staff training and process enforcement you can reduce some of the inevitable problems that can occur on the re-opening. Make your restaurant team feel like they are part of a learning culture and give them support and opportunities for growth.

8. Look for ways to trim your payroll

Learn to operate lean and mean now. Review your productivity reports and see who your superstars are. Invest in your top talent now and get them focused on sales as well as cross-trained to help in other areas. Laying off several employees at one time will affect your staff's morale, and all restaurants are only as good as the staff who supports them. However, for the business to survive, which includes the lively hood of many people, there may be some difficult decisions to be made.

For the first few months upon returning, business levels will not be what they were pre-crisis. You may need to adjust your hours of operation and even close a couple of days per week. If Sundays and Mondays are typically slow, why not consider closing and running a 5-day operation for now. From your market study, if lunch trade will potentially be slow, look to multiskilling the team and reduce certain positions.

However, be wary of cutting back too much staff at the risk of sacrificing customer service. Treat it like a new restaurant and don't make any sweeping changes to your staffing schedule until you see patterns arise as businesses, tourism and travel begin to return.

9. Invest in marketing

It is often understated on how important your restaurant marketing plan is. Think critically about re-developing your marketing plan. Don't cut back on marketing. Many businesses make the mistake of cutting their marketing budget to the bone in lean times, or even eliminating it entirely, but this is exactly when your business needs marketing the most. However strategically plan where to spend the marketing bucks.

Now is the time to negotiate with certain platforms that may have been out of your price range. For example, cinemas are closed, and the marketing departments of the cinemas would be looking at signing the next advertiser, and now is the time to negotiate. Try and secure longer agreements at lower rates for most ATL marketing who now desperately need the business.

Communication is key. Tell your customers that you have re-opened and offer them deals to welcome them back. As mentioned above, consumer budgets will have changed during the lockdown, therefore consider their spending and entice them with offers.

10. Be Frugal

When there is a recession it forces you to be frugal about your business activities and this crisis should have you being even more frugal as a recession usually recovers in a year or so, however, we do not have an end date to this pandemic yet. Because of the downturn, you'll make it a point to search for the best prices and the most efficient ways of conducting business. You may do it this way simply because you have to, but in the long run, you'll learn a very important lesson that can enable you to run a profitable business for years to come.

If you can re-launch and operate a successful business during this period, just think of what you can accomplish once the economy booms again!

The Bottom Line

Remember that it's temporary. Economies are a constant cycle of ebbs and flows. Some are just bigger than others. Plenty of businesses made it through the 2008/09 recession and have flourished since.

Nothing can guarantee the success but implementing these can help ensure that your business survives the tough times and possibly even profits from them. It all begins with analysing how you're doing things now and looking for ways to improve.

Paul Sarlas

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