How are local restaurant owners adapting to COVID-19? (Case study)
April 07, 2020
In this 6-minute read:
- How is COVID-19 impacting restaurants?
- What precautions are restaurants taking?
- What changes have taken place in the restaurant industry?
- What creative measures are business owners taking to adapt to the coronavirus crisis?
- What’s in store for the future?
Since the beginning of the COVID-19 pandemic, restaurant revenue has declined by more than 75% in some areas (such a San Francisco and New York City). At first, this was largely due to the advice consumers were given to stay home (or even apparent unfounded bias against Chinese restaurants in particular), but now many states are enforcing dining room closures as shelter-in-place directives or orders are issued and enforced.
How is this affecting restaurants, and what are local restaurant owners doing about this large shift in how their business is operated?
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While some restaurants have had to close altogether (temporarily or permanently), many are shifting their operations to delivery and takeout services, even if they’ve never done this type of business before. It’s a way to keep business running, keep their employees paid, and keep providing food for their local communities.
We were able to interview the owner of a local dine-in pizza restaurant that has locations in Utah and Idaho to see how the business is handling the pandemic and what they expect from the future.
Throughout this article we’ll share the experience of this restaurant, Lucy’s Pizzeria, from the perspective of the owner, Geoff Padigimus, along with insights from our research of how other restaurants are being impacted by COVID-19.
How is COVID-19 impacting local restaurants?
While the impacts of COVID-19 on restaurants may seem obvious, the effects are different across the industry. Dine-in restaurants that have never offered takeout services are seeing drastically different results compared to fast-food chains that have always had drive-thru service and have easily adapted to a fully curbside/delivery/drive-thru business model.
Lucy’s Pizzeria has seen a drastic shift as they’ve had to close their dining rooms to customers. According to Geoff, about 60-70 percent of their sales were dine-in prior to COVID-19. So shutting their doors definitely hit them hard.
Fortunately, like most pizza restaurants, Lucy’s already had well-established takeout and delivery mechanisms in place, so overall, they’ve only seen about a 30 percent decrease in sales. In this market, we call that a win… particularly since up to 70% of their sales were from dine-in alone.
At this point, no one at Lucy’s Pizzeria is needing to work from home, and the owners are working to keep all of the staff employed if at all possible.
Geoff says that unfortunately they have had to let a couple of their high-school-aged employees go. “We wanted to make sure people that depended on an income were able to keep their jobs. And our main objective is to see what we can do to at least get a paycheck trickling in right now [for our employees].”
Many restaurants have seen similar experiences as their states go on lockdown and more people start ordering food to their doors.
A brief summary of national restaurant data during the COVID-19 crisis
Because there was such a fractured and delayed reaction to the coronavirus across the country, the numbers really vary by state. But here are the big milestones of March, 2020 from a national level:
Monday, March 9th showed the first sign of potential trouble ahead—restaurant revenue was down slightly on the 9th, 10th, 11th (-1% to -5%)—prior to that, revenue was had been consistently up year over year.
Thursday, Mar 12th, after the NBA had canceled its season, and several states started to announce schools were closing, restaurant revenue quickly dipped to a 13% drop, and that weekend represented a real slowdown, but people were still clearly going out (revenue was down around 25% that weekend). Remember, these are national numbers. Numbers vary in states that were subject to shelter-in-place directives earlier.
The following week (Mon 3/16 – Sun 3/22) was when things really started to tank on a national level—the drop went from -34% on that Monday, all the way down to a -68% decrease by Sun the 22nd.
We’ve pretty much been in a consistent -50% to -60% pattern since then, and as of early April, no significant recovery is apparent.
Read our full national restaurant COVID-19 report with charts updated daily here.
What precautions are local restaurants taking to ensure the safety of their employees and customers?
The food industry is highly regulated and has specific guidelines in place when it comes to hygiene and sanitization. Most restaurants (if not all) already had the necessary handwashing and hygiene precautions in place to ensure their customers’ safety.
Lucy’s Pizzeria was sure to share on their social media channels and in their restaurant that this is something that they have always done and they want to ensure customers they are taking the right actions to ensure cleanliness and safety.
However, due to heightened awareness and concern, Lucy’s Pizzeria, along with several other restaurants, has adopted extra precautions regarding employees showing potential symptoms of the coronavirus disease.
Geoff requires his employees to take a mandatory three days off if they show any signs of fever or respiratory illness, until they can be evaluated further. Lucy’s is also following all public health guidelines from its state officials and the CDC.
What changes have taken place in the restaurant industry since the pandemic began?
The largest shift in the restaurant industry has obviously been a forced, immediate transition from dine-in to takeout/curbside/delivery services. Restaurants that didn’t previously offer takeout or delivery services are struggling the hardest as they scramble to get these services started.
Check out our helpful article: How to get your restaurant started with delivery or carry-out during COVID-19
Obviously this crisis is having a serious financial impact on pretty much every business (for good or bad—grocery stores had their revenue jump 200% in some states). But beyond the changes in demands to the restaurant industry, owners are also seeing positive changes in how business owners, employees, and customers are working together to help one another out during this crisis.
“Overall, everyone’s looking out for everyone else,” Geoff says. “Humanity, in general, is showing more compassion. People are more willing to help out, joining co-op coalitions, sharing what they do for their businesses.”
Delivery services like DoorDash and Uber Eats have offered free delivery in most areas, and have waived or reduced their commission fees for local restaurants. Many restaurants are also separately offering free delivery through their own couriers.
What creative measures are restaurant owners taking to increase business during COVID-19?
Many businesses are learning that they have to get creative during this crisis just to keep operations going.
So, what are some creative things restaurants are doing?
Lucy’s Pizzeria is creating some fun new offers for their customers that could be great ideas for other restaurants too:
- DIY Pizza Packets–Lucy’s is offering do-it-yourself pizza kits with the dough, sauce, toppings, cheese, a pan, and basically everything a customer would need to make their own pizza. With schoolkids and parents all stuck at home, Lucy’s wanted to create a fun activity that the whole family could enjoy, while also feeding them at the same time. They even created a YouTube video to walk customers through the process. They will deliver these kits as well.
- Lucy’s Dining Bonds– We loved this clever idea from Lucy’s: “In this time of war, and for a limited time Lucy’s is asking you to spend now and reap rewards later! Dining Bonds are available for purchase. They are $40 dollars now and when the Dine-in ban is lifted by our Governor they mature and become worth $50! You can buy them directly online, or in-person during your takeout, or have them delivered. We also can mail them straight to you! All at a socially adequate distance!”
Beyond just creative ideas for sales, restaurant owners are finding that social media is a great place to market these new ideas. As customers are staying home and scrolling through their phones a lot more, social media marketing is the perfect avenue to reach them.
What’s in store for the future of local restaurants?
The sad reality is that not every business is going to make it through this crisis. That’s just the nature of this unprecedented, global pandemic.
However, local businesses should stay positive, optimistic, and look for ways to innovate, update, and contribute. Lucy’s Pizzeria’s owners place an important emphasis on employees and customers during this time. “Our main goal is that we make sure our employees are paid and that our customers are fed. We’re always pushing new deals and specials to help community members,” Geoff says.
At this point, they are doing what they can to keep business running and keep the bills paid just to make it through this pandemic. Eventually, the hope is that everything will start to move back to normal.
Hope for the future is what is keeping a lot of businesses and people moving forward right now. Despite what it might feel like, this pandemic won’t last forever.
If you need help keeping your business afloat until things start to get back to normal, there are emergency funds in place to help struggling businesses during this time. Womply is a verified agent that can help businesses find eligible lenders for emergency SBA loans during this crisis.
Want to learn more? Click here or call us at 855-208-8813 for a free consultation.
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