Is it worth it for restaurants to operate just takeout and delivery?
Interesting post that raises some questions about how smaller restaurants can operate in the "new normal" ... in many cases, take out makes more sense than dine in, particularly if there are restrictions in place for the number of diners allowed.
In response to North Carolina’s COVID-19 lockdown order in March, Christi White, owner of The Box Seat in Greensboro, shifted to only takeout and delivery. The sports-themed restaurant also started working with DoorDash in a bid to field more to-go orders for food like wings, burgers and buttermilk chicken tenders. The Box Seat employed 29 people before COVID-19 but now is down to three. That dramatic reduction aligns with a survey published last month by the National Restaurant Association: It showed that the U.S. restaurant industry has lost two-thirds of its workforce, more than 8 million employees, as a result of the pandemic.
Wearing masks and gloves, The Box Seat’s three remaining employees now whisk orders out to waiting cars and use safety barriers and social distancing to manage customers who come inside to pay. The restaurant’s sales have taken a huge hit, White said. “We’re doing about 30 percent of the order that we used to do, if not lower than that.”
Even for national chains, the costs and risks of limited operations can be difficult to juggle. In a LinkedIn post, First Watch CEO Chris Tomasso announced the national chain nixed its takeout-only trial and instead shuttered all company-owned stores temporarily, in part due to concerns about employee safety.
As Forlano sees it, payroll is the biggest expense for restaurants and can be managed down as part of a takeout-only strategy. The second-biggest expense, rent, is at the mercy of the landlord. “Some of our landlords came out early and said, ‘Hey, we’re giving you a month or two of free rent; we’ll share the load,’ but others are being really difficult,” he said. “They’re sending out letters saying, ‘Your rent is due on the 1st no matter what.’”
The middle-ground solution: suspending a portion of rent but requiring restaurants to pay it all back down the line. Forlano worries that could leave tenants with burdensome debt, which could in turn hamper their abilities to resume dine-in operations when the economy bounces back. “The restaurant business is hard,” he said. “You work on slim margins. My thing is for landlords to share the load.”
Here and there, though, operators are getting by with takeout-only strategies. Shortly after the lockdowns started, Alan Freeman, Carolinas operating partner for The Shopping Center Group, spoke with a sandwich-shop owner whose business had declined by only about 25 percent. A key variable: Takeout had always comprised anywhere from half to two-thirds of the shop’s total sales. “I told him he was crushing it,” Freeman said.