Long before buzzwords like “contactless delivery” and “social distancing” became a part of our daily lexicon, the nation’s eating and drinking establishments were bracing themselves for a world where online ordering, curbside pickup, and delivery were all having a major impact on the dine-in restaurant business. In a rush to adapt, these companies were installing equipment, changing physical setups, and taking other steps to shore up business in our on-demand world.
To say that the COVID-19 outbreak accelerated this shift would be a major understatement. Almost overnight, restaurants and bars found themselves operating in a whole new world where this time around it wasn’t consumers who were forcing changes – it was the local and state governments. Facing a global pandemic, 46 states prohibited dine-in service at restaurants and bars, and three more were allowing only limited service as of early April, according to the Kaiser Family Foundation. Some of those restrictions have since lifted – only nine states were still under full stay-at-home orders as of mid-May – but the fallout from the health and safety restrictions will continue to be felt at least through the end of the year.
Deemed necessary to help stop the spread of COVID-19, these measures took an almost immediate toll on our nation’s eateries. And while many were already equipped to run active takeout/delivery businesses, the sudden drop in business was too much for some to handle. According to data from the National Restaurant Association and research firm Technomic, 3 percent of U.S. restaurants – roughly 21,000 total – had closed permanently by April 1. The prognosis isn’t much better, with the expectation being that another 11 percent of businesses would close by the end of April – equal to 100,000 fewer restaurants. These closures have already resulted in the loss of more than 8 million restaurant jobs.
Loaning out its Test Kitchen
To stay alive, many restaurants are shifting their business and turning to distributors and dealers for help. When Eric Ellingson got the call from a customer who was looking for some modular equipment that could be used to quickly set up and mobilize its takeout/delivery operations, this executive vice president at Bargreen Ellingson in Tacoma, Wash., immediately thought of the company’s three test kitchens. Sitting idle due to the state’s stay-at-home-order, the facilities included just the right equipment to get the restaurant operations up to speed.
“This customer is taking a fine-dining model and transitioning it over to fine-dining meals to-go,” Ellingson explains. The rub was that any new equipment put into service now probably would become irrelevant in a post-COVID business environment. “We decided to loan out the equipment now because it wasn’t doing us any good sitting in our test kitchens anyway,” Ellingson says. “We made the decision to empty it out and get the stuff into places where it could be put to good use.”
Bargreen Ellingson has repeated that goodwill exercise across several different customers since the COVID-19 outbreak reared its ugly head, knowing that these resourceful moves are win-win for both itself and for its customers. Still, Ellingson isn’t fooling himself about the speed of the recovery period, which may take time to surface and to fully develop.
“As dealers, we’re going to need to get really creative with customer terms, financing options, and other strategies,” he says. “We’ll need to meet customers where they’re at when they’re reopening on shoestring budgets. That’s where we’re going to present the highest value as distributors.”
For 86 percent of restaurant operators, according to Technomic, sales and foot traffic have declined both as a result of COVID-19 itself and the laws enacted to help stop its spread. At Bad Apple in Chicago, owner Kevin O’Hare says the popular eatery saw its sales drop by 80 percent once the outbreak started. “We closed all of our dining rooms about two-and-a-half weeks ago, and they’re staying that way through April 30,” O’Hare said in late March. As of mid-May, the earliest Illinois restaurant are likely to reopen their dining rooms is late June. “Takeout and delivery are still options, and we’re doing both, but sales aren’t anything close to what we’re used to.”
Noting that Bad Apple’s surrounding neighborhoods are supporting the restaurant during this difficult time, O’Hare says the establishment got a slight boost when the state began allowing it to sell beer and wine to takeout customers. “That gave us a slight lift in sales compared to when this all started, but our revenues overall are still down to about 20 percent of what they were.”
Sanitizing ink pens and ensuring that they’re only ever touched by one guest; setting up its bar to serve as a central station for to-go orders; and gloving- and masking-up its employees are just some of the measures Bad Apple is taking during the crisis. “We have people upfront who are taking money and who never even touch the food,” says O’Hare, whose employees are also following the appropriate social-distancing rules while at work.
O’Hare says the physical restaurant didn’t require any new equipment or much adaptation to accommodate the “new normal” operating environment. It did transform its regular expo line (stainless steel tables where food was prepped for delivery to tables) into to-go stations. Those stations are equipped with all the bags, boxes, and other items needed to fulfill to-go orders. Guests picking up their food do so right at the front of the establishment.
The increased focus on carry-out and delivery begins at restaurants like Bad Apple but its effects are felt among distributors as well. At Fountain Products in Bethel Park, Pa., Vice President Angelo Piacquadio says the firm’s curbside pick-up business for paper and disposable products has been brisk, and that its Asian restaurant clients are doing particularly well right now. “Our Asian-restaurant business is still strong, and definitely stronger than some of our other accounts are right now,” he points out.
Business tends to come in waves, Piacquadio says, starting with high demand for hand sanitizer, cleaning supplies, and gloves (at the outset of the pandemic), and now moving over to items like takeout containers and other to-go supplies. Manufacturer inventory for some of those suppliers was beginning to run low in early April.
“I’ve had a couple of back orders already on my last two or three orders for foam containers,” Piacquadio says. “I might order a certain amount and only get half of that actually delivered.” In terms of restaurant equipment, he sold one local catering firm two pieces of equipment and a work table in late-March. Otherwise, he says demand for equipment has been low.
To accommodate its customers, Fountain Products added call-ahead ordering and curbside pickup, and began taking credit card payments by phone. “Once the driver pulls into our parking lot,” says Piacquadio, “he or she just gives us a call and we wheel out everything to their vehicle.”
Goodwill Now = More Brand Loyalty Ahead
The banner scrolled across the top of 101 North Eatery & Bar’s website paints a pretty clear picture of exactly what this Westlake Village, Calif., establishment is going through and the shifts it’s made to remain in business: “Now offering FREE delivery & no-contact curbside pick-up for lunch & dinner! Call, text, or order online. Beer, wine, & cocktail kits available!” Situated in the very first state to get a stay-at-home order that required all bars, nightclubs, wineries, and brewpubs to close, 101 North was forced to quickly shift from a primarily dine-in model to one focused on delivery and takeout.
“Adapting was initially a challenge and a strong learning curve,” owner Jeffrey Helfer says. “We had to transform both the food and bar menu to lend itself to takeout. For us, that has meant simplifying some of our menu, coming up with new items that can travel while not compromising the integrity of the food.”
The company also started selling its house-made, pre-mixed cocktail kits to thirsty customers, many of whom continue to support the restaurant during the pandemic. “The response from the community has been great, we are garnering a lot of support,” Helfer says. “Our do-it-yourself cocktail kits and cookie kits are really a hit.”
Operationally, Helfer says all it took was a “slight reorganization” to get 101 North ready to do business under the constraints of a statewide stay-at-home rule. Since the restaurant opened, he says it’s taken pride in keeping health and safety at the forefront of its business. “Constantly sanitizing our equipment, floors, and common areas is an ongoing theme,” Helfer explains. “In addition, we’re requiring that sanitized gloves be used in the normal course of business, with the use of face masks implemented immediately as an additional safety measure upon learning about the COVID-19 virus.”
Asked whether the establishment is getting any support from its restaurant equipment vendors, general manager Brandon Breceda says that because the far-reaching issue is impacting companies across the board, most are focused on their own operations right now. “In my opinion, if they have the ability to, I think distributors should be extending terms and voiding any late payments until this situation is resolved,” Breceda says. “I think that goodwill during this time will lend to great brand loyalty moving forward.”
Turning on the Dime
When Chicago shut down all sit-down dining for two weeks, it made national news. Then, when the shelter-in-place rule followed soon after, “the hospitality community was entirely rocked,” says Kyle Welch, president of Epic Burger, an eight-location chain that specializes in non-processed, all-natural options.
“It’s heartbreaking to see, but we all remind ourselves that this is temporary, and that we’re doing everything we can to help support our community,” says Welch, whose company is offering 50 percent off for all hospitality workers (whether they’ve been furloughed or not). “I’m really proud of how quickly our team rolled up our sleeves and got scrappy when this massive disruption hit everyone so hard.”
One of Epic Burger’s first moves was to convert one of its locations into a contact-free Epic Drive-In, Drive-Thru Pop-up. Situated in the Lincoln Park neighborhood, the restaurant features a large parking lot that now accommodates guests who pull up, are greeted by a team member, lower their car windows to give their orders (no touching of door handles or menus required), and park while the food is made fresh to order.
“The finished food order is concealed in a secondary plastic bag for added protection. Then we run out the food with freshly gloved hands within minutes,” Welch explains. “Not only does it allow for safe, streamlined, and easy ordering, but it also allows us to expand staffing.” The idea caught on quickly – “After all, who doesn’t want to pull up to a drive in for some burgers, fries, and a shake, throw on some tunes in the car, and enjoy a meal in a new setting for a change?” Welch adds.
Epic Burger also began using tamper-proof bags for takeout and delivery orders; launched a new mobile app that makes online and mobile ordering seamless; and integrated that app with a brand new “Epic Rewards” loyalty program. “We remain fully optimistic that we will pull through this, I’m really proud of how our team has helped lift each other up,” Welch says. “We’ve all banded together to help raise money for our furloughed staff; it’s completely voluntary and we’ve raised over $20,000 and counting.”
Ask Them What They Need
It’s up to dealers and distributors to help operators like Epic Burger make those sudden transformations. Brad Wasserstrom, president at The Wasserstrom Company in Columbus, Ohio, knows that many restaurants and bars just aren’t set up to handle curbside or takeout efficiently. As a result, the casual and fine dining segments are struggling under the weight of COVID-19. “They don’t have bar sales that they typically rely on; they need volume,” says Wasserstrom. “Establishments that can subsist on takeout and delivery need disposables. They didn’t have the amount on-hand that they needed (when the new laws kicked in) and we’re trying to help with that.”
The Wasserstrom Co., is also working to match inventory to volume levels while at the same time managing its own expenses and cash flow – a balancing act that’s become increasingly difficult in the current environment. To dealers that are walking the same tightrope, Wasserstrom says to start by asking customers what they need. If a restaurant operator requests extended credit terms, for example, then make those decisions on a case-by-case basis.
“Remember, we serve an essential industry – people have to eat,” Wasserstrom reminds fellow equipment dealers. “Some industries are hurting even worse. We will need to be prepared to support our customers when they are back up and running. There will be good days again. In the meantime, it’s time to tighten up and survive.”