Waiting Until This is Over is Restaurant Suicide
Newsflash: This crisis will never truly be over. We have experienced and are in the middle of long term tectonic societal changes. If a restaurant does not pivot their operational focus, they will suffer and perhaps fail. The question is not whether change is needed, but how fast can they change before burning through their capital, PPP, lines of credit, other loans, and maybe personal savings.
The Story: A 200+ location casual dining chain is in near absolute analysis paralysis as they stare at empty restaurants. They are trying virtually everything to keep the kitchen running, keep employees on payroll, control cash burn, and weather the tsunami. Their operational DNA is table service and a bit of bar service. Generally, they viewed Off-Premise Service as a distraction and simply non-essential incremental business and never really gave Off-Premise much thought. Until now.
This restaurant chain is trying everything in their experience to manipulate their kitchen expertise, technology, flow, and even their restaurant layout to accommodate an unknown service type, Off-Premise. Unfortunately, they don’t even know the questions to ask.
Knowing their pain and having the ability to help, we attempted to open a simple conversation. Their immediate response was, “Wait Until This is Over.” Click. This company is quite professional and not known to be disrespectful. Their uncharacteristic response was a stressed survival reaction born of helpless fear.
What they haven’t grasped is that even when this crisis ends, the effects will never truly be over. They truly do not have time to wait.
How Can Some Restaurants be Experiencing Record Sales?
Not all restaurants are suffering, in fact, many are booming right here, right now. How is this possible? The one food group on fire is pizza and the question must be asked why? People can only eat so much pizza. How is it possible that at the exact moment in time when most restaurants are suffering, others are having record sales? The secret is their Operational DNA.
Who is Successful NOW!
Delivery + Carryout Specialists are surviving and thriving, but that is only part of the story. Pizza and delivery sub houses are experiencing record sales, and their success is not the food group but their expertise in Off-Premise. Their success is attributed to their Operational DNA. Just as you are a specialist in table service or another service type, they specialize in the aspects and nuances of OFF-PREMISE.
An Even More Interesting Fact
Most of these “successful” restaurants are only playing with half a deck of the possible tools for Off-Premise success. Very few of them have all of the tools in place, and if they come close, those features are not driven by one central system. They may have a decent POS, they may have online ordering through another company, they may also have a basic rewards system from even someone else.
For One Moment, Set Fear Aside and Let’s Break it Down:
- People have changed and social distancing to some extent is here to stay in the foreseeable future. Even as the C19 winds down, there will be fears about a re-emergence. Furthermore, there is now also heightened concern about the formerly ignored but deadly bugs like the flu strains.
- Consumers will tend to avoid crowded spaces, particularly the over 55 demographic which is 36% of the dining population.
- Consumers are now eating at home. The decades of habitual reliance on visiting restaurants as their primary dining option has been replaced with cooking at home, prepared meals, and delivery / carryout.
Impact on Restaurants
- Overly tight areas like bars and nightclubs will be less attended.
- No longer will packed tables be part of the atmosphere. Consumers will view sitting close to strangers as invasive and tone deaf. Jon Taffer of Bar Rescue suggested that some restaurants and bars may lose 30-60% of their seating capacity. This is potentially devastating,
- Crowded waiting areas be not be acceptable and people may simply walk away to find a less crowded environment.
- It is not unfathomable that the Health Departments may step in and impose their guidelines for seating capacity, not just the Fire Department and building codes.
- The math is straight forward: Less crowds for less tables means less turns and less revenue.
- The result is predictable: Table based restaurants who stay their current course are in serious trouble. They need to get creative.
Who Survives? Whoever gets their product where the consumer wants it to be, PROFITABLY!
- Online for pickup or delivery.
- Call ahead to come and pick it up.
- Delivered to their door.
- Less crowded dining establishments.
Who Actually Grows?
- Those who make it easy for their customers to be their customers.
- Those who know their customers and add more to the list.
- Those who go directly at those customers and build a wall around them.
- Those who treat those customers as their most valued asset.
- Those who give their customers what they want, which is Off-Premise Service options.
- Those who have mission-specific systems and procedures in place for the now mandated Off-Premise Service environment.
The False Profit: Reliance on Predatory 3rd Party Ordering (3PO)
In a burning theater, why do people instinctively follow everyone to the front door when there is an exit only 3 feet to their right? When under extreme stress, humans assume the crowd knows best and follow without really giving it any thought. This is the dynamic in play right now as restaurants jump on GrubHub, DoorDash, and other 3rd party ordering systems.
The 3rd Party business model foundation is to have every consumer use them as their central focus when hungry. They make the case they will bring you incremental business that you would not normally get. That may be true on a very small scale but that is not what is happening. They have complex systems in place to hijack consumer searches for your restaurant. They will take a Google search for your website and redirect it to theirs even if you do not have an agreement with them. The 3PO companies are taking your customers who are looking directly for you and hijacking them to their website and then charging you up to 30%. These practices are entirely predatory and yet operators are flocking to them because everyone else is doing it.
The house is on fire. The wrong reaction is to willingly give up to 30% of your revenue to an unaffiliated service while giving your customer list to your competitors through that same service. When you turn over your customer to any 3PO, they are no longer your customers. The 3PO does not share the details of those customers who are ordering through them. If you cancel the service, you cannot take those customers with you and the service will carpet bomb your customers with your competitor’s offers.
With that being said, 3rd Party does have an added benefit, if and only if, their service is viewed as a new customer-generator and optimized within the FlatZero Operating System to capture them as your own customers.
What is OFF-PREMISE DNA?
- Customer Attraction: OFF-PREMISE DNA does not wait for customer traffic to find them and show up, they go get their customers.
- Customer Retention: OFF-PREMISE DNA has mechanisms in place keep those customers coming back through highly advanced and interactive rewards and loyalty programs
- Technology: The OFF-PREMISE operation has a POS system designed to make the customer interaction seamless. OFF-PREMISE specific POS systems handle customer information as part of the order process.
- Conversational Ordering: Taking an order over the phone is distinctly different than at the table.
- Online Ordering: OFF-PREMISE online ordering systems are POS driven instead of some third party faxing, emailing, or tablet sending over an order to be placed into a generic POS system.
- Curbside Pickup.
- Handling Delivery.
Learn How FlatZero Can Specifically Help Your Restaurant
Your POS system should run your business more efficiently, and make your profits explode. You will be top-of-mind when your customers are thinking of food. You will build repeat business with incentives, keeping them coming back. And you will be right where the next generation of customers want you to be: Online and in social media.