Dine in Restaurants and Phase 3 of COVID: Patios, Pancakes & Rum Punch!

Dine-in restaurants have been one of the businesses that have felt the financial impact of COVID the most. With the government-mandated shutdown of all restaurants in mid-March, customers and business owners were both confused and scared.  Dine-in options at restaurants halted. Consumers were puzzled about how to adapt to their favourite restaurants shutting down and cooking more themselves. Fortunately, restaurants were one of the first businesses to open during Phase 1, but they had to go through the most changes and create new strategies with each stage of reopening.

With Phase 3, consumers now can finally go and enjoy their favourite dine-in restaurants. However, there is a fear factor of safety of being indoors with other customers on the nearby tables. This week on our Live, we discussed how restaurants have been impacted by COVID, what changes Phase 3 brought to their operation and the role of customers as they implement their business recovery plans.

Restaurant profits have been affected heavily by managing costs, inventory, the changing nature of the industry, sales and staff levels.

The industry:

The Food & Beverage industry is already a hard industry to be in because of their constantly changing nature. The models change daily even before COVID, and now it is changing even more drastically. The staff needs, trends in consumer preferences are analysed daily for decision making. For businesses that have a bigger scale of operations like Tyler’s, the importance of making the right decisions is very critical to maintaining a wider range of staff and restaurant locations than a small business.

Inventory:

Some businesses shut down during their busiest weeks which affected their annual profits heavily. Also, restaurants have a different nature than most stores in the sense that the products spoil over a short period of time. The government mandate to shut down businesses caused some restaurants like Christie’s pancake and dessert shop to waste their inventory, adding to their costs.

Sales and Product:

Some restaurants and cafes are more about the experience they provide than the product, such as Christie’s dessert shop. Since most of their products are related to brunch which more about gathering with friends and enjoying food than simply ordering takeout, they were pushed into experimenting with new ways to sell their food items. Thus, they started offering delivery, takeout, and selling frozen food items to keep operating.

Staff:

Aside from the sales and inventory factors, restaurants also must think of staffing. Finding the balance between how many employees to hire while trying to lower your costs can be very challenging. With the shutdown, many businesses had to let go of staff members. For a small business owner like Christie’s, this meant having no additional staff than herself. For a bigger restaurant chain like Tyler’s that needs more staffing at the management level, it was about deciding on the essential employees and temporarily eliminating others. Other than the financial implication of staffing, business owners also must consider their employees’ health and wellbeing while trying to maintain their business.

Business Protocols:

While coping with all the challenges, franchisee owners like Christie also have to follow some guidelines of the franchisor. However, the franchisor support wasn’t consistent due to the unexpected nature of COVID. Aside from franchisor support, each franchisee might also have different sizes, locations, and issues that make it difficult to cope with the process.

Are there any financial resources available to restaurants?

CERB is available to owners and their staff and might become the lifeline for some restaurant’s survival. For small businesses like Christie’s, a common strategy might be to reinvest the revenues back into the business to maintain the business and personally surviving on CERB.

There are some funding programs available from the government such as the Canadian Emergency Business Account (CEBA). This program provides interest-free loans to small businesses up to $40,000 and if the loan is paid back before 2022, business owners get $10,000 forgiven and only pay $30,000.

For businesses that rely on having staff, there is a wage subsidy program to help restaurants with staffing while lowering wage expenses. A strategy Tyler mentioned was how restaurants can optimise the level of staff by giving the staff a higher pay than CERB with fewer hours, so the restaurants can bring more employees and the staff can maintain a stable income and have the incentive to come back to work.

What advice can we give to restaurant owners to tackle these problems?

1. To be able to survive COVID, it is vital for businesses to realise that COVID has a long-lasting impact. Tyler mentioned how his business was ignoring some news features because they were about other regions or countries. However, it didn’t take long to realise that the pandemic had the same effects everywhere. Businesses need to adapt to the current COVID conditions to be able to survive this long term impact.
2. Businesses might try to mend their current business to fit into the new COVID culture. However, it’s important to treat your business as a new start-up. This allows businesses to understand the changing needs of the customers and adapt to the new market conditions to meet the new needs and grow their business. Restaurants might be getting fewer customers during this time, but customers still have needs and it’s about finding and meeting those needs.
3. Transparency is key to understanding the needs of customers, staff, and the business. Some staff members might not come back to work. Customers might fear to dine in at restaurants because of safety concerns. Being transparent and asking both the staff and consumers to share their thoughts and concerns are very important for businesses to adjust their strategy to operate their business and transparently deliver these strategies to customers who might have concerns.
4. Have change as your constant. Experiment with each aspect of your business to find what works best for your business. Whether its finding new ways to lower your costs or increase your sales, keep experimenting! Constantly experimenting with each aspect of the restaurant might help businesses find the bottleneck and create solutions to turn the weaknesses into strengths. This can be exploring new options of service such as takeout, delivery, creating a patio space around the restaurant, or adding and changing the items on the menu. For Christie, it was converting her perishable food items into frozen food products so it was more durable. You can also research highly demand ıtems in grocery stores and create your own marketplace to add new products.
5. Exploring resources that available are important for the restaurants to maintain and grow their business. Some restaurant owners can pivot their focus on alternatives such as patios to assist safety concerns about dining in. Also, some delivery apps give some incentives to businesses to keep using their services and grow their delivery channels.
6. Aside from exploring external resources, using personal connections, and leveraging your network has never been more important. COVID brought communities closer with everyone sharing resources with others. Christie used her network as staff when she didn’t have staff. For many small businesses, word of mouth through personal connections is increasing in importance to inform customers about the changes in the restaurant.

Is there any advice for customers to help dine-in restaurants?

Giving and receiving is a two-way street. If you want your favourite dine-in restaurants to be open for the upcoming months and years, show some support! If you are not comfortable dining in, ask the restaurant what options they offer and how you can support them.

Customers might not be sure about safety in dining indoors. Asking questions to the restaurants is a great way to ensure your safety while enjoying your experience.

We hope you enjoyed reading our blog about ‘Dine-in Restaurants and Phase 3 of COVID: Patios, Pancakes and Rum Punch!’. To learn more about our discussion, you can check the full live chat here. You can check last week’s blog article about ‘Retirement During COVID’, click here. Stay tuned to learn more tips on a new topic each week on our Instagram Live at 5 on Instagram! Aside from our live chats, we post daily financial updates on social media!