How COVID-19 Will Reshape Restaurant Industry

Posted on: July 29, 2020 by RMS Hospitality

Nearly five months after COVID-19 landed in the United States, many industries are still having to operate around the virus. One of those is the restaurant industry, which has seen major disruption in day-to-day operations. Full-scale restaurants once busy with dinner rushes can only operate at half-scale or depend more on features like delivery or to-go ordering. California had to reclose its dine-in restaurants again following a resurgence of COVID-19 in more populated areas, like San Diego and Los Angeles.

But this disruption isn’t limited to just restaurants as bars, coffee shops, and small markets have had to adjust to meet their customers’ needs while also keeping everyone safe. It’s safe to say all industries have been affected temporarily, but the restaurant industry may not be the same in the future. From economically planning ahead to figuring out how many staff members can stay on board, the restaurant industry faces many uncertainties.

The State of Restaurants

The restaurant industry is experiencing a drastic, never-before-seen scenario due to the COVID-19 outbreak. The outbreak forced restaurants to close or revert to only to-go or delivery, methods that significant players in the industry were starting to expand slowly. But with COVID-19 making its way through the U.S., to-go and delivery had to scale up quickly.

For restaurants, especially local and family-owned establishments, the decision to close their doors for good has had to be made in some cases. There’s no telling how long this will all last, but when the virus subsides, restaurants will have to decide if they want to reopen full-scale or keep working at a smaller capacity moving forward.

Some restaurant chains, like Chili’s and Applebees, operate at limited capacity in states where dining is allowed inside. Fast food establishments have mostly gone completely drive-thru or delivery, and options like pizza take-out and delivery are thriving.

The restaurant industry is relying on drive-thru. Preexisting capabilities are not limiting drive-thru restaurants as they are turning their parking lots into drive-thrus where necessary, and offering curbside pickup where customers call in orders and then text the restaurant when they arrive.

The same method is being used by pizza shops and local restaurants, allowing customers to text or call in when they arrive and have an employee put the food in the back of the car, contact-free.

Labor

One major part of the restaurant industry that is suffering is the backbone of the business, the employees. Restaurant employees have had to wear many hats during the various shutdowns, including food prep, answering phones, curbside carryout and drive-thru operations.

As restaurants have had to cut back on staff, they’ve had to think up in short, medium, and long-term solutions. One way establishments have responded is to cut hours of operations and open days. Instead of being open seven days a week, some have had to cut to five or six days a week. Instead of a 6am-10pm schedule, some restaurants have had to limit hours to 9am-7pm, for instance.

In some cases, operators are trying to reduce employee’s hours instead of letting them go completely. To reduce costs, some restaurants are trying to push to do more deliveries themselves and have called on each other to negotiate with third-party delivery services, such as Uber Eats and GrubHub to modify \ their commissions’ structure.

Working with Vendors

Restaurants are having to consider long-term solutions that ensure they don’t end up in a situation where they need to defer payments on essentials such as leases and paying vendors. Restaurants and operators are reaching out to landlords already to open a dialogue about the COVID-19 crisis and its economic effect on them.

For the most part, landlords have been open to payment arrangements, offering anywhere from three to four months of payment deferment, either in full or part, and to stretch out payments over the next year. However, this payment/financial plan isn’t sustainable for longer than a year. Having to keep the lights on and employees paid has presented an issue since restaurants have had to scale back to half- or no capacity with no real end in sight as to when operations will be back to normal.

About RMS Hospitality Group

At RMS Hospitality Group, our expertly crafted policies are written specifically for the hospitality industry. We offer custom-tailored solutions to meet any venue’s specific needs. For more information, contact our knowledgeable experts today at (888) 359-8390.

Posted in: Restaurant Insurance

COVID-19 Update:

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