Restaurant C-Suite COVID-19 Issue | Summer 2020

SUMMER 2020

INSIDE: RESTAURANT DELIVERY DISRUPTION PANDEMIC RESTAURANT DESIGN Q&A: UNDERSTANDING CONSUMERS EMPLOYEE RETENTION STRATEGIES AND MORE… RESTAURNTCSUITE.COM

Restaurants are reopening for business, and we can fast-track their success: • Enhanced customer communication • Profit optimization program when every penny counts • Recipe costing program for improved food & paper margins • Marketing solutions, including coaching and loyalty programs

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Resurgence@arel7consulting.com | RESURGENCE.AREL7.COM

TABLE OF CONTENTS SUMMER 2020 04 Editor’s note 06 Q&A: Suzy Badaracco on COVID-19 impact on consumers, food trends 11 Restaurant delivery spreads into next evolutionary chapter 17 Design ideas for a pandemic world 21 Reducing friction in ordering 27 How to attract, retain employees amid a pandemic

BUSINESS Executive Editor Rick Zambrano contactrick@eaterypulse.net Eatery Pulse Director of Photography Anthony Torres Assistant Editor Margaret McConnell Editorial Designer Ashley McCarty

About Restaurant C-Suite Magazine Restaurant C-Suite Magazine is distributed by Eatery Pulse Media. Eatery Pulse is a primary source of national restaurant industry news and content, providing information services, consulting and a creative, customcontent studio for business. This digital magazine was specifically created for multi-unit restaurant executives. It delivers the most highly-impactful news for the restaurant industry’s top leaders and visionaries. Today’s C-suite executives and their managers need information that is carefully selected, meaningful and delivered in a seamless, cohesive fashion.

Stay updated with all our content at subscribe.restaurantcsuite.net.

Contributors Anthony Jabaly, Kara Nielsen, and Eric Nomis To place an ad, contact sales@eaterypulse.net.

Powered by On the cover: Illustration by Ken Duquet.

Photo Left: Photo by Bara Buri.

Copyright 2020 Eatery Pulse Media.

RESTAURANT C-SUITE 3

Photo by Andrew Seaman.

Editor’s Note To say these are challenging times for the restaurant industry is an understatement. Between April and May alone, the restaurant industry lost $80B in sales due to the impact of both the coronavirus illness itself among staff and customers and the much-needed severe restrictions that arose in response. Some restaurant operators closed temporarily; others have shuttered for good. Restaurant operators that have been able to persevere have evident similarities: creativity, a grip on fundamentals and a hunger for taking a greater share of business in their market.

Restaurants had to pivot to alltakeout business. This reinforced many of the core values of successful restaurant businesses, absent the dining room—core values,such as serving customers where they are, taking customer & employee safety seriously and communicating to and engaging with customers. But are there longer-term keys to resilience that operators of surviving restaurants can take away from this daunting and historic episode in foodservice history?

restaurant design. In addition, we look at several approaches that restaurants can take to attract post-pandemic business.

...Eatery Pulse Media has launched a Restaurant Resurgence Program to help align all our services with the needs of restaurant operators during reopening.”

Many questions linger. Will customers come back to restaurant dining rooms? What will attract them? How will offpremises business factor into the next chapter of the restaurant industry? We explore some answers in this magazine issue.

For example, we know for certain that COVID-19 will have lasting impact on multiple aspects of

RESTAURANT C-SUITE | Restaurant news that’s fresh, informed, inspired (by you) 4

Based on our principles of having restaurant operators’ backs, Eatery Pulse Media has launched a Restaurant Resurgence Program to help align all our services with the needs of restaurant operators during reopening. This program will affect almost all facets of our information services, consulting and learning series.

We hope you’ll find this Restaurant C-Suite Magazine issue helpful and insightful.

Sincerely,

Rick Zambrano Executive Editor contactrick@eaterypulse.net

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POWER UP YOUR PROFITS.

MENU INNOVATION PROFIT OPTIMIZATION RECIPE MANAGEMENT MENU ENGINEERING

arel7 restaurant consulting LEARN MORE AT AREL7.COM/CONSULTING-RESTAURANT-REOPENING

Q&A | Suzy Badaracco Covid-19’s impact on consumers, foodservice trends In this interview, Restaurant C-Suite Magazine speaks with Suzy Badaracco, president of Culinary Tides. Badaracco joined the food scene several years ago. She has become an established authority on consumer products and foodservice. Culinary Tides, Inc. practices Chaos Forecasting and uses Military Intelligence analytics. She recently authored the company’s annual report, Shifting Sands: Trends Shaping the Food Industry in 2020/21.

COVID-19 has caused an “amplification and acceleration of the tide that was already rolling in,” says Badaracco. “It’s no less significant for its abruptness and shock value, but pandemics can have the effect of shaping and altering the trajectory of already-identified trends.”

Restaurant C-Suite Magazine: How would you describe today’s consumer during this health crisis and as we go into reopening Phases One and Two? Also, how does the economic impact of COVID-19 play into consumer sentiment?

Suzy Badaracco: There are two different issues you are dealing with. We have moved from a stall (occurs when economics are fine but consumers behave as if they are in a recession) to an actual recession. Both a stall and a recession cause psychological fear.

Covid-19 has caused both psychological fear and physical fear. Covid-19 accelerated the stall toward a recession. The initial psychological fear caused panic buying and hoarding in which cost was no issue. A secondary reaction will reverse the cost-is-no-issue stance and budget will override convenience. Consumers will trade down across the board, especially with taxes coming due and continued unemployment.

The physical fear will cause product, space, and brand avoidance. The secondary reaction will produce product, space, and brand abandonment.

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RCS: Tell us how this understanding can benefit restaurants and foodservice companies: what might be the best ways to communicate to consumers/diners and bring them back?

SB: Address and correct the fear, not the product. Understand and address real vs. perceived fears; although consumer behavior will present the same way, they are handled with different approaches. Real fears are best handled with facts of how a company is keeping the consumer safe. Perceived fears should be corrected with education to dissolve each perceived fear.

There is going to be a lag between restaurants opening and consumers being comfortable enough to return--a hangover or PTSD effect that COVID-19 will cause. The recession will also prevent consumers from returning to restaurants, due to financial devastation. The best combination approach for a company to follow is to tell consumers how exactly they are keeping them safe and also express empathy.

Trust will calm fears.

RCS: Lately, people have been talking a lot about eating and serving comfort foods due to customer anxiety. What food & beverage items and categories would you recommend restaurant operators carry on their menus, and what might be some that they might want to avoid?

SB: When comfort food appears as a trend, it is a sign of fear. So, it is never a good sign when it materializes.

We were already heading into a recession; what COVID-19 did was accelerate and amplify that course. Because of COVID-19 we were plunged quickly into an economic downturn. Comfort food cannot track in that quickly so the hybrid position has taken hold. Global comfort or

regional USA comfort is a better stance to take. Food and beverages represent an escape from reality. Create hybrids by combining a familiar, retro, or historical base with trendforward seasonings, add-ins, and preparations.

Make sure they match each other in voice, personality, and tone.

RCS: Do you expect some permanent changes to the way we approach food & beverage offerings in restaurants, or is this part of a passing stage or chapter in the consumer timeline?

SB: After months of health-related uncertainty, immunity will rise to the top of most consumers’ functionality demands.

The category of foodceuticals is broad and encompasses a range of ingredients and target areas, but for the near-term consumers will look for foods and beverages that provide additional protection as we move out of the current crisis and into the next flu season.

Interaction of food and function allows people to feel in control of health. Controlling one’s diet lends autonomy, but consumers will be more alert to clinical research and authentication of health claims or true ingredient efficacy. There is a danger of foods or food groups being villainized or seen as false heroes.

After a period of intense anxiety and fearfulness, consumers will demand even more transparency and greater levels of food safety from the retailers and foodservice operators they visit as well as the foods and beverages they purchase. Confusing labels, unfamiliar ingredients, and opaque sanitation practices won’t cut it in the post-COVID-19 reality.

It is difficult to know how economic fallout from the early restrictions will unfold through the end of 2020, but certainly many people will be dealing with spending limitations. This will make consumers particularly conscious of where their food and beverage dollars are spent and the value received from both the experience and the cost.

Coming Soon WINTER 2020 Food trends 2021 How to sine in a digital world Restaurant sales Restaurant trends 2021

SPRING - RECOVERY ISSUE 2021 Forecast Tomorrow’s restaurant workplace Virtual food businesses The state of suppliers PPP

LATE SPRING - BEVERAGE ISSUE What’s hot as summer approaches A dive into plant-based Functional beverages Barbecue spotlight Farm to glass RESTAURANT C-SUITE 7

DESIGN FOR THE

FUTURE

RESTAURANT DESIGN ADAPTS TO A HEALTH CRISIS What does the future hold for restaurants? In our article on page 17, we talk to top designers who provide insights into the short-term future and the long run ahead. Consumers are not likely to forget the pandemic even after a vaccine and effective treatment regimen are available.

Illustration by Ken Duquet.

RESTAURANT C-SUITE | Restaurant news that’s fresh, informed, inspired (by you) 8

OFF-PREMISES

DISRUPTION

AN EVOLUTION IN RESTAURANT DELIVERY AND PICKUP Operators surveyed are looking for a third-party delivery shakeup, but concerned about mergers.

See the % of operators who would:

WOULD LIKE A FLAT-FEE COMMISSION DELIVERY

THINK THIRD-PARTY FEES SHOULD BE CAPPED BY LAW

ARE CONCERNED ABOUT THIRD-PARTY PROVIDER MERGERS

76%

71%

69%

% of restaurant operators

Source: Technomic

Also, Starbucks is focusing on its Pickup Stores, and expanding that format. These service as order-ahead and pickup locations, as well as hubs for third-party delivery to local markets. A total of 400 traditional stores will close this year as the coffee giant evaluates its real estate strategy. Low-traffic mall locations are most at risk.

Uber is the latest company to bet big on restaurant delivery consolidation as it agrees to acquire Postmates. Not only does the deal help the Uber Eats platform gain efficiencies and compete against DoorDash, but it also gives Uber an entry into the delivery of other goods, including groceries, homewares, prescriptions, and more.

MONTH ANNOUNCED

DEAL VALUE

Just Eat Takeaway to buy Grubhub

June

$7.3B

Uber Technologies to buy Postmates

July

$2.65B

Photo by Starbucks.

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SMART

ON RENT

RESTAURANTS FAVOR ABATEMENTS, CATCH UP ON DEFERMENTS After three (3) months of rent deferment, commercial tenants are starting to feel nervous about allowing any more arrears to accumulate without a more permanent solution with landlords. They’re really looking for rent forgiveness since it’s still uncertain how brick and mortar are going to fare even after government restrictions are lifted and consumer spending habits move towards virtual and online options. Tenants are feeling as though once the emergency dissipates, their arguments for why the purpose of their lease is frustrated will evaporate too.

Peter Anthony Jabaly of Jabaly Law - He began his legal career with the New Jersey Office of the Attorney General before transitioning to private practice. Having worked in both the public and private sector, Jabaly has accumulated experience and knowledge that has proved invaluable. His high-impact practice focuses on business matters.

Photo by Masarath Alkhaili.

RESTAURANT C-SUITE | Restaurant news that’s fresh, informed, inspired (by you) 10

Off-premises business Restaurant delivery speeds into a new evolutionary chapter

By Rick Zambrano

The current pandemic has infused momentum into restaurant delivery. At the beginning of the pandemic, 32 percent of consumers indicated that they had ordered delivery at least once per week. More recently, 73 percent of consumers had ordered restaurant delivery in the immediate past week and 27 percent had ordered thirdparty delivery in the same timeframe. These insights from a Technomic webinar and the firm’s COVID-19 updates shed light on a tremendous appetite for delivery, as Americans seek out safety and abide by CDC and state recommendations keeping them at home.

Restaurants are differentiated by convenience or the experiential, suggests Technomic’s David Henkes, Senior Principal, Advisory Group. He points to the success of many

casual-dining operators during the pandemic as an indicator of how valuable off-premises business is to restaurants. “Going forward, the importance of having an off-premises strategy is vital.”

“Technology is a pure enabler of online ordering,” Henkes adds. At the same time that consumers’ technology adoption is increasing, so too is their desire for the convenience of delivery. In a Technomic webinar, “Off-Premise Shift,” conducted by Principal Melissa Wilson, she outlined a “dual-demand” environment in which restaurants will be operating, as consumers are expected to continue using multiple formats of off-premises foodservice: drive-thru, delivery, pickup, and curbside pickup.

and restaurants using two or three different third-party delivery service providers. He believes that loyalty is the inevitable key: Third-party providers can offer incentives for exclusivity and restaurants need to generate more consumer loyalty as well, so consumers become inclined to use fewer services.

Delivery still faces a growing chorus of negative publicity. The high third-party commission fees paid by restaurants can be burdensome and have been capped by some cities, including San Francisco, Seattle, New York City and Washington, DC. During the pandemic, independent restaurants have been using employees to make deliveries.

New restaurant product lines, including family meals, meal kits and pantry items have beefed up the selection available to be driven to the waiting arms of customers.

A dual-demand environment

Tock 20 provides a comprehensive suite of solutions, allowing reservations, digital ordering and contactless payment. Photo by Tock.

Delivery disruption Next to drive-thru, which is an area in which limited-service restaurants have been dominating, delivery remains a highly-prized convenience--one that currently is seeing disruption and shift. The $7.3B acquisition of Grubhub by Just Eat Takeaway is poised to upset the apple cart. Just Eat has global reach, while Grubhub needs capital and resources to make a comeback in its race against DoorDash and Uber Eats.

“It speaks to a large degree that you need economies of scale,” says Henkes. The alternative to the Just Eat acquisition was a rumored potential purchase of Grubhub by Uber Eats, which would have faced antitrust concerns, he noted. Consumers and operators have shown no desire to be faithful, with consumers ordering from more than one app, RESTAURANT C-SUITE | Restaurant news that’s fresh, informed, inspired (by you) 12

Consumers are ready for the convenience of delivery while concurrently seeking other forms of takeout. In foodie markets like Washington, new delivery services are launching. DC ToGo-Go is a new delivery service launched by restaurants owners that understand the business. The service is designed to be a solution for the Greater Washington, DC Region, which, like many urban markets, has restaurant owners juggling different providers and technologies to build back their businesses.

According to DCist, Chris Powers and coowners Ivy and Coney’s Adam Fry and Josh Saltzman are rolling out their own online takeout and delivery platform. Their app collects fees of 5 to 15 percent (versus the 30 percent collected by third-party delivery services). Online orders that are for pickup can be fulfilled for the lowest-tier rate of 5 percent, while the next tier of 10 percent is charged to restaurants that have their own drivers. A new delivery service using To-Go-Go’s own drivers is forthcoming, and will be charged at the highest rate.

“Maybe there are some learnings that we’ll take and build upon,” suggests Henkes. “It also has to make sense with the restaurant business.

Saladworks partnered with REEF Kitchens’s mobile, ghost kitchens to expand capacity in new markets. Photo by Saladworks.

Margins look horrible so people (starting delivery services) have to be familiar with restaurants and how restaurants make money.”

Ghost kitchens (or virtual kitchens) and virtual restaurants are further proof that the restaurant industry expects delivery demand to accelerate over the next few years. In the past two months, hospitality management company sbe launched its own set of ghost kitchens to create delivery-only brands, leveraging its real estate and food halls. Its third delivery-only restaurant brand, Plant Nation, launched in May, will grow to 40 locations nationwide if all goes according to plan.

In May, Saladworks partnered with REEF Technologies to expand its delivery capacity without building new stores. The fast-casual chain will use third-party providers to deliver the food. Moreover, a new ghost-kitchen service, Crave Delivery, plans to operate in 50 high-growth markets across the United States by the end of the year. Its business model calls for the delivery of upscale food, partnering

with high-end restaurants and top-tier chefs.

According to Technomic, 53 percent of operators used ghost kitchens during the pandemic lockdowns. Prominent forms of ghost kitchens include chain-run ghost kitchens like Kitchen United, and aggregators such as DoorDash Kitchens, notes Henkes.

“Ghost kitchens provide efficiencies in deliveries and cost savings. New operators can create new brands… and run virtual restaurants.”

Clearly, not all customers will be flocking back to restaurants for dine-in service, whether for quick breaks, lunch visits, client meetings or after-work dinner outings. The dual-demand environment puts customers in the driver’s seat, increasingly demanding the convenience of food delivered to where they are at a fair price. As part of “safer-at-home” policies and work arrangements, delivery demand will persist and grow; restaurant operators will need to fine-tune their approaches to make the most of this new normal.

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ADAPTING

TO OVERCOME

CREATIVITY AMID THE PANDEMIC Fabián Von Hauske, Chef/owner, didn’t have the staff to keep both open so combined Contra and Wildair into Contrair, a concept they came up with when Contra and Wildair were forced to close to fight the crisis. The menu features Q’s Sunday Biscuit with umeboshi butter, lamb birria stew, jerk chicken and even braised tripe. Desserts also exude comfort - rice pudding, ice cream, chocolate pudding dubbed “Dirt Cup.” Provided by Kara Nielsen - She is Director of Food & Drink at WGSN, a trend forecasting and consumer insights group. Nielsen has deep experience tracking and translating food trends for business growth.

Photo by Contra, New York City.

RESTAURANT C-SUITE | Restaurant news that’s fresh, informed, inspired (by you) 14

FLEXIBILITY AMID A

PANDEMIC

LEVERAGING TAKEOUT BUSINESS WITH FLAVOR On the Oakland/Berkeley border, Chef Russel Moore (of Camino in Oakland, CA, now closed) converted his corner restaurant, The Kebabery, to a take-out spot serving comfort fare that the chef is inspired to cook.

I ate a meal from there last week - lamb skewers, roasted vegetables including corn on the cob, yellow lentils; this week it is fried chicken, roasted King Trumpet Mushrooms, and some sides, flatbread and dessert. https:// thekebaberyoakland.square.site/ He uses local produce.

Provided by Kara Nielsen - She is Director of Food & Drink at WGSN, a trend forecasting and consumer insights group. Nielsen has deep experience tracking and translating food trends for business growth.

Photo by The Kebabery.

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SAFETY & SANITATION

MUST-HAVES

WHAT CONSUMERS WILL DO WHEN THEY RETURN TO REOPENED DINING ROOMS Safety & sanitation can’t be emphasized enough. See what is top of mind for customers as they return to restaurant dining rooms (proportion of survey respondents indicates what they are likely to do once returning to reopened dining rooms): • Wash my hands more - 86%

• Avoid uncooked foods - 64%

• Maintain distance from other diners - 86%

• Avoid ordering shared foods - 59%

• Avoid crowded waiting areas - 83%

• Maintain distance from own party - 52%

• Avoid “open” food - 79%

• Wear gloves / masks in restaurant - 44%

• Disinfect / wipe down surfaces - 66%

• Bring own utensils / straws - 35%

Source: Datassential webinar Running through the fire - planning the future of restaurant menus.

Photo by Gor Davtyan.

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Restaurant Design Restaurant design ideas for a pandemic world

By Rick Zambrano

Design will play a defining role in the restaurant industry’s next chapter. The COVID-19 pandemic has introduced layout themes that will be cemented over the next six months.

Moreover, restaurant operators will lean on design both to navigate reopening restaurants and to keep customers and employees safe.

For example, Chris Degan, owner of Tricky Fish at CityLine in Richardson and Fort Worth, Texas, is separating tables with plexiglass as a way to maximize capacity during reopening.

“This experience will inform future design, but I think dining rooms and bars will eventually return and somewhat resemble what we used to see before COVID-19,” says Degan.

“Guests are more aware and appreciative of safe sanitation practices, but when it comes to distancing, people are tolerating it out of necessity.” Degan’s premise encapsulates

many restaurant operators’ viewpoints: this pandemic will pass and they’re best served by responding to the moment and showing they can adapt their practices to the best interests of their guests.

Factoring design into the future of operations Many restaurant operators yearn for a return to the social aspect of dining. Consumers dine at restaurants for the experience, and restaurants have differentiated themselves from food retailers by becoming purveyors of occasions.

However, the restaurants that we have come to know may change substantially over time as off-premises business grows. Restaurant delivery and pickup are accelerating rapidly, fueled by restrictions and fears arising from the COVID-19 health crisis.

While uber-social outdoor spaces may be absent in our short-term future, changes to layout, materials and configurations to accommodate safety may be permanent.

Photo by JZA+D.

Joshua Zinder of JZA+D Design sees a dual set of benefits. “I think there is an opportunity to be had here: restaurateurs can take less space (and pay less rent), make the experience more exclusive and provide a space with an arch or turnstile or pass through that can be kept separate from the dining experience.” According to Zinder, this is an interim opportunity because in the long run, consumers will want to return to being “social animals.”

Restaurant space may be turned on its head, suggests Degan. He acknowledges that more consumers will be working from home, which will change demand for dining-out lunch business. A popular development during this crisis has been the ability to create craft cocktails for to-go orders. According to Degan, this solution has staying power and will help propel business forward.

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An evolving layout and functionality focused on safety A number of design modifications can offer restaurants formidable solutions as they reopen businesses while still navigating the pandemic. JZA+D has recommended installing windows to accommodate pick up orders.

Another idea is to provide pickup food on lazy-susan turnstiles for customers who want contactless service. Incorporating locker pickup on the exterior of restaurants is yet another creative way to provide contactless service to customers. Restaurant staff place food in the locker from inside, and customers with codes can retrieve their orders from outside.

Restaurant space will have the look and feel of what one would find in Europe, suggests Rebecca Stone, principal and practice area lead for OZ Architecture’s resort and

hospitality practice. “Outdoor ‘dining rooms’ will become much more common, and patrons will experience different levels of service and menus between the indoor and outdoor spaces, where the indoor space is an elevated experience over the outdoor space,” she says.

In addition, restaurants are now able to have overflow seating on streets and sidewalks, much like in Europe.

Indoor restaurant design will take on new importance. With heightened emphasis on hygiene, designers will be rethinking materials.

Stone adds, “The interior space needs to be an interesting experience in and of itself. Material selections will become sleeker as designers will favor less-porous surfaces, less fabric and upholstery, and more emphasis on surfaces that can be cleaned easily and frequently.” She explains that “spacing regulations may ebb and flow over time,” so indoor spaces need to be more flexible—particularly with tables that can be removed or moved.

Open kitchens have risen in popularity over the past decade, but now they will gain even more importance by providing transparency. “Guests also want to see how clean the kitchen is, so open kitchens will offer this reassurance. From a materials standpoint, cooking services will be clad in anti-microbial materials and guests will expect this,” Stone says. She also predicts that as consumers continue to embrace the convenience of takeout, ghost kitchens will become more common, preparing food for the restaurant and to-go. “Take-out dining is here to stay, so kitchens need to adapt to providing a combination of both.”

and delivery and employees can be rehired to help with the corresponding demand for offpremises business.

“Getting a 6 course meal in a box or bag that you eat in front of the TV is not the experience most chefs want for their diners,” says JZA+D’s Zinder. “At the same time you can’t ignore the financial impact on the business. Initially the dining experience may be more exclusive, like a chef’s table where they can charge more for the unique layout, but home dining boxes and take out I expect will be a part of all food businesses for some time.”

For many chefs the on-premises dining experience is still the way to go. “People are desperate to go out, and not getting a table at your favorite place will only stress things more,” Zender says. “For years to come tables will be more spaced out, and lower seat counts will be typical.” A frequent prediction by designers and experts alike is that reservations will come at a premium and menus will be condensed to enhance the on-premises and the takeout experience. In Washington, DC, fine-dining restaurant Seven Reasons implemented both a minimum spend and a time limit for its outdoor patio dining. Its management team announced

Lessons for fine-dining restaurants For fine-dining restaurant operators and chefs, the dining landscape was already changing; COVID-19 has only accelerated the shift to consumers enjoying fine dining at home. With states keeping some restrictions in place, it has become challenging for fine-dining restaurants to operate profitably. In response, the creativity of many of these restaurants has spurred meal kits, family meals and subscription meal services to make the most of the takeout game. Meals can be scheduled for pickup

State and local restrictions restrict capacity but creatively-crafted restaurant spaces endure.

Photo by JZA+D.

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Some consumers may want safety taken to the extreme, but most designers assess a different future for now and beyond. Illustration by Ken Duquet.

that this was a way to keep the operation profitable and to ensure they could continue to bring back employees.

Interim solutions impacting a restaurant’s layout should change as things get back to normal.

Flexibility is key in the new normal, notes Kana Ahn, CetraRuddy’s interior practice leader.

CetraRuddy has designed restaurants with a large open kitchen and counter space,” she says.

“Even though those restaurants weren’t originally designed to accommodate takeout, the open plan design offers flexibility to accommodate the new takeout services. We believe many existing brands will consider minimal renovation to create the needed flexibility.”

Ahn also believes that open kitchens are important, particularly as a launching pad for togo orders. She adds, “We recommend reviewing the current kitchen layout and space outside of the kitchen for possible reconfiguration and renovation. Not every kitchen was originally designed to accommodate delivery operation or has the flexibility to expand.” If possible, a kitchen RESTAURANT C-SUITE | Restaurant news that’s fresh, informed, inspired (by you) 20

can be opened up toward the dining room and offer an additional outlet for takeout orders.

“Incorporate a large pickup counter at the kitchen opening so that pickup and delivery flow well.”

When opening up the kitchen is not possible, decorative furniture pieces can be placed along openings to provide a welcoming area for pickup and delivery orders.

As delivery opens up possibilities for finedining restaurants, takeout is here to stay and branding helps export the restaurant experience to customers’ homes. “We also want to emphasize the importance of the branding, graphic design and packaging,” says Ahn. With an evolving set of regulations and ordinances, restaurant operators are challenged both to adapt to the moment and to incorporate long-term lessons into redesign and future restaurants. Designing with flexibility in mind, remembering the importance of sanitation and enhancing takeout options are key success strategies today’s restaurant operators can embrace.

Reopening for business

By Eric Nomis

How to attract, retain employees amid a pandemic The easing of COVID-19 restrictions around the country means more restaurant companies reopening their dining rooms. For many restaurant operators, this signals the first steps on the path to “normalcy.”

Employees that were previously furloughed can return to work.

Amid this welcome news to many, there’s also a reckoning that some staff may not return. A number of factors can prevent an employee’s return; among them are an offer of other employment, a continuing concern for health and well-being or continuing unemployment benefits that can offset work income.

RESTAURANT C-SUITE 21

disparity is greater for African-Americans and other minorities, who may not have access to healthcare through their employers, spouses or families. In fact, COVID-19 as we have seen, has impacted minorities more than Caucasian Americans. A CDC survey of 580 patients confirms that although African-Americans represent 18 percent of a population, they represented 33 percent of COVID-19 hospitalizations.

Likewise, according to data from the National Restaurant Association, although AfricanAmericans compose only 29 percent of New York’s population, they make up 39 percent of COVID-19 patients. According to data from New York City, African-Americans were more than twice as likely to die from COVID-19 than Whites (92.3 deaths per 100,000 versus 45.2).

Starbucks bolstered its partner benefits and leave time as the health crisis took hold.

Photo by Starbucks.

As restaurants reopen, safety and sanitation will factor greatly in employees’ comfort level to return; so too will health benefits and access to paid leave in case they get sick.

How can restaurant companies bring back and retain employees in this interim period when COVID-19, although declining, remains a dangerous reality in the absence of a vaccine and effective treatment?

• Understand the plight of employees, many of whom are the front line of contact with customers • Erect compassionate policies that seek to ensure worker safety and remove inequalities across demographic groupings • Reward employees for what they do, and add a bit more during times of crisis • Create a more inclusive culture

Understand the plight of employees According to a recent webinar presented by the National Restaurant Association and MFHA, employees are on the front lines and many lack sufficient health resources. The RESTAURANT C-SUITE | Restaurant news that’s fresh, informed, inspired (by you) 22

Erect compassionate policies that seek to ensure worker safety “We have to be intentional and connect the dots,” says Gerry Fernandez, president of Multicultural Foodservice & Hospitality Alliance (MFHA). “As a leader you have to be authentic.” When you reopen he says, it’s an opportunity to rebrand yourself as an organization that cares.” Fernandez recommends there be a strong emphasis on employees and zero tolerance on discrimination. This is a great opportunity to do what’s right, he adds. Even more so, during the health crisis, who needs impediments to efficiency and to the careful stewardship of customer safety?

After the pandemic, employees will need reasons to continue working for a particular restaurant. These “team members” or “partners” want and need to be heard. Quick, regular location-based staff meetings are an art that only some restaurant companies have embraced. These meetings treat each day as a new opportunity to celebrate victories, address mistakes and discuss both positive and negative customer comments.

Restaurants can emphasize these and other in-person or video-based communications. “(We) Listen to our employees’ thoughts and

ideas,” says Jose Schwank, VP of Franchise Development for Sushi Chef. He also suggests restaurant operators acknowledge when employees are striving to improve.

At Jeremiah’s Italian Ice, in times of personal tragedy, the company provides additional care to workers. For these employees’ personal friends and family, the franchise helps raise funds to show support. “We have held numerous 100% proceeds nights to give back to the community that builds our Frog Squad in times of need,” says Julianna Voyles, senior training manager for Jeremiah’s Italian Ice. Jamal Rasoully, chief executive of The Halal Shack, makes sure his stores take the extra time to support team members who may lack the ability to seek out and understand resources available to them during the COVID-19 health crisis. He sees to it that resources are translated in employees’ native languages, because as Rasoully says, it can be frustrating to call an 800 number and not be able to navigate or get the help you need.

Reward employees for what they do, and add a bit more during times of crisis Restaurant companies that lead by example engender goodwill. Starbucks, Restaurant Brands International and Dine Brands Global, for example, have been communicating thoroughly about safety and taking action toward employee wellbeing. Starbucks Coffee took a leadership position during the pandemic, staying in constant communication with stakeholders, including employees.

Workers were given extra paid time off to use as they wished and when they or their family members were sick. The company also provided supplemental mental health resources during a stressful time. In addition, Starbucks employees who were healthy and chose to continue working were paid $3 extra per hour through the end of May, according to a letter to employees from Rosann Williams, company EVP and president.

Other chains followed suit and provided additional pay to employees, as frontline workers risked their health to enable

Starbucks has exemplified a leadership position in employee communication amid the pandemic. Photo by Starbucks.

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restaurants to continue operating during the COVID-19 crisis. Chipotle and Wendy’s each paid employees an extra 10 percent during the pandemic, according to RB Online. Increasing pay can really make a difference, when team members want to continue working but may be fearful of exposure to customers who might be carriers.

pandemic, it’s an especially important time to make sure employees are treated well and feel comfortable coming to work. Major media reports have shown that during the COVID-19 crisis, minorities have been targeted by customers for a variety of reasons, including looking different or being blamed for the outbreak of coronavirus.

When it comes to employee retention, advancement, and the accompanying better pay, can go a long way. Many restaurants focus on providing employees’ first jobs; now they’re realizing restaurant work represents a career for many. At Jeremiah’s Ice, Voyles says that 60 percent of managers start in entry-level positions, then rise up through the ranks. When other staff witness the potential for upward mobility, that reinforces a culture of long-term potential within that restaurant or restaurant company.

MFHA’s Fernandez recommends that restaurant managers must show by example that they are treating staff members equally. In addition, a clear communication of policies and procedures, as well as applying these evenly go a long way in establishing that all employees, regardless of their backgrounds, are an important part of the business and respected.

Create a more inclusive culture Different ideas, perspectives and backgrounds have contributed to the success of many restaurant businesses. In the context of the

Use role-playing to help answer employees’ concerns and questions, suggests Fernandez.

This is an effective tool to demonstrate in realtime how some situations can play out. It also helps employees empathize with the situation and the characters involved. Showing how team members can interact with a respect for inclusiveness is doubly impactful: it reinforces conduct in alignment with workplace values and enhances communication within the team.

Safety and inclusiveness are top priorities for restaurants employees who are the lifeblood of the industry. Photo by Louis Hansel.

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Photo by Monika Kozub.

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Reducing friction in ordering Customers flock to restaurants that offer convenience, safety

By Eric Nomis

As restaurants reopen, many consumers are looking to return to dining rooms. Most restaurant chain sales are down about 18 percent vs pre-COVID, but according to marketing-platform company Zeta, which tracks consumer preferences and trends, QSRs are faring much better, down just 3.5 percent. To recapture sales more easily during business reopening phases, restaurant operators are relying increasingly on technology solutions. Whether on-premises or off, customers want their dining experience to be as frictionless as possible.

Stepping back to look at the overall landscape, it’s important to note that food and meal orders increased in mid-May compared to April by 13 percent, according to Zeta. Nevertheless, a good number of restaurant patrons do not plan

to return to restaurants anytime soon. In late May, 44 percent of customers said as much in a survey, according to foodservice consultancy Technomic. Therefore, reducing friction in all forms of ordering is key in an era when takeout orders have become a permanent and sizable part of restaurant business.

When compared to pre-COVID, many restaurant chains have actually increased sales. Sonic, Krispy Kreme, Dairy Queen, Raising Cane’s, and Taco John’s are some of the top chains that are showing this increase. Chains such as Sonic, that were already heavily drive-thru based, appear to be benefiting from its current heightened popularity. These chains are also known for quick customer service interactions, which puts them in a good light when it comes to safety.

Order-ahead for pick-up can also be a value play for customers because of the service fees and delivery charges they pay when ordering from third-party services. This cost savings will appeal to younger consumers and other customers whose incomes have been affected by the economic downturn associated with the pandemic.

Getting help with safety and sanitation

Order-ahead and pickup has proven to be a boon to Chipotle Mexican Grill.

Photo by Chipotle.

Understanding consumers in the current pandemic environment As foodservice consultancy Technomic noted in a recent webinar, Off-premise shift, restaurants are operating in a dual-demand environment and therefore, must be ready to provide service when and where customers want. Takeout in its various forms is something that consumers now expect. Restaurant operators that embrace a seamless takeout experience will overcome short-term challenges and thrive after the health crisis is over.

One popular format, order-ahead for pick-up, makes a lot of sense for younger Millennials and Gen Y, just as it does for restaurant operators. Particularly in dense, urban areas where the delivery perimeter might not be large, order-ahead provides better financial results than third-party delivery where average commission can cost up to 25 percent of order amounts. By providing a convenient way to order and pick up food, restaurants can increase profitability in the absence of those commissions. Also, this format could bring restaurants an additional $7,000 in sales per day on average, according to Rakuten Ready.

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Frictionless ordering is also driven by the need for safety and sanitation. Consumers expect restaurants to provide a clear message about how they are safeguarding the health of their customers and their employees. As restaurant operators embrace contactless ordering and payment solutions for their customers, for example, they also reaffirm their commitment to keep their communities safe.

In a survey that illustrates the importance of safety and sanitation, consumers told menuanalytics firm Datassential what they would most likely do when returning to reopened dining rooms: • Wash my hands more - 86 percent • Maintain distance from other diners - 86 percent • Avoid crowded waiting areas - 83 percent • Avoid “open” food - 79 percent • Disinfect / wipe down surfaces - 66 percent • Avoid uncooked foods - 64 percent • Avoid ordering shared foods - 59 percent • Maintain distance from own party - 52 percent • Wear gloves / masks in restaurant - 44 percent • Bring own utensils / straws - 35 percent For casual-dining operators, tableside kiosks can be great for ordering and payment.

However, chains will need to adhere to frequent and disciplined cleaning of the devices.

Furthermore, they will need to provide ways for customers to sanitize the devices during

their meal. Mobile devices, which are already in customers’ hands, have become a preferred method of viewing menus and paying for orders. It will be interesting to see how kiosk popularity changes during the pandemic.

With regard to employee safety, order integration can be another vital tool for restaurants. The potential for crosscontamination is heightened when multiple employees are handing multiple devices to fulfill online and delivery orders. However, when restaurants integrate outside orders directly into the POS, as is possible through technology companies, like Olo or Chowly, that risk is reduced. ** Note that Pre-COVID = Last 2 weeks of February and COVID = Last 2 weeks of May

Enhancing technology to reduce friction Whether offering menus on a phone, payments sent to the POS via a mobile device or easy drive-thru & curbside experiences, technology is key to execution. Multi-unit operators benefit greatly from adoption of technology that helps them serve customers more efficiently and with less friction. And today’s consumers, who already wanted to experience restaurant food at their preferred places and times, can now also benefit greatly from enhanced safety. Several advances in technology are helping consumers skip the lines and reduce interaction with others. Contactless payment, order-ahead, drive-thru and curbside all help customers to feel safe while patronizing restaurants.

A contactless drive-thru experience increases safety and revenue, order-ahead is one of the most profitable channels for today’s multiunit operator. Not only are wait times reduced, but the ability to take orders and prepare with minimal impact to staffing levels is a sure win for restaurants. Fast-casual Chipotle is a chain that has benefited from both an easy-to-use app and the availability of pickup cubbies for takeout orders. Chipotle offers a model that other limited-service and sit-down chains can emulate.

With order-ahead drive-thru—another format that Chipotle has embraced—wait times at drive-thrus become shorter and through-put expands. This spotlights all the best features of efficient ordering and pick-up. As Rakuten Ready team reports, there is even more upside revenue opportunity: Order-ahead drive-thru customers can be upsold in the drive-thru, the increased efficiency reduces drivethru queuing, and this in turn attracts more customers that are driving by.

Thus, technology is a great facilitator of frictionless ordering, helping restaurants attract more customers and making it easy for consumers to order food. With an ongoing global pandemic, ”frictionless” also means “safer.” Consumers want to order more food and drink from restaurants, but they also want that experience to be hygienic and safe.

Technology enables many of those outcomes for restaurant operators.

Fast-casual bakery-cafe chain Panera Brand launched a geofencing capability to help with curbside orders. By expanding Wi-Fi service and tapping geofencing technology, Panera will know when customers arrive to pick up their Their orders, thus speeding up curbside pick-up. First, customers place their order on the Panera app or online. Next, they enter their vehicle information so it can be easily identified when they arrive. When customers arrive, they press the “I’m here” button in the app to signal they are ready for their order.

According to a Rakuten Ready whitepaper,

Customers want to order food at their pace and convenience. To-go orders are a great way to keep their business during the pandemic, offering them choice. Photo by Chipotle.

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