Ray Camillo – Founder & CEO, Blue Orbit Restaurant Consulting
It’s the end of the 2020 Summer and COVID-19 is still running wild. Elections are on the horizon and, regardless of your political bent, moving left or right carries downsides that don’t quite feel great for the country as a whole. The only constant is uncertainty and restaurants continue to suffer mercilessly with no end in sight until a vaccine is imminent (no easy or automatic task) or herd immunity runs its course. So why on earth would it be a great time to START a restaurant?
It takes at least nine months to conceive – then launch – a restaurant. Maybe eight months if taking over second-generation space. You’re creating a brand… a product line… a new business. You need to plan for it including financial modeling, business plan, funding, site selection, designer and architect selection, contractor selection…then construction, recipe development, guiding principles, SOPs, manuals, handbook, hiring, training… etcetera.
Despite GrubHub’s and UberEats’ best attempts to convince us that the world is moving toward food delivery, pasta will ALWAYS look terrible in a plastic or paper takeout container and will ALWAYS be something less than it was intended to be after the 20+ minutes it takes to get from the restaurant’s kitchen to your table. Burger buns get soggy. Napolitano style pizza is not as crisp after steaming in a cardboard box. Steaks just look goofy in takeout containers not to mention how fast asparagus with hollandaise or mashed potatoes get cold. We all accept some level of degradation in food ordered for takeout or delivery…because we’re hungry and the alternative (cooking it ourselves) is less attractive. It’s a utility purchase. Something we have to do, so we look the other way on quality to enjoy the convenience. But paying someone to make your lunch or dinner is not always utilitarian. What about just getting out of the house?
Restaurants are not going the way of movie theaters where their only alternative was to turn into restaurants that show movies… in plush, reservations-only recliners. Thank Blockbuster for that (then Netflix…then everyone else). But restaurants can learn from the decline of the popcorn movie theater: fast casual and fast food are thriving as never before because they’re convenient, and full-service restaurants that survive will need to be on their A-Game. It will stay that way for some time and any fast-casual restaurant that does NOT offer curbside or drive through pickup is nuts. But the demand for atmosphere… music… voyeurism… the mating ritual… seeing and being seen – is still there and will likely always be. People will never stop dining out and DoorDash will never replace the experience, so as soon as people CAN go out, they will.
Sure, the market is saturated and going through a brutal adjustment. Having the right model means nothing and right now is a terrible time to own a restaurant as there are likely to be many more casualties in the upcoming months. Restaurants are forced to burn their precious-and-limited resources on start-stop-start-again attempts to return to normal or adopt a new service model they are not designed or geared to execute… while at a fraction of their former volume. All of this while landlords relentlessly demand rent…but can you blame them? They have to pay the note on that building and the bank is not going to forgive them, so it rolls downhill. Restaurateurs that own their building get to skip the landlord but then get to face the bank directly, which is like Mom handing the belt to Dad to beat you with. The right model today will likely not be the right model in eight or nine months.
Sadly, many restaurants will fail until there is some return to normalcy. No expert is willing to put their name behind a return-to-normalcy date because it has been so hard to predict. I’m no expert so I’m certainly not going to claim that victory is right around the corner…however, I am optimistic that Spring 2021 will be a turning point. Not because the virus will be over and done but because people are social and need to get out of the house. Spring brings optimism and after the fall and winter we’re surely about to suffer, demand for the return of social venues will not be small. If you’re opening a new restaurant, you’re not under a landlord’s (or bank’s) thumb. You’re creating and getting ready. It’s different for you. You’re on the outside looking to get in, so timing is everything.
It all comes down to this: the restaurants that open first when COVID-19 is on the run will be uniquely positioned to capture all of that pent-up demand. As awful as it sounds, incredible locations are opening up every week, much of it requiring only cosmetic changes…or at least far less fitting out than a cold dark shell. So, if it takes eight or nine months to bring a new brand to life (from idea to opening day), and if you agree that Spring 2021 is a decent bet for the return of cocktails, social gatherings and great food that folks have not been able to get from the back seat of a Yaris, then you had better start getting your concept together NOW…because in eight months, it’ll be April, 2021…and the lever that gets the boulder moving will be the financial model.