Operations
By the numbers: Advice for new restaurateurs
Marlo Fogelman, an attorney and founder and CEO of Marlo Marketing, shares her thoughts on where the restaurant industry is now, and what new restaurateurs will be dealing with in the post-COVID era.
April 12, 2021 by Marlo Fogelman
The restaurant industry was far from perfect before COVID-19 shuttered approximately 110,000 dining establishments in 2020. Overhead costs were high, competition was stiff, food margins were narrow and staffing was a constant challenge. But as history has shown us time and again, necessity is the mother of invention. Many entrepreneurs will have the benefit of hindsight as restaurants emerge from hibernation hoping, to rebuild their businesses better than before and a new guard of restaurant operators surfaces.
New restaurateurs should study the lessons learned by those before them to improve upon the business model. While the restaurant industry is one built on equal parts hard work and passion, anecdotal observations can only take one so far. A deeper look at the data, statistics, and numbers can paint a clearer picture for new restaurateurs seeking direction in the post-COVID era.
Essential service
Few things so regularly factor into consumer spending as dining out. Now, thought of as a necessity akin to grocery shopping for many, takeout and home-cooking continue to blend together when considering meal planning. In fact, 88% of adults enjoy going to restaurants. For new restaurateurs, this is great news. Restaurants are no longer seen as a rare luxury, but an essential service. And it is likely that pent up demand for dining out and greater variety of food options (compared to what can be made at home) will drive an increase in restaurant revenues for the next few years.
Guests first
Restaurants are in the business of guest relations. Forming strong, trusting relationships with guests has always been fundamental to the success of a restaurant, but in the post-pandemic world the guest experience is even more critical. After a year of modified behaviors — staying home, social distancing, minimizing touchpoints and shifting spending online — many guests will have some reticence about dining out again. However, 63% of consumers feel safe eating at restaurants if they can eat outside. New restaurateurs should be mindful of varying guest comfort levels and create a layered, customized experience from which diners can "pick-their-own-adventure", i.e., dine-in or takeout, order-ahead or at a counter, menu or QSR code, indoors or outdoors.
Serve your employees
The leisure and hospitality industries account for 39% of jobs lost to the pandemic. But just because unemployment remains at all-time highs, do not be mistaken in thinking that staffing a new establishment will be a piece of cake. In fact, 47% of fast casual operators have job openings that are hard to fill. First, many hospitality staff left major metropolises like New York City and San Francisco, moving home to more rural or suburban areas with no plans to return. Next, workers had no choice but to find more reliable income in other industries given the frequent state-by-state lockdowns and the anxiety around their own health and safety. Finally, the communities of color that make up a good part of restaurant jobs were hardest hit by COVID. New restaurateurs need to factor in the many layers that complicate staffing and create hiring and retention programs that emphasize employee health, security, wellbeing, and happiness.
Table stakes vs. differentiators
COVID-19 turned the restaurant model on its head. Fine dining restaurants became pop-up sandwich shops, full-service restaurants became ghost kitchens and everyone transformed their menus to better accommodate the demand for takeout and delivery. What was previously an added convenience, and often a notable differentiator is now the expectation. For instance, 71% of limited-service restaurants now offer curbside pickup. Limited-service restaurants offering delivery went from 38% pre-COVID, to 83% and 26% added a dedicated counter for online pickup. It is estimated that54% of restaurant sales will be made online by 2025. Savvy new restaurateurs will build their businesses to thrive within this new digital ecosystem surrounding the dining experience.
Don't be afraid to ask for help!
In 2020, restaurants sliced and diced their budgets to keep costs down and squeak out any profit margin — in fact, 42% of restaurant operators put a lot of time, energy and money into driving traffic, but one of the first things to go during COVID-19 was marketing. Operators were left juggling social media, press, email marketing, and promotions.
As new restaurateurs look to establish a marketing strategy one option to consider is an outsourced marketing solution. In this trying time for operations, growth, and planning, it is easy to quantify the benefits that come from hiring outside marketing experts with a broad skill set and lower overhead than creating and managing an in-house team. Similar to outsourcing IT, finance, or human resources, bringing in an external team of diverse experts under one roof who can cover the roles of CMO, internal team and agency partner(s) all in one, reduces both the cost and time required to recruit, manage and retain an internal team.
About Marlo Fogelman
Since opening its doors in 2004, the agency has won more than 30 communications industry awards for excellence across public relations, communications, digital and social media. Marlo has also received numerous accolades and distinctions, including being recognized as one of Boston’s “40 Under 40” by the Boston Business Journal in 2006. She is a member of the 2007 class of the Emerging Leaders Program at the UMass – Boston, and was named one of the seven most innovative Bostonians by BizBash magazine in 2011. In 2019, Marlo was awarded the Pinnacle Award for Achievement in Entrepreneurship from the Greater Boston Chamber of Commerce and was selected as one of the 28 notables in Boston magazine’s cover story “The Powers That Will Be” in 2019.
Originally from Detroit, Michigan, Marlo is a graduate of Boston University School of Law and holds a Master’s Degree in International Relations from Boston University’s College of Arts & Sciences.
