Scott Barnett & Associates Blog
COVID, People and Restaurants

October 5, 2021
For the last 18 months, COVID has dominated the world. At first the concern was, how do we stop the spread? Then, the question was, how can we mitigate it until we have a vaccine? That of course led to the question, how quickly can we vaccinate everyone against it? All of these questions have been answered, but we still have millions of people not wanting to take the vaccine.

What does it all mean for us in this business? Aside from the industry's explosive revolution in technology, delivery, virtual kitchens, tighter menus, and patio dining - when exactly do we get back to basics of restaurant service that is "hot food hot, cold food cold and service with a smile?" The unfortunate answer is we still don't know.

In the interim the industry can take certain steps to maximize profits. My firm has recommended the following to our clients:

  1. Streamline and simplify your menu to match what you can obtain and what you can do with less people.
  2. Invest in technology as much as you can. Does a tablet speed up service and eliminate a server? Does your drive-thru make use of license plate recognition software?
  3. Shop your 3rd party delivery vendor (if you even have one). They are now under enormous pressure from their customers, municipalities, co-ops and others. Work them!
Taking Stock of COVID and the Labor Market
Last night I had dinner at a restaurant (outdoors) with the CEO of a company where I am a board member. It is not a restaurant company but it's related. As I listened to him describe the difficulties involved in direct sales, the supply chain craziness and the general effect COVID has had on his business, I thought, "Well, that just reaffirms again that it's not just the restaurant business. It's almost every industry." He is moving mountains adjusting to COVID but the disease is constantly something to contend with - it's just always there.

Like everyone else, I believed that once the big unemployment checks and free rent stopped, we would see a massive return of people to the workforce. To some degree we have seen this but not at the level we need and, above all, not in the kitchens.

Since we know that people of color are an important source of the industry's labor supply and, at the same time, we know this group has been among the hardest hit by COVID, it at least partially explains the lack of workers. Why would people want to increase their exposure to COVID working in a closed indoor environment in proximity to others? Throw in a mask, other draconian requirements and impatient or insensitive management, is not an attractive work environment to say the least.

If you are a food server or a cook, you can't do your job virtually over Zoom. You have to actually be there, touching things and speaking to people face to face.

There are many ways to treat employees well that make them loyal and eager to work for you. Yes, you also have to pay more but satisfaction with the job (and its safety) goes a long way.

The market has a way of closing labor supply and demand gaps and it will close this one. But make no mistake, there will be casualty in the meantime in terms of restaurants struggling to find people to work shifts and possibly unable to operate.
COVID International Ripple Effect: Lockdowns, Supply Chains & Fatigue
Much of my business is international. I am on Zoom or FaceTime or Google with someone overseas literally every day. If intercountry travel does not return soon, many countries are facing a terrible deterioration in their economies. I am hearing extreme frustration with lockdowns and restrictions around the world. A single COVID case in a Chinese port city can result in a 2 week-long citywide shutdown. Nothing gets shipped and the result is a supply chain disruption potentially around the world.
If you are having problems with a supplier, look around. If you're a smaller operator, go to Costco or Sam's. If there are items you simply cannot do without (think cheese in a Mexican restaurant), over-inventory them.
Island nations like New Zealand can essentially close their borders to outsiders. But for how long? Are they just putting off the inevitable? How much longer can Australia keep their citizens in a lockdown before they have had enough?

It is difficult for a restaurant group to franchise internationally if they cannot experience the market, review potential sites and learn the culture enough to intelligently deal with the myriad of issues that arise. How do they support their franchisee in Cairo over Google Meet?

The answer is they largely don't. The negative effect on international franchising will be long-lasting if we cannot get there.
COVID and the Evaluation of Risk
What these ideas relating to COVID labor shortages, supply chain disruptions, and COVID fatigue have in common is the evaluation of risk. At what point do we recognize that COVID is here to stay? When do we say, "The vaccines have bought us some time but the real issue is how do we deal with this for the rest of our lives? And our children's lives." What we really need now is an Operation Warp Speed on therapeutics and treatments- medicines that will take the mortality rate down to the level of influenza or even better.

There are risks in the world. Every time we leave our home, drive a car, go swimming or yes, eat in a restaurant, we are taking a risk. We have learned to accept those risks as a part of life. Some are bigger than others. We can mitigate those risks but we can't eliminate them.
Reach out to me today to learn more about mitigating your restaurant's risks in the "new normal" of our interconnected COVID world.
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