Restaurants: a recipe for survival, trend 2020

20.05.2020
2926

Editor's note: An article for hoteliers from Tatyana Goncharenko caused a stir.

We suddenly got a lot of questions... from restaurateurs. Therefore, in order not to disregard their problems, we offer another expert article.

Tatyana will tell you how to deal with business as a restaurateur in 2020.

So:

  • What they say in the world: 10% of restaurants will die anyway (some ceased to exist in the first month), another 30-50% will close forever if the quarantine lasts more than 3-4 months.
  • What is in Ukraine: most of the venerable restaurateurs, whose names are well known not only among their own, but also in the general circle (Dmitry Borisov, Savva Libkin and not only them), use a short obscene word of 4 letters.
  • From the latest news: the UberEats delivery service is leaving the market. From May 12, restaurants open their outdoor areas. Is this a conditional measure or salvation, what do you think? Everyone on Facebook has already joked about drinking coffee without removing the mask and throwing dishes to the guest from a distance of 1.5 m.
  • Roman Tugashev, the founder of the street food festival, summarized everything that happens in a short video.

What restaurateurs say about the virus and its consequences

About 80% of the establishments’ staff were sent on vacation at their own expense. It would be more correct to say, fired. People are running out of money: workers, restaurateurs, guests.

Delivery does not bring profit in most cases, but makes it possible to pay the salary for the minimum part of the restaurant team. And for each employee, to a certain extent, it is a “social project” with significant resources spent on its launch.

The guests will not come in crowds. According to the survey, restaurants are not even among the top ten places that people plan to visit after the lockdown is relaxed. The market signals the need not to raise, but to reduce the price:

Let’s count.

Income

**The number of seats on the terrace (and there are often few of them) is divided by the social distance. We multiply by the revenue of tables during peak hours and downtime at others. We multiply by the number of days with good weather (each region has its own) and add the human factor - the ability of the waiter to sell takeout dishes to the guest.

Expense

***In addition to the standard costs, we are adding new security costs – from disposable masks and menus to sanitizers.

Can we talk about profitability? Could it hasten the agony? It is very important to give the business a chance to breathe.

Only a full-fledged opening of restaurants can revive them, and not everything can be brought back to life. Recovery at best will take place in September, and pre-crisis indicators should not be expected this year. In the greatest risk group are the restaurants that worked for tourists (until the tourist flow is restored), for events, and those that were in a crisis state even before quarantine - did not have loyal guests, a clear concept and effective marketing. And many more other factors.

Is there a way out? There is always a way out.

Who is the cool one? The one who delivers... adapts the product and service to new realities

As one of my colleagues said: “There is no tomorrow. It ended yesterday. The planning horizon is an evening, not even a week.” In such conditions, it was necessary to completely rebuild the work, models and business processes. We had to “put ourselves in new shoes” and deliver dishes to the guest.

Case number 1: delivery or takeaway

What happened? During the first month of quarantine, many opened for this purpose and closed after 2-4 weeks. Even to break even, we had to change everything: the product, sales channels, communication system, prices, logistics and operating models.

Most of those who did not have delivery before the crisis started it from scratch, working 20 hours a day, adapting, adjusting, changing and creating everything on the go. Everyone works like a horse, non-stop - from chefs to owners. Often, the latter deliver orders to guests - both as a PR and as a manifestation of extra-loyalty.

It is impossible to make money on rent in such way, you have to negotiate. The most successful delivery cases are a maximum of a third of the usual income.

Business is balancing between two truths.

Sometimes it's better to close a restaurant There is no profit, but the backbone of the team remains

In general, such situations show that we are often not ready as managers. There is a lack of stress resistance, decision-making speed, teamwork, there is a huge need for communication, for which there are often not enough resources and time. Working in a period of total uncertainty, when the decision sometimes changes three times a day, is a big challenge.

Next, I will write about whether delivery has a great future. And is it mandatory for everyone?

How to start delivery?

2-4 weeks - exactly how long it takes to reach stable performance.

What is important for a successful launch of delivery: to understand that delivery is a different business.

The success of a delivery launch is a set of correct actions. And a mistake in one of them can lead to a general collapse. The success of delivery now is to at least break even and provide work for the backbone of the team.

The main mistake of launching delivery: the wrong business model. Restaurant and delivery are two completely different models, and having a successful restaurant doesn't mean you'll have a queue and demand for delivery at all.

Remember the main theses:

  • Just delivering according to the current menu of a classic restaurant is not enough in 90% of cases.
  • Restaurant wow-serve cannot be saved.
  • Delivery radius - dishes must arrive hot, at least warm.
  • This is a completely different economy and calculations, a different guest, different needs and other conditions.

What to deliver? What does the guest want?

Marketing starts with the product. Marketing is not SMM or advertising. It's the right product for the right audience at the right time.

And a guest in early May wants:

  • Out on the street and barbecue.
  • Go to work.
  • Stop cooking and washing dishes three times a day.
  • Go to a restaurant, but make sure it's safe and inexpensive.
  • Eat something you didn't cook yourself.
  • Favorite dish that I dreamed about during quarantine.

Savva Libkin talks about meatballs. It's cheap and you don't have to do it yourself. In Galician cuisine, this can be banosh, mushroom soup, flaki (tripe stew), sausages (according to special recipes), and fish. But at a reduced price. Something that you don’t cook at home every day, but love very much and often order at a restaurant.

The well-known restaurant chain Fest has combined key dishes from several of its establishments and made a mix of products for any request, budget and mood, and everything can be ordered centrally.

We can only add that the delivery was opened on March 16th. And at first it looked like a simple Excel file and a post on the page with the announcement of the start of delivery and the Viber number to order. A good PDF-file appeared much later. And the site - about in a month!

Now it is a full-fledged working online resource, created in accordance with all the canons and rules. But the drive appeared in the first second of quarantine.

What we had to create and add to the delivery menu:

  • Semifinished products (both frozen and chilled).
  • "Wholesale" dishes for 1 kg / 1 liter.
  • Boxes for preparing a specific dish with all the ingredients and a recipe (ideally - a video).
  • Cooking sets.
  • Emotional experience products, flowers and other creatives.

Let's learn from vivid examples of how you can use an opinion leader, turn on creativity to the fullest, use a non-standard and very marketing approach.

Essential goods:

Classical marketing worked well - when the product was created as the fulfillment of a specific task for the guest (client):

  • Easter baskets and Easter cakes with delivery. Some restaurants immediately sold consecrated sets, even Ukrposhta delivered consecrated Easter cakes!
  • Picnic sets.
  • Complex dishes that are difficult to prepare yourself, from procurement to technology (for example, sushi).
  • Classic hits like pizza.

An example of a complex offer and not at all restaurant prices from the Pastateca restaurant (Kyiv):

They say that everything is delivered, even coffee and steak. The latter can be brought in a raw pickled form, plus coal, ignition, plus even a grill and video instructions.

And craft beer or good wine for it, because this is one segment and the task of the guest, and for the restaurant - a larger check. Same goes coffee. You just need to warn the guest and discuss the nuances, if there are any.

Marketing is at the heart of everything =)

Is there a future delivery opportunity? Colleagues recommend not to invest significant resources in delivery. This is still a small market: there are no such volumes as in other countries (confirmation is the UberEats withdrawal from our market and 7 more countries): they predict that the delivery market will fall by 20-30% after the quarantine is lifted, and maybe more.

Where to look for partners to arrange delivery

There are three channels for delivery:

  1. Pickup.
  2. Delivery from the restaurant.
  3. Delivery services. For example, Raketa, Glovo, local services.

Ideally, this should be the priority. All three channels work if the product itself and your delivery conditions are configured correctly.

Self-pickup is beneficial. The least profitable is cooperation with delivery services. They take more than 30% commission on the order value. But there are subtle nuances not clear from the first glance.

Restaurants in every possible way encourage self-delivery with discounts and bonuses, which are calculated in terms of no more than 15-20% in order to maintain expediency. But often, especially at the first stage, their own “distribution costs” were almost equal to 30%, and sometimes even more, and some restaurants chose the delivery service path as the starting or even the only one. Depends on the business model.

A third-party delivery service is an outsourced sale and delivery: an algorithm for sales, orders, work and delivery has already been developed, as well as the communication with the client and your online store (you don’t need to create your own website and organize payment methods if you didn’t have them before). Technically - it is the delivery itself, convenience for the buyer and advertising. That is, all these tasks are performed by a single contractor.

Some restaurateurs started with delivery services, and in parallel set up their own channels. In most, especially in small restaurants (not powerful holdings, where it makes sense to organize their own service), all 3 channels work. And if you have launched a delivery, it makes no sense to refuse one of them. The main task: to launch properly and to keep eggs in different baskets.

Do you still want to start delivery? After the fourth launched delivery, our team and I have already developed a certain algorithm of actions.

Delivery start checklist

  1. We are working on a product. ATTENTION! You will have to add another menu and in most cases the prices will be lower. Consider the following factors:

The current demand of the guests of your and other restaurants (which has already formed on the market). It's great if you have your own niche and anchor product + loyal guests.

Meals that can be prepared with minimal resources (including staff), at an adequate cost, and make the most of inventory / easy to order products.

Cooking speed (up to 15 minutes, and preferably up to 10) and the ability to maintain the quality of the dish during delivery.

The yield of dishes can be partially increased.

Form anchor products (which should be emphasized in the promo) and USP: there may be shipping costs, gifts, additional components, delivery radius, appearance - whatever. Analyze the market: are there any free (adequate) niches left. Show unlimited creativity within reasonable limits! :)

Prices are a combination of several factors: the market (your competitors, not everything), the guest's wallet and your USP.

orm your delivery conditions: from what amount the delivery is free, the cost of delivery, to which areas you deliver, what speed, what the couriers look like and who delivers (maybe you have a contract with the stars).

Basic structure: guests' favorite dishes from the classic menu (do an ABC analysis), corresponding to the previous points + inexpensive dishes for every day + current offers for different occasions: weekends, holidays + convenience foods + spice up with creativity :)

  1. Set up the operating model: acceptance and processing of orders, work schedule (peaks - lunch and dinner - adjust schedules accordingly), packaging - strength, temperature, shape, branded or not, cuisine and production (get involved at the menu formation stage), security.
  2. Sales channels: guest databases, social networks, website, delivery services - what do you have and what is your priority?
  3. Think over and set up a convenient and fast payment system (preferably contactless).
  4. Advertising and communication - cut and stop what doesn't work, select and amplify the most efficient and effective channels for rapid communication. Focus on your guests databases, social networks (do targeting, launch advertising campaigns, do not only promote posts), bloggers and opinion leaders (tastings and unpackings are hype now, and you should already think what to do next), content on the site.

What to talk about:

  • Anchor dishes, USP and special offers.
  • Reviews.
  • Sincere emotions.
  • Safety + cleanliness = trust.
  • Positive.
  • Creative and fan.
  1. Set up analytics and analyze the results every day.

These are basic points, and the settings depend on the type of restaurant and your guest, your market and competitors (and here it is important to understand who your real competitor is and draw the right conclusions), marketing activity, but the basic rule is:

Launch and adjust in the process, analyzing daily the demand, the effectiveness of the marketing tools involved, and the results. A static model is now a utopia.

Common mistakes: take the classic restaurant menu or give something that everyone has (vareniki, chebureki, if this is not your specialty), or copy from a more successful colleague, leave a restaurant margin, set a bunch of conditions and restrictions (delivery tomorrow, the amount is from 500 + hryvnia, inconvenient work schedule, inconvenient pay), do not respond quickly to open communication channels, do not provide operational communication channels, etc.

Delivery is a set of actions and a flow from different sources, which together gives you the desired result. My advice is to launch all the channels in order "as soon as you have time" and further work on the effectiveness of each. This applies to both the menu and marketing.

The best result is for those restaurants which are most convenient for the guest (payment, order, schedule, etc.) and meet their current needs (menu) and wallet (prices and delivery terms). And most of them have changed. And they will change again after the summer terraces open. Delivery volumes will decrease, but in total with the summer terrace, the restaurant's income will increase.

The summer terraces are open. Now what?

Now the restaurateur is thinking: “Terrace + delivery? Is it enough to leave only a terrace? What to do if one of these is missing?

Consider, negotiate with colleagues, partners, landlords and decide whether to open now. The numbers are disappointing and depend on how many places you will have on the terrace, whether the rent is included, how much it costs to start the operation of the institution and the approved work and safety rules. The market agrees that it makes sense to start if you already have delivery and an open terrace. But each economy and situation is different. What is bad for Lviv, may be good for Odessa.

Who is visiting whom? About communication "guest - restaurateur"

As Dmitry Borisov said, a metamorphosis has taken place: the guests have turned into customers, and now we are their guests!

But remember one thing firmly: you need to communicate if you receive guests or if you yourself go to them.

Therefore, first of all, after choosing the direction of movement and setting up operational processes, the next stage is communication. These are PR, collaboration, educational, charitable projects, social networks, and communication in instant messengers. Anything you have the time, energy and resources for.

Heroes are those who are doing something now: they are fighting, opening delivery. Heroes are those who understand that we need to support each other, share recipes, take no rent, lobby for solutions and ask for help from each other and from the state. All those who do something to survive themselves and help others: doctors, their own employees.

Watch live broadcasts from the restaurants of Garik Korogodsky.  
Get inspired and learn with UA Restorator.
Follow Dima Borisov.
Read the SPRAVA blog, pay attention to Garik Korogodsky on the anti-crisis proposal.

What, to whom and where to speak?

Communication - a sincere one, not manipulative - is emotion. Speak to the guest. You are all in the same boat.

To whom?

The most effective way is your own client base. Everyone has it. But very often it is not digitized, it was not very actively used, and so on. In four restaurants where I launched delivery, they raised and digitized notebooks of table reservations for the previous 2-3 years immediately with the beginning of quarantine. Esperienza survey services and analogues, online booking forms: if you didn't open yesterday, you have it. You can set up social media ads for your own customer base. The base today is the greatest value. And your own base is priceless. :)

Set up mailings, SMS, SMM and even calls, but make them as heartfelt as possible:

well as Mother's Day, good weather, hurricanes and rains. Perhaps you would like to use the services of "Sytiy Peter" for delivery? Or do you use delivery services? What suits you?"

Or:

“We have opened a summer terrace, but we also have delivery and takeaway. Come visit us this week and we'll be happy to serve you."

The main thing is that this position should be filled with the most adequate... no, with the employees who are best in communication. Surprise your clients. If the owner himself delivers the order and communicates with the client, this is very valuable. This is also part of the communication program.

The legendary Dmitry Derkach is delivering popcorn, a new product of the Planet of Cinema, to no less stellar friends. The purpose of the action: to make hype and interest, make as wide an audience as possible  fall in love with the product idea for minimal funds, but attracting personal brands.

And even where cinema and popcorn are the main business, you can generate cash flow, which means there is an opportunity to earn and pay minimal expenses, at least for staff. The scheme is the same: a new alternative product + creative + customer base + attracting opinion leaders. Marketing is actually the same everywhere, the main thing is the idea and the courage to implement it.

What about corporate clients? HR companies that were your customers, or just HR. If they like you, they have a colossal resource in their hands - the base of all employees. But they must WANT to buy from you. Therefore, in the first place - the product and conditions (including convenience) + emotions (hook, remember, make you try again).

Opinion leaders and bloggers will help you. Unpacking sweets live, tasting - it works great. Do not forget that now is the era of microbloggers with a reach of 100+ likes and a real, live audience of 2000+ thousand.

Look at the blogger’s feed to see if his content is active and matches your values, reaction to publications, swearing and comments, and offer to treat him for communication. Better yet, divide the influencers into categories and think about what suits you best: lifestyle, travelers, mom blogs... Everyone has their own audience, and all these people... eat!

A common opinion: all bloggers work only for big money. But it's not. Now not everyone has the financial ability to pay, and such cooperation is also support for each other. Maybe even more than that - bloggers of your business, whom you, in turn, help to provide jobs for a couple of dozen people.

Bloggers with large audiences, if you don’t offer something like an all-Ukrainian festival or some other large-scale projects, may even be ineffective and expensive in terms of conversion costs in your case.

Another point of communication is advertising. Where your guest is now, and this is a smartphone or tablet.

If you come up with your own charitable social project or join any other, people will remember it. They are drawn to those who do good. And also, quarantine will end - people will remain. This is the right position in relation to your own staff and their attitude towards the company, and towards those whom you help. And an example for colleagues not only from your industry - you can also infect with kindness.

Creatives are the icing on the marketing cake. Fantasize yourself, analyze your colleagues - the bike has already been invented, you just need to adapt the idea for yourself.

Read more here

Speaking of the fashion for democratic restaurants

Now there is a lot of discussion about this. There are important factors: the guest will be poorer. In parallel, in a couple of months there will be an increase in purchase prices. There is also a “Covid effect” – some guests whose income has not changed during the quarantine period have seen significant savings on coffee, cakes, breakfasts and dinners on their bills. They have seen the light and now they want to spend less money. Fine dining restaurant format is the most risky post-crisis concept in terms of losing guests.

Some cleansing is predicted to take place. The “necessary” restaurants and formats that are necessary from the guest’s point of view will remain.

There is an opinion that nothing will change for the premium segment. They are unlikely to save on food costs, they think in other categories. But do we have a lot of premium segment people?

Attention! Those who have a purely tourist format are now in crisis until a tourist comes. But if your restaurant focuses on local cuisine and atmosphere, it's time to negotiate with tour operators who are now actively developing new tours. Restaurants have long been a part of a quality tourist product and gastronomic experience, they compete with architectural and historical monuments, and it remains to be seen who wins.

Taste will come first. People will look for gastronomic experiences, tired of home cooking, but there is an opinion that they will be afraid of complex, incomprehensible multi-component combinations. The atmosphere will remain important. They will go where they like to gather and spend time. Restaurants without a clear concept, audience, atmosphere, anchor products can go under.

Remember, your guest will be more careful in terms of security. Therefore, the concepts of an open kitchen should be brought to the fore.

THE FINAL? No, the beginning of a new life

Sooner or later we will return to normal life. She will change. And our task is to give the guest what he wants.

Menu. Security. Price.

And don't forget the positive. A visit to a restaurant should not be like visiting an intensive care unit. People will go to forget about quarantine and deprivation, and not stumble on restrictions every minute.

People will follow the positive. Even the temperature measurement at the entrance should be made as “cute” as possible: a girl with cleavage or a superman in a red cloak and with flowers who will greet the first guests.

There is an exit. Follow the market, follow the guest, communicate with him and develop for yourself a functioning model that can be differentiated in terms of products - restaurant menu, terrace menu, takeaways, and pricing policy within the menu.

I hope you found it useful! In fact, everything can be done. Need help - get in touch!

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