On September 9th, a Michelin spokesperson had confirmed that the announcement of all four 2021 Michelin Guides for the United States would be delayed. Shortly after, Zagat announced that their annual Manhattan dining guides would be put on hold because they felt it wasn’t appropriate during a time of bankrupt eateries. These reports illustrate the uphill battles that restaurants face in a climate where operator sentiment is low and annual sales have declined to 2016 levels. While health restrictions in Texas now allow an expanded capacity of 75% for most business operations, it’s still paramount that entrepreneurs maximize the usage of every square foot in their restaurants. Certain unconventional methods have popped up around the country to tackle the difficulties behind limited spacing, like open-spaced dog parks and outdoor patio igloos. While this seems like a great start during COVID-19, the restaurants still afloat are wondering what new revenue streams can be tapped into so they’re more prepared for future pandemics. I reached to Nicholas Walker, an executive chef at Profound Kitchen, to discuss how this pandemic is effecting restaurants.
David Chang, founder of the Momofuku Restaurant Group, has stated that “I feel like some of the responsibility is on the restaurant industry for not having had a lot more flexibility.” What revenue streams do you think restaurants will need to tap into during future pandemics?
I think that when you look at kind of the history and style of a chef, a lot of the times chefs are known for not being flexible. They serve this fantastic crispy potato dish and a guest wants ketchup and they’re like, “hell no, you’re not getting ketchup”. I think that this has been a big reality check for restaurants and chefs in general, to realize that they are our guests and they are the only reason that we are in business. We need to understand our art should be appreciated for what it is, but at the same time we need to make sure that we essentially do what we can to keep them coming back. There are thousands of restaurants closing down right now because they didn’t have any immediate, flexible idea or they only had one specific revenue stream. We had the first big hit in March and restaurants closed and so many of them never reopened and the ones that did reopen have had nothing but a struggle due to occupancy restrictions. I think that there are things that we can do from a restaurant standpoint to continue to make money and to continue to make guests happy. Some restaurants and chefs are doing in-home meal kits or in-home catering. And then there were options as far as cooking classes, video demos, and all kinds of things that essentially is pivoting. Some of the chefs have even started making grocery baskets and just things that they could do to supplement that income in the meantime.
A blog post by Toast, a restaurant management system that helps restaurants improve operations, reports that a typical restaurant operates at a 3-5% profit margin. In a climate were delivery service companies, credit-card processors, and food vendors are taking larger percentages of the restaurant’s cash flow, is there any innovative ways that restaurants can cut costs?
You look at the lineup of services that a restaurant uses on the daily and it’s unbelievable the costs that it takes to operate a restaurant. You have your linens service, food delivery services, wine service, liquor service, food vendors, and many other third-party companies. There’s all kinds of these companies that are no longer doing the same amount of business that they were before and that’s a huge hit. If the restaurants are only doing 50% of the business, that’s 10 to 20 other companies that are only doing 50% of that business and that’s just for that one restaurant that they service. If you look at cutting costs for a restaurant that’s 20 services that you have to somehow skim off of and it’s like, what am I going to do here? Am I going to wash linens in my own home washer and dryer? Am I going to start doing paper napkins instead of cloth? Am I going to switch from one really high end vendor that I use for my produce to a lower quality, so I can cut costs? There’s sacrifices and cost cuts that all restaurateurs and people in hospitality right now are having to make. It’s all across the board.
The U.S Bureau of Labor Statistics reported that dining out as a percentage of average income has declined year to year from 2017-2019. Do you see COVID-19 having a long-term impact on what customers are willing to spend on dining?
I think this pandemic has caused the biggest economic and employment hit of our generation. If you look at the unemployment rate that hit us in the past six months, there’s definitely a huge drop in people willing to spend money at restaurants, myself included. I have barely been out to restaurants at all since we did our shutdown and I have been doing so much more cooking at home just because it is more cost efficient. We are all at the house and we don’t have to pay restaurant prices for that. I don’t know if I necessarily agree with David Chang and other restaurant advocates on asking guests to be willing to pay more to help restaurants survive. I don’t think that is the guest’s responsibility. My thought is that it’s the restaurant’s responsibility to pivot in order to get guests to come and if you look at the trend right now, those are the restaurants that are surviving. There’s chefs in town that have dumbed their food down, whether it’s smaller portions and lower quality ingredients with the chef driven twists that still are enough to impress their guests and make them happy. Not everybody’s interested in caviar and black truffles all the time, or especially when we’re in an economic disarray like we are right now. I think that it’s up to the restaurants to make those changes on keeping guests coming back and doing more approachable food at a more approachable price, and those pivots require less labor and less costs upfront
The House-backed Heroes Act, which would include 120 billion dollars in aid to restaurants, still awaits Senate review. Whether or not this bill comes to fruition, do you foresee changes amongst restaurant employees in terms of their responsibilities and how they interact with customers?
A lot of chefs have had some hard criticism of the industry in general saying this could be our fault for not having a backup plan in place or not being flexible. I’ve also heard others saying that this is a tragedy and we have no way out of it and I’m not going to compromise my work just because the world ended. I think that there needs to be a midway form of humility, because ultimately we’re the ones serving the guests and they are the only reason that we are where we are now. You look at something like federal aid that is going to fund restaurants to keep them afloat and it brings a lot of optimism. What restaurateurs wouldn’t want that right now? You get your business open, but you also get your employees back. At least 50% of the joy that we get is working with our staff. So you look from the top executive chef and the general manager all the way to the cooks, to the servers, to the busboys, to the dishwashers whoever it may be, every one of those employees are nervous. They’re all wanting a little bit more and it’s a scary time. There are restaurants that have closed and are no longer hiring. I know so many cooks that are now stocking shelves in Whole Foods and that’s perfectly fine, but that’s not why they’ve been busting their a** for the past 10-15 years. Servers could just work four hours, give mediocre service and still get tipped $400-500 a night at a higher end restaurant, but now they’re struggling to get by. When I see servers now at a restaurant, they’re busting a** because the workforce has been cut dramatically. If that restaurant is only doing 50% of the revenue that it was doing before, it’s only going to have 50% of the labor and that means that server might not have a busboy or food runner. That means the server is running the food, busing the table, pouring the water, taking the orders, seating the guests, and showing them to the restroom. Meanwhile, they’re also communicating to the kitchen and doing all the above with a smile on their face and really fighting for that gratuity. And I think essentially that whole paradigm has changed. I think that before this pandemic hit, it was an employee’s market. An employee could go get a job anywhere because everybody was so busy, they just needed people and they would do anything to get more servers or more cooks in the door. They’d pay them $20 an hour, which is nuts. That’s what was happening and then now the paradigm has shifted, it is now an employer’s market.
With concerns over supply lines during the peaks of COVID-19, was there any logistical issues that had to be overcome in your restaurant and do you predict any changes to occur to menus?
I think that you look at logistics when the pandemic hit in March, it was just something that restaurants never planned for. Unfortunately I lost my job during the pandemic and I was executive chef for the Virgin hotel and it was a heartbreaking week. We all kind of knew that this was a possibility, but we didn’t think it was going to be happening in the week before and then I got the call from my food and beverage director and he’s like “we need to make the calls right now and let everybody know that we are shutting down”. I’d never been in a position like that before and none of us could have seen something like this coming. There was a very hard emotional connection that never happened right there and it’s like you look at us being set up just before that time and even right after when some restaurants did reopen, you look at supply chains and how to get product. It was rough because we were not the only ones that had to do that. There were delivery companies that only had 20% of the drivers. There was a shortage of gloves. There was a shortage of to-go containers. There was a shortage of all kinds of things when restaurants tried to reopen, because everybody was trying to make adjustments somehow and nobody’s ever seen that being an issue. At one point there was a shortage of people that were willing to work because there was so much unknown. Even right now, we are nine months into this and we barely touched the tip of the iceberg of what we know about this virus and how it is going to affect us long-term. Nobody knew and all of that unknown with the crippling economic impact and the just immediate headshot to the food and beverage industry, you couldn’t have planned for that. If you’d asked me a year ago, do you ever think you won’t have a job chef or do you ever think you’ll be unemployed or you ever think it’ll be hard for you to find a job? I would have laughed in your face. I’ve never been in a position where it’s been hard for me to find a job or there wouldn’t be a job available for me. It’s been a crazy realization. I think that it’s all about staying positive and being strong and attempting to make some pivots somehow for yourself as an individual for your business, whether you’re an owner or an employee and doing research. There’s not going to be something that just falls on your doorstep, you need to research and analyze and see what you can do to better yourself or better your business right now.
