Restaurants in trouble : How restaurateurs can deal with Pandemic

Recently on CNBC News, there was an interview with restaurateur David Chang, founder of restaurant Momobuku and the famous TV show “Ugly Delicious” ‘s host on Netflix. What David mentioned at the show was the entire restaurant had been shut down, and he had to lay off more than 800 people during the pandemics. He looked exhausted and frustrated, and it seemed very different from his usual appearance, which is an enthusiastic head of the restaurant chain owner and TV show host. ()

David Said,

“ It’s been the hardest couple of weeks in my life,” and he emphasized, “Every single restaurant and small business in the service sector needs help. It’s important but opening my restaurant is not my priority, the top priority unequivocally is to get cash into the hands of hourly employees ASAP. ”. and he demonstrated  “ We may be headed for a worst-case scenario, I hope that I am wrong and it’s hard for a restaurant specifically in the service industry in hospitality sector that has low margins to begin with to stay a float and I have a hard time seeing any business survived this epidemic and it’s hard to fathom what it’s going to do. Unfortunately, I said some number like 90% but I think I might be right I hope to god that I’m wrong.”

Of course, David’s comments do not represent the entire restaurant industry, but at least he is one of the chefs and in David’s words, who is currently leading the trend in the U.S. restaurant industry, which makes a lot of sense . To expand his interpretation, it is clear that many restaurants will be closed or placed in limited conditions under the current pandemic situation, which is expected to be as short as a few months or as long as 18 months.

What is the government’s suggestion for small businesses now?

The government/local community has been supporting in various ways, including funding and suggested guidelines.

If you visit SBA(Small business administration) web page they demonstrated possible funding and resource options for small businesses.

SBA ‘s Funding options for small business owners

Also, the US Chamber of commerce foundation recommendation is below guideline when a small Also, the US Chamber of commerce foundation recommendation is below and guidelines when a small business gets in trouble due to COVID 19 Pandemic.   

uschamberfoundation ‘s Key guide line for small business

And moreover, there are some local and private fund raising (Facebook, etc).

But those kinds of supports are temporary, and even if they got funded, it’s a debt, not free money usually. And also, well-funded restaurant chains cannot survive more than a few months because of fixed costs such as rent, equipment lease, utilities, and interests for the existing loans.

So how should restaurant business leaders deal with the future?

The suggestions below are strictly personal, and it is up to the individual to accept them.

1. From a customer’s point of view, first, acknowledge the reality that pre- pandemic conditions will not come back.

First of all, forget about the idea that if this situation gets a little better, consumers will return to their daily lives of coming to restaurants/bars, chatting, eating, and enjoying, as they did before March. This is most important, and I wish it could be done, but in fact, most people won’t do it when we don’t know how much time it takes the vaccine/cure is developed. Also for the customer perspective, adults in their 40s and older, and their families, who are relatively in the high-risk group of COVID 19, are more likely to prefer eating inside at home in the future than eating out. However, those in their 20s who are relatively healthy and low-risk groups can become the primary consumers who come out to eat out after minimal self-protection. So those trend changes need to be considered to deal with the next step for a business.

2. If you understand number 1, you need to 2. If you understand number 1, you need to research for changes in consumer behavior under the current situation and changes that can be sought in the current pandemics.
: Let’s consider the ongoing social distancing period as the perfect time to plan for future business. Remember, “Crisis can be an opportunity,” the current restaurant industry is right for the saying in a crisis.  So ironically, it could be the most significant opportunity as well. Make the best use of the current situation that will be given for a short period of one or two months from now, and set up and revise a business plan to respond to future changes in the period. At the same time, actively search and get supported by the government resources, which has stated earlier, in order to minimize the financial risks that may arise during this period.

3. Considering the available resources and decide whether to execute a plan or close the business and execute the decisions.
: If you have made up your mind, there are only two decisions left. Will the business be withdrawn as it is, or will it turn into a new opportunity based on the plans set up? One of the most important things is to determine how much of the available resources can be utilized at this moment. If you push the plan ahead without considering the resources, even if it is a sound the idea, cannot last long. As David said, a restaurant is a business with a low margin structure, so the plan should only be implemented when it is determined that it can survive more than 18 months by the most efficient way to use resources in the current situation. Depending on the case, it may be an excellent way to delay the execution itself. Remember time is one of the most valuable resources.

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