Prior to reopening its restaurant, McDonald’s Corp. sent hundreds of its U.S. franchisees requirements for enforcing cleaning and social distancing rules. Changes to current procedures include mandates to clean digital kiosks after every order, clean bathrooms every half-hour, and either close public soda fountains or have a staff member monitor them. The company’s 59-page dine-in reopening guide also includes new equipment recommendations, such as a $310 automatic towel dispenser and a $718 touchless sink. The guide even mentions foot-pulls that let customers open bathroom doors without using their hands.
McDonald’s employees are required to wear masks and gloves, and according to the guide, face shields in any jurisdiction that requires them. According to hundreds of U.S. owners, the new expenses could create logistical problems, but McDonald’s management stated that it will wait for franchisees to be ready before reopening all 14,000 of its U.S. locations. Reopening will happen slowly in collaboration with local authorities, and so far only some U.S. locations have resumed dine-in service.
JAB Holding, the investment firm behind Peet’s Coffee, Panera Bread, and Pret A Manger, is pursuing an initial public offering of its coffee business in an attempt to raise as much as $2.2 billion. According to Dealogic, it is the largest European IPO of 2020 and among the top three globally. JDE Peet’s owns Peet’s Coffee, Jacobs Coffee, Douwe Egberts, Senseo and Tassimo, all of which sell coffee at cafes and grocery stores. Around 80% of JDE Peet’s coffee is sold for at-home consumption, a market that investors are betting will be last for many months due to the coronavirus pandemic. According to research firm Nielsen, single-serve coffee sales at grocery stores increased 16% during the four weeks prior to May 2, while ground coffee sales increased 11%. To capitalize on the growing demand for at-home coffee, Pret A Manger recently launched a range of ground and whole-bean coffees to sell in stores and online.
Cafe chains, on the other hand, have taken a hit due to lockdowns. Starbucks Corp. announced that global same-store sales fell 10% in its second quarter. The company has begun reopening numerous U.S. stores exclusively for drive-through, delivery, and pickup sales. Peet’s has also started reopening stores for pick-up at the door.
Four world-famous chefs, René Redzepi of Noma in Copenhagen, Dan Barber of Blue Hill at Stone Barns in New York, Kwame Onwuachi of Kith/Kin in Washington D.C., and Jessica Koslow of Sqirl in Los Angeles, all sat down with Howie Kahn from the Wall Street Journal Magazine to discuss the future of restaurants in the wake of the coronavirus pandemic.
All agreed that widespread shutdowns have exposed deep-seated vulnerabilities in the independent restaurant business. The pandemic has also put the spotlight on restaurants as cornerstones of local food systems, economies, and communities. Barber imagined a future where those food systems evolved beyond the current farm-to-table relationship. Despite supplier challenges, Redzepi explained that his main focus is on re-connecting with the local community in whatever way is possible. Koslow asked, “how do we create community outside of our restaurant?” and Onwuachi speculated that takeout would eventually become a more accepted way of experiencing a restaurant at home, despite the challenges and limitations of a take-home box.
Without a playbook, restaurants are taking several approaches to safe and profitable reopening. Most restaurants are considering thermal cameras and plexiglass as part of the plan, and many are stepping up their takeout game by selling groceries. New York restaurant Il Buco Alimentari e Vineria already has a built-in grocery store that’s becoming a model for other restaurants struggling to make it financially viable to reopen at reduced capacity. Fort Defiance bar and café in Red Hook, Brooklyn, recently remade itself into Fort Defiance General Store, and owner St. John Frizell has reduced the 42-seat dining room to just one or two tables inside as well as expanded outdoor seating.
Chef-owner Greg Baxtrom of Brooklyn’s Olmsted repurposed his private dining room into the Olmsted Trading Post, which now stocks around 120 grocery items. Many were served at Baxtrom’s restaurant and some are new products such as mushroom-growing kits. Café Cancale is another example in Chicago, where the dining room has become a new French market called Café Cancale Marche. The market features fresh seafood like shrimp and halibut as well as oyster-shucking kits and high-end pantry items rose vinegar and truffled Dijon mustard. Café Cancale Marche also sells martini kits from its neighboring bar, the Violet Hour.
When it comes to the long-lasting financial effects of the coronavirus, independent restaurants are in a uniquely vulnerable position. Safety restrictions such as social distancing of six feet, limited-size gatherings, and wearing masks cut to heart of the dining business model as they restrict sales volume and compromise the enjoyment of eating out. Although Congress passed the $670 billion Paycheck Protection Program (PPP), it contains mandates that could hurt, rather than help, independent restaurants, which make up 70% of all U.S. restaurants and are defined as those that operate 20 or fewer locations under one name.
For relief, two restaurant lobby groups, the National Restaurant Association and the Independent Restaurant Coalition, have lobbied Congress for weeks. Their efforts have resulted in two new bills in the House, which could be voted on next week. One is the Paycheck Protection Flexibility Act, which extends the period businesses can use their funds past the eight-week restriction the PPP demands and also eases restrictions on non-payroll use. The other bill, called Real Economic Support That Acknowledges Unique Restaurant Assistance Needed (the Restaurant Act), offers $120 million and targets small restaurants.
These bills offer a lifeline to owners of popular restaurants like Naomi Pomeroy, James Beard–Award winning chef at Beast in Portland, Oregon. The extra money and flexibility in using it, says Pomeroy, will allow her to re-invent her fine-dining bistro and allow her to weather the downturn until she “can start to really figure out a game plan that’s going to make sense and push us forward.”
Ten chefs and executives from chain restaurants like Burger King and upscale restaurants like Per Se met with President Trump and other cabinet members this week to seek increased economic aid for the nation’s 650,000 restaurants. The Independent Restaurant Coalition (IRC) promoted a stabilization fund for getting independent restaurants (those with less than 20 locations, accounting for about 70% of restaurants overall) back on their feet. Co-founder chef Tom Colicchio expects independent restaurants to earn only 20 to 30 percent of their usual income due to reopening restrictions and the public’s uncertainty about dining out again. “We’re opening up into a severely depressed market, and we need capital to kind of float the restaurants until business comes back,” Colicchio said.
According to the National Restaurant Association, the industry is expected to lose a staggering $240 billion in 2020. The group explained why the Paycheck Protection Program didn’t work for restaurants, yet after statistics were shared and strategies discussed, no firm commitments were made. “We’ve saved and we’ll continue to save the restaurant business,” said President Trump, “and ultimately we’ll be paid back many, many times.”
Chef Akira Back has high hopes for U.S. restaurants staying busy once reopened, even with social distancing practices in place. Back owns fine-dining restaurants all over the world, including spots in Las Vegas, Los Angeles, Singapore, Jakarta, Bangkok, and Dubai, and he wants American chefs to know things will get better soon. The chef’s restaurants in Vietnam and South Korea recently reopened and are busier than ever with steady streams of customers eager to get back to dining out.
“Everybody asks me what I think about the industry,” Back said. “I honestly think it’s not going to be as bad as everyone is saying it will be. It’s bad for sure. A lot of restaurants will close. But I really think people are going to come out to restaurants,” he said. The chef’s industry friends in South Korea keep telling him that their restaurants are busy and customers are getting comfortable with social distancing in the dining room. “We’re human,” says Back. “We’re going to go out and eat.”
Acclaimed Boston restaurateurs Jody Adams, Jamie Bissonnette, and Ken Oringer participated in a case study with the MASS Design Group, an architecture firm that has previously designed socially distant dining rooms in Haiti and Liberia. MASS released a set of open source design plans that show restaurateurs how to reconfigure their dining rooms to comply with social distancing requirements. The diagrams depict the flow of staff, guests, food, and air, incorporating design ideas for key “exchange zones” such as delivery, storage, cooking, customer hand-off, and disposal. According to executive director, Michael Murphy, the goal of reconfiguration is to show how “restaurants can reclaim their role in the public realm.”
The top three U.S. restaurant food delivery services are DoorDash, GrubHub, and UberEats. Together, they dominate about 80 percent of the market, while Postmates, Caviar, and smaller third-party delivery companies make up the rest. While DoorDash is currently the market leader, #3 Uber has made an offer to buy #2 GrubHub, a merger that would dominate 55 percent of the market, leaving DoorDash with only about 35 percent of the market, according to research firm Wedbush Securities.
Shortly after the news of a possible merger broke, GrubHub stock soared 35 percent. Negotiations between the two companies may have been accelerated as a result of Uber’s ride-sharing business choking up due to decreased travel amid the coronavirus. Currently, UberEats is the company’s only service experiencing higher sales year-over-year with a 53 percent increase in the first quarter of 2020. Get the full story at The Wall Street Journal here (subscription required) or at CNN here.