The Pandemic Business Model
What is the restaurant pandemic business model? Is there one? If so, what is the pandemic wildfire business model? We responded immediately when we were shut down on March 16th and sold more takeout corned beef and cabbage on St Patrick’s Day than ever before. By that Friday our online ordering was up and running. We offered delivery, provided by the (masked) faces you know and trust. That was Business Plan Phase One.
Once we were able to reopen we enacted Business Plan Phase Two and set out spacious and gracious seating indoors and out and rolled out a 3-course, fairly expensive offering. This was a mishit, too much food for most. So we pivoted back to a more traditional menu.For Business Plan Phase Three we converted the wine bar into the takeout and delivery zone and rolled out the Marketplace. We spent thousands on a new reach-in cooler and freezer and began to fill them up with items produced in our kitchen or procured from local farmers and vendors. We bought jars and labels, upgraded our POS system and converted to fully integrated online ordering. We modified the wine program, lowering prices and scanning the market for great deals we can pass along.
The Next Pivot
Those of you with a business background - or (un)common sense – will understand this. It's the fixed expenses that kill you. Our rent at over $5,000 per month didn’t go down. Processing credit cards still costs over $3,000 per month. PGE hasn’t called to tell us our utility rates are going down. Our labor went up, even though our hours of operation decreased. Winter is coming and it looks like we’ll be down from 35 tables (pre-COVID indoors and out) to seven tables. If we don’t grow the takeout and Marketplace business to offset our expenses we are toast. Winter is coming and when we lose our outdoor seating our dine-in capacity will be cut by 50% again.Sometimes when Janet and I drive through the neighborhood we consider the small percentage of those households that are our customers. So many of you readers affirmatively support the restaurant and your support has put us in a position during this pandemic that most restaurants would kill for. We built our relationship with you the old-fashioned way, with genuine hospitality, great food and service, meaningful conversations and humor. Our core dining customers choose us for the experience and it has been our task to identify and amplify the ingredients of that experience.As our ability to provide that experience shrinks due to limited seating we need to attract additional customers that may use different criteria for choosing us. What might those criteria be? Specialty service? Niche products? Price?At Bethany’s Table we have not used discounts and coupons to appeal to customers. We have targeted all of our conversations, decisions and actions on the bullseye of why our core customers choose us. When we tried to diversify our audience years ago with a coupon program we attracted people who were not our customers and we confused those who were. This formula still works for dining in the restaurant, but it appears to be coming up short in the takeout business and I suspect that the Marketplace will need a different approach as well.
Our Value Proposition
We decided some time ago that we would be in the world what we wished to see in the world. When we made that decision the cost of chicken went up. Of course, we had always focused our product selections on organic produce and antibiotic and hormone free proteins. Then we added humane treatment to the criteria and the pasture-raised chicken got smaller and beef producers must adhere to Temple Grandin standards, etc. When COVID hit, Janet set her heels on buying ever more this year from local farms and vendors. These things cost money.I flat-damn guarantee you that our cost of goods resulting from this values-driven decision-making produces a cost factor that is ten points higher than nine out of ten of our competitors. In my view, this was okay as long as we were full. When an additional 20 people show up for dinner on any given night our fixed expenses don’t twitch a nickel. At $50 per cover, that $1,000 was taxed only by cost of goods. A full restaurant made it possible to hold to our values and holding to our values made the restaurant full.
Times Have Changed
The "full restaurant profit formula" doesn’t work in the current environment. Our ability to provide the experience that our core customers choose us for will soon be limited to seven indoor tables. We will not try to replace this lost profit by setting aside our values, lowering our costs or reducing the living wages of our staff. These are driving factors as we determine next steps.The recently implemented online ordering system sends out a review and rating sheet to every customer. Although the ratings are dominated by 5-star feedback, we often see only four stars for “Value.” Portions that are fully satisfactory in the restaurant, where they are enhanced by the experience of service, ambiance and hospitality, are not as favorably viewed in a to-go container. For years I beat on the kitchen to stop piling so many mashed potatoes on the plate of Chicken Marsala, as I saw so many spuds being scraped into the trash once the table was cleared. And how much pasta can a person eat in one seating?
Before COVID we modified the menu to make the (locally farmed, organic, roasted) vegetables an option on most entrees, instead of being automatically included. Again, I simply did not like what I saw going into the trash. Recently Janet added veg back to enhance the value perception as folks opened the to-go box, and she raised the prices slightly to cover that cost. I’m guessing though that more needs to be done. We need to simulate our “full restaurant” formula with the to go business, so we need to appeal to a broader spectrum of customers and to different buying criteria not based on experience. This we need to do without undermining our position in your neighborhood as the go-to dining spot. COVID may be around for a while, but it won’t last forever.
Your Opinion Matters
It really does. Please take the time, make a simple click below and share your thoughts and insights. We will be drilling down on these issues internally and you can expect more changes this month. Change, it appears, is our only constant.Thank you for all you do.