Independent restaurant operators are navigating some of the most brutal effects of the COVID-19 pandemic. Even multi-unit operators in great markets have seen radical changes in the last several months, as they described in a Food On Demand Conference panel discussion titled “Delivering a Consumer Experience.”
Kim Bartmann, of Minneapolis’ Bartmann Group, Nate Pollak, of The American Grilled Cheese Kitchen in San Francisco and Enrique Mendez, of Stone Bridge Pizza & Salad in New York, said their work today is all about the experience, but even more about just getting food delivered at all. Meghan Musbach, of Uber Eats, said the company made a full pivot to help independent and smaller operators.
All the operators had done a little or a lot of delivery, but the pandemic has been transformative.
“We have been experimenting with delivery only for probably a year, year-and-a-half, and then of course since the end of March we’ve been aggressively trying to build our game and seek out best practices,” said Bartmann, who has opened four of her seven restaurants. “They’re all doing low sales, all are doing delivery.”
She said only one location, a lakeside restaurant, has been as busy as ever.
For Pollak, the San Francisco-born grilled-cheese restaurant was already changing.
“We had been downsizing the business as we started a family and have moved into other businesses. We downsized to about two locations. Before the pandemic hit, San Francisco was the first community to completely lock down and L.A. started soon after. So we’ve been feeling the effects for four – four-and-a-half months,” said Pollak. “Our original location where the dream began, where I soldered copper pipe, is still live and operational—we never closed and (we) employed almost our entire staff through the process.”
He added that sales at the original location in downtown is running at approximately 15 percent of the revenue it usually produces.
“A lot of that has to do with the fact that we’re in a heavily tech neighborhood and they have all said they’re not returning until January,” he said. “And our beloved neighbors two blocks down, the San Francisco Giants, they’re not there anymore. It’s very much hurting.”
Losing major drivers of urban foot traffic has been a huge change for hot concepts in the past several months. Those with lines out the door for lunch from the growing business sectors around them suddenly don’t have any business, but fixed costs like rent, utilities and enough staff to stay operational remain.
Mendez said the same thing about his restaurant in Manhattan. The young restaurant company was just getting to a nice place with company catering when everything went, “poof.”
“When this hit, very similar to Nate—we’re in Midtown Manhattan a business district—so, 90 percent of our business evaporated overnight. The growing part of our business was corporate catering, we were putting a lot of effort behind that and there was a lot of demand for pizza especially the artisanal pizza we create,” said Mendez. “That all went away.”
With limited access to capital and PPP money running dry, independent operators like this are struggling through the crisis because they just don’t have the capacity for big drops.
“Starting a small business is like flying a plane. At cruise altitude, when something goes wrong, there are things you can do. But if something goes wrong at takeoff, you’re dead,” said Mendez. “We still consider ourselves a startup company.”
The Big Pivot
Musbach said Uber Eats saw the pain early on, and as the crisis was beginning, the company pivoted to helping its restaurant partners.
“Everyone has that moment when the pandemic really set in. For me and the team it was about March 10. We have quite a large staff and all work in the office, so we were scrambling to work from home and also balancing that with the 200,000 restaurants that need support at the same time,” she said. “Ultimately, we needed a focus and that focus needed to be independent local favorites. Our goal behind the eat-local push was to keep people ordering food. There were a lot of concerns about safety and we felt strongly what we could do with our reach and our customers was to keep people ordering food.”
She said Uber Eats basically “rebuilt the app” to help small- and medium-restaurant operators and shifted the marketing plan to focus on that segment. The quick change also put some of the company’s data work on full display. One key learning Musbach shared during the panel was helping operators expand delivery out of their own kitchen using Uber data to guide the way.
It’s “looking at our [Uber Eats] search data to see what those cuisine gaps are and we provide that to the restaurant owner at the early part of the conversation. To me, that’s part one. Then once you provide that gap it’s helping with the menu, so we have a library of items that fit that gap and will deliver well,” said Musbach. She said restaurants that tapped into that process saw a 40-percent incremental demand in delivery.
The operators on the panel didn’t say they tapped in themselves, but they made lots of changes on the delivery front to keep the lights on.
Bartmann rolled out a to-go menu with all her locations’ hot items and cooked them in a single restaurant to reduce costs across the organization. She also opened up curbside delivery at the locations that remained open, loyal fans started driving to the restaurants and “curbside pickup shot up and delivery went down.”
Pollak said despite a good fee from Caviar, secured as he was one of the first four restaurants on the platform, he rolled out delivery on every platform he could.
And Mendez said he actually had to shut down the company’s ghost kitchen location for weeks because the facility was too small inside to operate safely. At his main location, he expanded the delivery radius and shifted to residential consumers.
Things are getting better in aggregate, but the struggles continue for these operators and many others. They’re all looking for more ways to expand business right now and tapping into that entrepreneurial spirit, but their stories represent a scary prospect for the restaurant industry overall. Where do our favorite restaurants fit in the new normal?
“This is going to have a big impact not only on our business, but the economy in general. The world can change significantly, it’s already doing so,” said Mendez. “It’s important to figure out where we fit in this new world.”
Watch this panel and everything else from the virtual Food On Demand Conference, register here to see the recorded sessions.
