The restaurant industry is facing a stark outlook due to the COVID-19 pandemic. Many restaurants have been forced by government entities to operate at limited capacity (delivery, in-house) or shut their doors completely. As restrictions begin to ease, restaurants face many questions regarding how best to reopen by balancing government regulation and customer safety concerns, all while operating a profitable business model.
Timothy Webb, an assistant professor of hospitality business management at the University of Delaware, can talk about potential strategies restaurant owners can use to segment the market, account for government restrictions and potentially match pre-COVID dine-in revenue totals.
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Ensure that delivery options have been explored. Customers tend to feel more comfortable ordering take-out or delivery and these customers put no limits on seating capacity in the restaurant. It is not uncommon for restaurants to add delivery fees to order totals to balance potential added costs. From a general menu construction standpoint, Webb doesn’t believe altering a delivery menu from traditional pricing is a good idea. “Customers know what prices are expected when ordering and the corresponding quality based on price,” he says.
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Operate under normal menu and circumstances. For locations that have to operate at limited capacity (Ex. 60%) the number of guests that can be served on a busy day will be reduced. This reduces potential revenues and profitability.
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Recognize that not all guests are the same. Some guests order and spend more while others spend less. To capitalize on revenue potential from a lower guest count, restaurants could employ an option to limit capacity to reservations based on a Prix Fixe menu, where price is communicated in advance and is standard for each guest. The restaurant can then determine a menu and price according to market. This may mitigate the revenue lost from unused capacity, while controlling variability in average check, and the menu can be tailored to match the price and is known in advance. This can streamline production, lower labor costs and control profitability. Also, based on the reservation structure, guests may feel more comfortable knowing only reservation guests will be in the building and guest counts can be monitored for government restrictions and protocols.
