This article was originally published by Alex Canter, founder and CEO of Ordermark, on LinkedIn. It is republished in full here with permission. Thank you to Alex and the Ordermark team for their insights.
As concerns about coronavirus grow, Ordermark sat down with Alex Canter (Ordermark CEO) and Charlie Jeffers (Ordermark Head of Innovation) to share input on how it’s affecting restaurants and ways that restaurants can prepare for an indefinite period of reduced foot traffic and on-premise dining.
1. Foot traffic is down nationwide. How should restaurants respond to coronavirus concerns?
Alex: As with any public health concern, restaurant operators must take the coronavirus pandemic seriously. Leaders of their organizations have a responsibility to their staff and their diners to both ensure the highest levels of food safety, but also to educate and help assuage any fear or panic in staff and diners that can lead to poor choices and misplaced anxiety.
The CDC, or Center for Disease Control, has the most comprehensive and up-to-date information on coronavirus and restaurant operators should visit and monitor this website to educate themselves and then share this information with staff.
In addition, the National Restaurant Association has provided guidance specifically for restaurant operators here:
Besides educating themselves, their staff, and diners, operators should prepare for the possibility of a sustained downturn in dine-in volume. This could impact decisions about inventory, budgeting for advertising, and possibly hours of operation. Although we’re seeing a significant upturn in online ordering, operators must assess for themselves the true impact of additional investments there.
Here are two additional useful articles on how restaurants are responding:
2. For those restaurants experiencing growth in delivery volume, how should they be planning?
Charlie: With surging orders online, make sure you have extra to-go packaging, bags, utensils, etc. and be open to accepting more orders at peak times. There may be supply chain issues, particularly with packaging, so it’s wise to plan purchases with this in mind. We don’t know the duration of the coronavirus situation, so it is wise to err on the side of caution and be extra aware when making purchases that may be impacted by this.
If your locations are experiencing growth in online ordering, it is important that you understand and closely monitor operational concerns such as prep times and order timing. If your staff is unaccustomed to higher volume online orders, retraining may be needed to accommodate reasonable prep times and you may need to do more prep in advance for online orders. Additionally, if you find that online orders are received at the start and up until the end of your hours of operations, you may decide to test expanding hours of operation to accommodate increased demand and opportunity to capture more revenue.
Be especially mindful that your staff does not throttle online orders. This means you may need to reallocate staff from the floor to the kitchen if you are experiencing decreased on-premise dining.
3. More restaurants are opening virtual restaurants, some in response to declining foot traffic. How do the economics of virtual restaurants compare to brick and mortars?
Alex: There’s no question that virtual restaurants have been growing in popularity the past year or so. In our experience working with hundreds of them, they’re generally quite profitable when you account for fixed costs such as rent and payroll. If you take into account these are fixed costs, regardless whether or not you operate additional virtual restaurants, the additional incremental revenue that virtual restaurants generate is generally very attractive. With the only additional cost being food cost and online ordering take rates, the profit margin can be as high as 40% on incremental virtual restaurant orders.
4. What are some ways that restaurants can ensure quality and consistency when allocating more resources to delivery?
Charlie: There are many ways to optimize for online ordering starting with an intense focus on quality and consistency. For restaurants that are new to online ordering or that haven’t optimized for it, you must test menu items and packaging for delivery and varying delivery times. Ensuring the highest quality of the food delivered to your customers is job number one, two and three.
Next, pare down your online menus to the items that travel best and that are the easiest to source and the most profitable for you. More is not more. More is less. Include signature dishes if you can. Make your menu straightforward and easy for your online customers.
5. How have you seen the concerns around coronavirus affecting chain restaurants, their plans for online ordering, and planning in general?
Alex: It’s still early but our national chain customers are making significant investments in expanding their footprint of online ordering. It’s pretty clear why they’re doing it: On-premise is being hit hard and online ordering represents a shift in revenue opportunity that is crucial, however long the coronavirus concerns remain. We’re also seeing a very high degree of interest among non-customer chains interested in rapidly deploying online ordering across a large footprint of delivery services. We’re here to help them with that — it’s what we do — but of course we take no pleasure in the circumstances and we hope this whole episode passes quickly.
6. What are some ways that technology companies, POS and ordering services, can help restaurants cope with the challenges posed by coronavirus and declining foot traffic?
Charlie: Talk to them! Learn what they’re hearing and seeing. That’s the best advice I can share. Learn how they’re dealing with the situation; what’s working for them — then try to duplicate it. You might be able to call up a few friends that also operate restaurants, but your technology vendors are working with hundreds or thousands and can be a great resource for helpful tips and information on how to respond to changing consumer behaviors during this crisis.
There are lots of tricks for shifting more revenue to online ordering. For example, you can offer free or reduced delivery fees and each of the ordering services offers a wide range of promotional opportunities. Finding out what will move the needle for your business will require either a bunch of experimentation or better yet, conversations with people that have already tried them!
I’m working with dozens of independents and chains and the best ones already have plans together to deal with this. You’re not alone. Ask for help!