For the New York-based Figure 8 Logistics crew helping restaurants spin up profitable delivery, carryout and native delivery operations, the COVID-19 crisis has been a sea change. Rather than focusing on executing soft- and hard-launches on previously planned schedules, the delivery-focused consultancy is helping restaurant concepts turn on a dime to provide customers what they really need to survive isolation—be it fresh produce or make-at-home cocktails.
While Figure 8 is a new company (first profiled by FOD back in February), some of its initial clients are early-stage restaurants, some of which had to drastically change their business models as the pandemic took hold—and became a historic crisis in the country’s largest city.
Co-founder Scott Landers said pivoting to new business models isn’t easy, but it’s a requirement for brands determined to stay open to make money in this vastly reshaped restaurant landscape. While he acknowledges that no tactics apply to every restaurant, the concept of moving quickly and being open to radical ideas is essential for survival.
“The reality has set in and people realize this is bad and it’s going to get worse, but the way we turn that corner faster is by talking about solutions and not waiting for those solutions to come to us from a government bailout or consumers going back to work,” Landers said. “These are the times, this is the new reality, and if you’re going to stay open, here we go.”
With corporate and retail trade areas especially hard hit, with central business districts and retail rows largely closed, Figure 8 is focusing on a range of options including delivery and pickup, meal kits, beverages including cocktails, and even selling raw vegetables directly to consumers—a trend that’s being adopted by brands as large as Panera Bread.
In an effort to assist the industry beyond Figure 8’s client base, the company started a newsletter highlighting best practices and case studies, including the release of an open-source economics calculator that calculates profit margins on menu items and delivery orders. Margins are calculated by plugging in food and paper costs, then pairing the items with the required packaging, and then operators can create mock orders that rope in commission, delivery fees and delivery-specific packaging to determine profitability.
One of the brand’s clients is Mexicue, a New-York based restaurant that started as a food truck, and now has five locations in New York, Connecticut and Washington, D.C. With a menu that’s Mexican street food with a hint of the American South, the restaurant started a white-label delivery experience called MexiCrew, focused on group dining.
Its stripped-down menu includes taco-based family meals and happy-hour offerings with tortilla chips, three dips, a handful of tacos and margarita kits where customers just add the mezcal.
So far, Mexicue’s new plan is working, with average check sizes closer to $60 than the $30/order that was originally forecasted in its business plan.
“Some are skewing more grocery, others are skewing to just bigger portion sizes,” Landers said. “Average check sizes in the $60 to $80 range is probably the new normal for anybody that’s still in business.”
Another client, Naked Farmer, also had to change its business model right before a planned launch in St. Petersburg, Florida. Rather than offering the original menu of vegetable-based meals, Naked Farmer decided to sell fresh produce to take advantage of the connections it had forged with area farmers.
While nothing is a silver bullet that works for every restaurant, Landers said all restaurants can learn from success others are finding.
“Anybody that has a restaurant right now that is looking at empty tables that has a supply chain they’ve invested in can immediately start supporting their local farmers, selling more affordable products [and] getting people healthy local foods and staying in business,” he added. “You’re going to have to scale down your staff and get really focused on this, but it can be done.”
For any restaurant looking to reopen or make a change, he advises thinking about primary factors: knowing your consumer and looking at the foundations of your business to rethink what you can offer to customers in your home turf.
“If you’re going to stay open and you’re going to go for it, those are the two things to look for,” Landers added. “It’s a fast-moving market, and it really is like fight or flight, so if you’re going to fight, you gotta fight.”