BACK TO NORMAL IN 2021? NOT SO FAST!
Back to Normal in 2021? Not So Fast!
So here we are, gingerly taking our first steps into 2021. Welcome to the new year.
An exclamation point on the end of that sentence is conspicuous by its absence. As much as we embrace the symbolism of a fresh start heralded by a glittering ball dropping in Times Square, the reality is this: We are entering our 11th month of a pandemic that is unlike any other event in living memory.
I will always remember March 14 as the day that the pandemic hit our industry like a two-by-four to the face. It was the day after the President’s declaration of a national emergency. Traffic plummeted to an unprecedented degree, literally overnight. Was there a single restaurant anywhere in the U.S. that was not impacted?
It is impossible to use a single brush to paint a picture of the balance of the year that followed. I think it is fair to say that all restaurants faced adversity, but the nature and degree of the challenges varied significantly. Casual-dining operators faced the most difficult circumstances. Drive-thru-dominated quick-service operators—and especially those in the pizza category—had the upper hand (though certainly not without their own issues to overcome). Operators in the fast-casual segment were somewhere in the middle; the nuances of their service systems and niche occupied by their cuisine were key factors in their ability to build back traffic. As I write this piece at the start of 2021, estimates vary on the number of restaurants that have closed, but I think most would agree it is in the many tens of thousands, and quite possibly is now into six figures.
As we cross the threshold into 2021, it comes with the reality that the restaurant industry has been fundamentally changed. It will likely never return to what it was. And if it does, it will take years to do so. Like the asteroid that wiped out the dinosaurs, the pandemic has reset the landscape of restaurant species. And as much as it pains me to say it—and it is indeed difficult to write it, given my respect for every restaurant operator, past and present—this is good news for the restaurants that survived the metaphorical asteroid impact.
Most would agree that the restaurant industry in the U.S. was overbuilt for some time. A saturation of restaurants never seemed to hinder the development of new restaurants; our industry is somewhat unique in that there is always room for another great restaurant, and so the macro environment—best described as too many restaurants for too few people—remained the status quo, year after year.
As we enter 2021, the complexion of the industry is far from settled. The last gasp for some operators came in the period from Thanksgiving to New Year’s Eve—the peak season for many. Many operators in the casual-dining arena fought valiantly to make it to that time of year, hoping that they could enjoy better times. Unfortunately, conditions surrounding the pandemic did not improve, and some operators saw their last flicker of light extinguished. It is not likely that we have reached the bottom of the valley of restaurant closures. That point in time is still yet to come.
For those restaurants that remain—no matter the degree of success enjoyed in 2020—this is a ray of light for 2021. It represents an unprecedented opportunity.
How do you take advantage of the opportunity?
For starters, take an inventory of your successes in 2020. The pandemic is far from over, and there is still time to double-down on the things that worked well for your business.
Don’t take your foot off the gas when it comes to providing an experience that eases people’s concerns about COVID-19. There are millions of people who have not been to a restaurant since March of 2020. If they have been out of the market this long, they are among those most concerned about the risks presented by the pandemic. Should they select your restaurant for their reentry into restaurant dining, you won’t stand a chance of gaining their repeat visitation if your operation doesn’t take their expectations into account.
The shift of the consumer to an off-premises dining experience was underway long before COVID-19. The pandemic simply accelerated the shift. Watching the movement in the channels of trade during the course of the pandemic has been fascinating; it provides insight into how customers might prefer to engage with your restaurant post-pandemic. Now is the time to examine these dynamics, and cast plans for how you will mold your operation in the post-pandemic world (whenever that may be).
If you have been enjoying success, don’t become complacent. While you may enjoy being in a superior position as a quick-serve operator, don’t lose sight of the fact that eventually restaurant counts will begin to rise. And when they do, the new restaurants will likely be more competitive, not less. I suspect that for several years to come, most people investing in a new restaurant will look at it through a prism of being able to survive (or better yet, thrive) under conditions akin to COVID-19. And goodness knows, lenders and landlords are going to look at it that way.
I will not try to predict the impact that the COVID-19 vaccines will have on consumer behavior during the course of 2021. Nor will I try to predict the point in time when state governments will begin to ease the restrictions placed upon the restaurant industry. What I will predict is that consumers will come back to restaurants faster than the pre-pandemic restaurant count will be reconstituted. When it comes to supply and demand, the demand for restaurants will outpace the supply of restaurants. And for operators—regardless of the segment they operate in—this will be a good thing. If you are operating on March 14 of 2021, you have reason to be optimistic. In my opinion, very optimistic!
And that deserves an exclamation point.
Note: This is the first entry of a monthly column from Firehouse Subs CEO Don Fox, covering the challenges restaurant operators continue to face due to the pandemic, and the potential path forward. Click here to read the article on QSR Magazine's website.
Don Fox is Chief Executive Officer of Firehouse of America, LLC, in which he leads the strategic growth of Firehouse Subs, one of America’s leading fast casual restaurant brands. Under his leadership, the brand has grown to more than 1,190 restaurants in 46 states, Puerto Rico, Canada, and non-traditional locations. Don sits on various boards of influence in the business and non-profit communities, and is a respected speaker, commentator and published author. In 2013, he received the prestigious Silver Plate Award from the International Food Manufacturers Association (IFMA).