Food Fight Restaurant Group is looking at changes to its business model from employee salary to building structure in order to stay afloat post pandemic.
“We need to change and educate. It’s our fault, but we have taught guests to expect large portions, farm-to-table food and low prices,” said Greg Frank, managing partner of Food Fight. “In the best of times that’s a dicey model, and at times like this it’s a disaster.”
He told a Madison Rotary Club meeting yesterday that in a good year, restaurants make about a 5 percent profit, “leaving little room for error.” But the COVID-19 pandemic changed things rapidly. Frank noted tens of thousands of restaurants have closed nationwide. Madison lost some of its favorite locations, too.
“Our sales are half of what they were last year,” he said. “Come October if we’re not able to seat indoors, it’ll be a tough winter. So I’m really hopeful for a vaccine.”
Food Fight’s 21 businesses employed 1,000 employees pre-pandemic. It had to lay off about two-thirds of its staff, and is still not back up to previous employment numbers.
Frank explained that just like every other full-service business, restaurants had to come up with a new business model overnight: expanding delivery, online ordering, curbside pickup, partnerships and lobbying for personal protective equipment. Food Fight had to negotiate with its banks and landlords in order to stay afloat — all while making sure its staff and customers were safe.
Some adjustments are expected to continue post-pandemic, such as cancelled buffets, smaller dining rooms and even limited hours or days open per week. With outdoor seating becoming the new normal, fine dining — almost always indoor — is likely to take a hit. Frank also predicted more prepackaged or take-and-bake items and even “ghost kitchens” that centralize multiple restaurants to one kitchen making it easier for delivery drivers.
Even further, Frank suggested changes to the labor model.
“The industry is labor intensive. It has historically not been the highest paying, and the work is not easy,” he said. “Our cooks average well over $15 an hour with a good benefits package. That does come with a cost. And if you can’t raise prices enough to support it then it makes some tough choices.”
Frank noted that the Euro-model — fixed price and no tip — or the one-fair-wage model — everyone is paid the same and tips are split among everyone — may become the new normal.
Additionally, efficiency in all areas of the restaurants will be essential: smaller menus, no wasted kitchen space and an adjusted pricing model.
“The food and labor accounting for up to 75 percent or more of sales; there isn’t much left to cover the rest,” he said, adding that a diversified revenue stream is something that Food Fight is looking into.
“We need to not rely on the person walking in the door and figure out ways to bring in other income in other ways,” he said. “I don’t know what that looks like… we’ll see where that goes.”
-By Stephanie Hoff
WisBusiness.com
