Restaurant Activity

Peter Creasey

Peter Creasey

Peter Creasey
Along with "Retail Activity" oriented toward wine...

Any thoughts as to what the future holds for the restaurant status and activity...and when? Will restaurants allow mingling like before? Can the small operators cope? What might be a timeline?

This chart is heavy...

restactv1.jpg
. . . . . Pete
 
originally posted by Peter Creasey:
Restaurant Activity
Along with "Retail Activity" oriented toward wine...

Any thoughts as to what the future holds for the restaurant status and activity...and when? Will restaurants allow mingling like before? Can the small operators cope? What might be a timeline?

This chart is heavy...

restactv1.jpg
. . . . . Pete
Click to expand...
The evidence is accumulating that a large part of the collapse of restaurant attendance was consumer driven, not just state restrictions or shutdowns. Which means that, regardless of states "opening" or not, the return to restaurants will be slow and gradual. And obviously highly dependent on both the facts and media perceptions regarding infection rates, immunity and vaccines.

On the other hand, we're herd animals, so I could imagine a scenario where within each market it's very gradual to a point, and then suddenly accelerates. Again assuming the virus doesn't resurge in the places reopening. (Big assumption at this point).
 
I have read recently that a restaurant running at 50% capacity either barely breaks even or barely doesn't break even. Most restrictions on re-opening will have restaurants operating at 25% capacity and, obviously, no business can run for long losing money. A restaurant that had been extremely successful for many years, enough to have become a fixture, might be able to weather some months of such a situation. But many will surely go under. When we come out on the other side, I'm pretty sure there will be restaurants again. Thereo have been epidemics and pandemics before. That won't help much all the individuals who own or work for the current set of restaurants though. And I think there will be fewer of them for some years.
 
Christian, interesting that the collapse might have been largely consumer driven.

Another factor in consumer response will be what the restaurants offer up in the way of both protections and ambience.

As to your comment on the recovery being "highly" dependent on media, given what's been going on so far, there is no question as to what perceptions the media will project.

. . . . . Pete
 
Jonathan, the restaurants I have knowledge about furloughed many if not all of their employees. And they are tending to call back the lower salaried employees. One of the fall-outs of this is top sommeliers remaining on furlough because of their higher(er) salaries.

Not a pretty picture!

. . . . . Pete
 
originally posted by Peter Creasey:

Jonathan, the restaurants I have knowledge about furloughed many if not all of their employees. And they are tending to call back the lower salaried employees. One of the fall-outs of this is top sommeliers remaining on furlough because of their higher(er) salaries.

Not a pretty picture!

. . . . . Pete
Click to expand...

I'm sure numbers of restaurants will try to hang on with reduced staff and patronage. But if 25% is the new norm for the forseeable future, much less if the clientele doesn't come back, it won't be for long.
 
one thing that has not come up in these discussions on reopening at reduced occupancy is whether demand and loyalty in customers would be significant enough to pay increased menu prices during reduced occupancy. obviously not every customer could afford this, but i believe that there are customers that could and would be glad to do so, rather than see favorite places die.
 
originally posted by robert ames:
one thing that has not come up in these discussions on reopening at reduced occupancy is whether demand and loyalty in customers would be significant enough to pay increased menu prices during reduced occupancy. obviously not every customer could afford this, but i believe that there are customers that could and would be glad to do so, rather than see favorite places die.
Click to expand...

I have not seen such a possibility discussed, which is why I did not bring it up. Nathan could speak to this better than I can, but if 25% accuracy means one is less than half way to breaking even, logically, it would seem that prices would have to more than double. I doubt many restaurants could survive that. Well, I guess the luxury places like the Inn at Little Washington could given their clientele, but not places whose customers are normal human beings.
 
originally posted by robert ames:
one thing that has not come up in these discussions on reopening at reduced occupancy is whether demand and loyalty in customers would be significant enough to pay increased menu prices during reduced occupancy. obviously not every customer could afford this, but i believe that there are customers that could and would be glad to do so, rather than see favorite places die.
Click to expand...

So, for most restaurants 70% occupancy is a death sentence. Most need 90%+. Even successful restaurants are paying off start-up costs for the first 5-7 years. Restaurants think in terms of turns. Many need more than 1 per shift to make their business model work. One of the reasons that restaurants are so screwed is because prices didn't rise in line with costs. If you're lucky, when you re-open, you will still get rent consideration from your landlord to match your business. This is assuming that your customers want to come back. Like many full service independent restaurants, our demo skews older and those are precisely the folks at higher risk. Those are also the patrons that can most afford to pay higher prices. As far as I can tell, nothing has changed from Tom Coliccio's supposition that 70% of restaurants will never re-open.

Edited to add: a little back of the envelope really rough math puts our BE at somewhere around 1.1 turns per night and we are an established restaurant with a reasonable lease and no debt.
 
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