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By Jonathan Horowitz – Guest contributor

Apr 17, 2020

Op-Ed:  What Dining Out Might Look Like After The Pandemic

There is tremendous uncertainty surrounding the issue of when our lives will start to get back to “normal” — whatever that might be. However, we can all be sure things will be quite different than they were prior to the COVID-19 coronavirus pandemic. There continues to be numerous discussions about how restaurants and bars may function after they’re allowed to reopen, and what they may look like while we wait for a reliable vaccine for COVID-19. 

According to the Texas Restaurant Association, there are more than 12,000 restaurants in the greater Houston area, employing more than 300,000 people. Based on a recent poll, only half of those restaurants which applied for assistance through the CARE Act have received so much as a response to their application. Unfortunately, some of those may fail even after they receive assistance, since it will take time for business to build again and there will be significant differences in they way restaurants are forced to operate. 

Here are some possibilities for what we may see in the future:

Restaurants and bars will look different. It’s highly likely our favorite dining spots will be forced to reduce capacity by eliminating seating and spacing the remaining tables farther apart. It’s also possible that restaurants won’t be allowed to seat large parties or accommodate private events in their function rooms. It will be even more difficult to get reservations at popular locations. This certainly will reduce restaurants’ revenue overall and will put additional financial hardship on already strained businesses. As a result, future restaurant development likely will trend towards smaller locations, streamlined service models, and more fast-casual and quick-service concepts.

The dining experience will change. Be prepared to see servers and other employees wearing masks during their shifts. It’s likely they all will be getting temperature checks before they begin work each day. Some restaurants may even start taking customers’ temperatures before allowing them inside. There certainly will be more cleaning and disinfecting going on during service times, and more disposable or single-use menus, utensils, plateware and glassware being used. Unfortunately, all these things increase the operational costs for the restaurants and, consequently, may force restaurants to raise prices – something that often results in consumer backlash.

 

Moreover, expect restaurants to reduce as many potential “touch points” as possible — which may mean the elimination of valet parking as well as waiting areas inside the restaurant, potentially forcing customers to wait in their cars until a table is ready.

A continued increase in take-out and delivery. Right now, any restaurant not doing take-out or delivery is closed. However, even prior to this pandemic, consumers were utilizing take-out and third-party delivery services at an ever-expanding rate. Expect this to continue as more restaurants adapt to consumers’ changing demands and expectations. Already, many operators have learned how to increase proficiency and productivity utilizing fewer employees. The question will be whether this is viable as a business model since most delivery services take 25 percent to 30 percent in commissions from the restaurant, making those sales only minimally profitable, if at all. Concepts like “ghost kitchens” — where food is produced solely for delivery out of small, kitchen-only facilities — likely will see continued growth and increased market share.

The possibility of additional revenue streams for certain restaurants. During the pandemic, some regulations have been relaxed to enable restaurants to generate revenue through “non-traditional” means. Two of those things are the ability to sell retail products in a “market” or “grocery” format, and the ability to sell pre-packaged drink kits with small, sealed bottles of alcohol (not mixed drinks). There is hope within the industry that, after restaurants re-open, these changes will become permanent. It remains to be seen how the Texas government and regulatory agencies will handle this; however, leaving these options in place would help restaurants financially and would provide more purchasing options for the consumer.

What happens next is still a matter of debate both locally and nationally, but all indications are that the entire hospitality industry will look, feel and operate quite differently in the future than it ever did before.

Jonathan Horowitz is founder and CEO of Houston-based Convive Hospitality Consulting.

By Laura Gillespie  – Reporter, Houston Business Journal

Mar 31, 2020

Houston Could Lose A Quarter Of Its Restaurants, Consultant Says

Local restaurants are now losing 40 percent to 50 percent of their business amid the fallout from the coronavirus pandemic, and that’s if they’re successful with the takeout and delivery model, industry expert and restaurant consultant Jonathan Horowitz told the Houston Business Journal.

Should the current timeline hold, and businesses open again in a matter of weeks, Horowitz estimates Houston may still lose 20 percent to 25 percent of its restaurants. 

Horowitz, former CEO of Legacy Restaurants and currently founder and CEO of Convive Hospitality Consulting, said many more restaurants may close temporarily rather than continue offering takeout and delivery.

 

Currently, Houston is seeing major fine dining restaurants like BCN Taste & Tradition, MAD, Turner’s and The Annie Café & Bar temporarily close. 

“Places that are more traditionally associated with takeout and delivery are more likely to maintain more traffic,” Horowitz said. “Higher-end sit-down restaurants, people don’t think of them first in terms of where am I going to get my takeout.”

Those restaurants that are remaining open are learning to live with a new normal. Some are adjusting better than others. “The ones that can adapt and encourage and maintain as much takeout and delivery business they can hopefully will be able to hang on long enough to still be there when things turn around,” Horowitz said. 

Many restaurant leaders agree that it will be impossible for them to survive the social distancing efforts need to slow the spread of COVID-19, the disease caused by the new coronavirus, without government assistance. Horowitz agrees, and adds that support and concessions are needed on all sides.

“I do believe that there is going to be (assistance) needed,” Horowtiz said. “I think what currently is in place is a good start. (Delivery and takeout is) not going to be the end-all, be-all for all restaurants. It’s going to take more, particularly if the time extends more than just the next month.”

Landlords want to be helpful on assisting their tenants on rent, Horowitz said, but they do have bills and mortgages to pay. Horowitz has talked to some who have come to an agreement to abate the rent now for several months and tack it on the back end of the lease. This is similar to solutions proposed by some restaurant leaders, such as acclaimed restaurateur Chris Shepherd.

"People aren’t getting paid, so how can you expect them to pay rent? … We’re all going to have to be in this together," Shepherd told the Houston Business Journal. "Take that hit (now), and then in the future you can tag that (rent) back onto me, and I’ll pay you.”

Horowitz encourages restaurants to go after everything they can in terms of assistance. Relief exists from many organizations, from the Small Business Administration to the James Beard Foundation and more. Even if a restaurant thinks it might not be eligible for a loan or grant, it should apply anyway, Horowitz says. 

Houston restaurants fighting to stay alive during coronavirus pandemic

 

Businesses might not recover, and those who do will face a very different Houston restaurant landscape.

Greg Morago

March 24, 2020  Updated: March 26, 2020

Aaron Lyons likens what’s happening to Houston restaurants to a prize fighter sent into the ring with both hands tied behind his back. Some restaurateurs would probably add blindfolded, too.

Facing an unprecedented curtailing of routine business operations, Houston restaurant owners are struggling in ways none could have imagined before the novel coronavirus pandemic. Almost every aspect of restaurant operations has been upended since bars in Harris County were closed last week and restaurants were limited to drive-thru, takeout and delivery. Though some restaurants quickly shifted gears, others decided to temporarily close as Texas grappled with halting the spread of the coronavirus.

The developments have shaken restaurateurs to the core, and the prospect of even longer business delays is devastating.

“I do think there’s going to be a lot of casualties,” said Lyons, who owns five Dish Society restaurants throughout Houston and in Katy. “If you were struggling before, this is probably the nail in the coffin.” Lyons’ observations underscore a sobering truth about small and independent restaurants that traditionally operate with razor-thin profit margins (1 percent to 2 percent), leaving them vulnerable to minor business interruptions, “let alone catastrophic impact such as the COVID-19 crisis,” according to the Texas Restaurant Association.

Restaurants in Greater Houston — at least those that could — quickly pivoted to curbside pickup and delivery businesses in an effort to stay afloat and keep workers on the payroll for the mandated two-week shutdown. Still, last week roiled the industry as operators pleaded to local, state and federal officials to help save a key thread in Houston’s business and social fabric. And Texas’ too: The restaurant industry represents a $70 billion economic impact to the state of Texas.

It is only the beginning of what some predict will be an ongoing catastrophe for the Houston restaurant scene.

“We’re trying to make it day to day right now,” said Tracy Vaught of H-Town Restaurant Group, which includes Hugo’s, Backstreet Café, Caracol and Xochi. “We’re not thinking about the future except to say that it will probably last longer than two weeks.”

But that future is what is on the minds of everyone in the restaurant business.

“I’m predicting that things won’t get back to 90 percent of normal until the end of 2021,” Vaught said. “When we reopen, whenever that is, we’re going to be limping along. It’s not going to be a bounce back.”

And when it comes back, it will not look the same, said Jonathan Horowitz, founder of Convive Hospitality Consulting, a restaurant consulting company.

“It’s going to change the landscape forever,” said Horowitz, former CEO of Legacy Restaurants and former president of the Greater Houston Restaurant Association. “We’ve been shell-shocked. It’s more grim than you can imagine. It’s utterly depressing and really, really scary.”

The Texas Restaurant Association projects that 25 percent to 30 percent of independent restaurants will close if Gov. Greg Abbott’s executive order to close all Texas restaurant dining rooms and bars for dine-in service continues past its run through April 3. For Houston — which has more than 10,000 restaurants and employs about 300,000 in Harris County — that’s a terrifying prediction.

“The challenge for folks right now is not knowing when it’s going to end,” said Melissa M. Stewart, executive director of the Greater Houston Restaurant Association. “You have no idea how much worse it’s going to get before it gets better.”

Restaurants in Chinatown have suffered longer than other Houston restaurants because of the coronavirus news in January. “After that, the whole of Chinatown was dead,” said Mike Tran, who for now has closed his restaurants including Mein, Toukei, Ishin Udon, Ohn and Tiger Den. “We’ve been dealing with this for a while.”

Tran said the worst is yet to come. If the restaurant ban is extended and businesses remain closed for additional weeks or even months, “it’s going to be harder to get customers back,” he said. “People are scared. I don’t know how long this thing is going to last. A lot of people are scared.”

Restaurateur Benjamin Berg says it has to get better. Houston is a social animal that thrives on a lively restaurant and bar scene. Higher-end, full-service restaurants like his — including B&B Butchers steakhouse, B.B. Lemon, B.B. Italia and The Annie Café & Bar — are taking a hard hit because the public doesn’t associate them as curbside and takeaway operations. Mere days before the dine-in ban, Berg had opened another spot, the lavish, luxe-minded Turner’s, set just below The Annie on Post Oak.

He thinks there will always be a place for fine-dining restaurants in Houston. “Taking that away from people would be a mistake. There’s a place for them in Houston, 100 percent,” he said. “When your goal is hospitality, providing experiences and great dining, you have to put it all out there.”

But there are many lessons to be learned by the coronavirus shutdown, Berg acknowledges. Restaurants are going to have to be smarter and more efficient, and perhaps smaller; less overhead and more rainy day funds. The typical Houston restaurant business model will have to be re-evaluated.

It’s not so much a flawed business model as it is a matter-of-fact one. Slim margins will always mark the restaurant industry, Horowitz said.

“The problem with the vast majority of restaurants is that unless they’re owned by some uber-wealthy person, they don’t have a pile of money sitting around in a rainy day fund. All the cash goes back into operations.”

Right now that cash is even tighter. A group of local restaurant-industry workers, numbering about 500, signed an urgent petition to Mayor Sylvester Turner last week imploring the city for help in the form of delayed or deferred state sales taxes (which the state denied Friday), rent relief from landlords, paid sick leave for employees and the use of emergency funds to allow restaurants to file “interruption of business” insurance claims to cover 30 days of labor or rent costs. Turner, in kind, asked U.S. congressional leaders to enact measures to aid the local restaurant industry, the fourth-largest employer in the Houston area.

Could Houston restaurants have done more to protect themselves before the pandemic?

Horowitz said no. “It’s important to note that you can have the best business plan in the world, but nothing can prepare you for what we’re going through right now. This is beyond anything anyone has experienced,” he said. “The most efficient business model in the world is going to struggle in this environment. This is so extraordinary, so unusual and so devastating.”

But not insurmountable, said Lyons, who noted that restaurantgoers are eager to support the industry and can’t wait for their beloved eateries to reopen in full.

He uses the boxer analogy again: “Much like what happened with (Hurricane) Harvey, this city rises to the occasion any way it can. People in Houston keep taking the punches and keep getting back up.”

 

 

 

 

© 2020 by CONVIVE Hospitality Consulting.

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