When restaurants reopen, by force or by choice they will be operating in a different world than before the lockdowns began. There will be temperature checks for staff and much less tolerance for working while sick. Kitchen and dining areas will have to be redesigned to accommodate staff and customer physical distancing. There will simply be no way to fit in as many guests as before. And customers may not return in the numbers they used to.
Even with these profound changes to business as usual, the number of infections will begin to rise again as soon as the economy reopens. Slowly first, then more quickly. Countermeasures will then have to be put in place to slow the virus’s spread. If it nonetheless spreads too fast, another intense lock-down will be necessary, followed by another reopening.
This is the reality: Corona time is the cycle that has only just begun. It will probably alternate between intense lock-downs to prevent infection rates spinning out of control and less-intense lock-downs during which the economy partially reopens. This cycle will have to continue until there is a vaccine — which could be up to two years away. Any existing restaurant business model is incompatible with this new social and economic reality.
Because the novel coronavirus is so contagious, even the low frequency with which it either kills people or makes them severely ill means that it would devastate the economy if allowed to spread uncontrolled. There is no medicine known to be reliable in treating COVID-19, and no working vaccine has been developed yet. Short of widespread and mandatory biosurveillance (in the form of monitoring and recording individuals’ temperatures, movements, and locations), aggressive physical distancing in the form of intense lock-downs like the ones now in place around the world seems to be the only reliable and highly effective way to control its spread.
Because of all this, we know that business (and social life) can only go back to normal when physical distancing can be suspended without the threat of the coronavirus spreading rapidly. This will only be possible if and when a working vaccine becomes available and a large enough percentage of the population has been vaccinated or has recovered and become immune. A reality check: This will probably not happen fast. Tens of millions of doses will most likely be needed for the U.K. alone, hundreds of millions for the U.S. Billions of doses worldwide.
Before there is a working vaccine, reopening the economy without controls will allow the coronavirus to spread faster. This means that reopening the economy can only be partial and temporary, and must be supported by extensive testing and tracing. Governments will probably have to periodically reinstate intense lockdowns to slow the virus’s spread so that the number of new infected patients doesn’t overwhelm health care systems.
For governments to know when, how, and for how long to impose intense lockdowns, they will need accurate and highly reliable tests that show who is currently infected with coronavirus and who has recovered from it. And they will need to be able to test many hundreds of times the number of people currently tested every day. These testing tools and methods need to be designed and manufactured, technicians trained to use them, facilities built to house the testing staff and equipment — governments and businesses are working on this now, but getting to the scale required will inevitably take time.
So, the realistic estimate, based on what is known right now, is that intense lock-downs must continue until the infection curves are pushed down enough that health care systems are not overwhelmed and much better testing and monitoring is available at scale. At that point, the lock-downs will be relaxed but not fully suspended. For restaurants, business as usual will not be possible during these less-intense lock-downs. Some level of physical distancing will have to become the norm. And even then, intense lock-downs will probably have to be reapplied intermittently and unpredictably until a vaccine becomes available.
This means there’s almost no chance that coronavirus will go away in a few months. Short of a technological breakthrough, it’s unlikely that corona time will end before the end of 2021. And when people do get to eat in a restaurant before then, there will have to be far fewer people eating and drinking together than before.
Restaurants face enormous uncertainty in corona time. This uncertainty is not the same as the risks that restaurants routinely encounter — like not knowing exactly how many no-shows there will be on a given night, or running out of prep in the middle of a particularly busy service. These garden-variety risks can be understood, and so can be managed with proper planning or insurance.
Coronavirus uncertainty is entirely different. It can’t be understood, and so it cannot be planned or insured away. At this moment, restaurants don’t know how long intense and less-intense lock-downs will last. They don’t know what restrictions there will be on how they can operate during less-intense lock-downs. They don’t know what the economy will look like over the repeating lock-down cycles of corona time. They don’t know how customer demand will be affected by how the economy will be affected by coronavirus. This coronavirus uncertainty is unavoidable, and it will fundamentally change what it means to be a restaurant in ways no one fully understands yet. This uncertainty threatens the viability of the pre-coronavirus idea of the dine-in restaurant itself. And it is likely to last in some form until a vaccine is available.
For restaurants, the last few weeks have been about scrambling to find ways to make enough money after dine-in customers suddenly disappeared. This is an already-devastating preview of what the rest of corona time will be like. In these early weeks, this new, physically distant reality still feels short-term. Attempting to preserve what remains of normal life, many consumers are eating where and what they used to. Except now they’re doing it at home. For the moment, some restaurants will be able to get by on selling what they used to serve to dine-in guests, putting it in a box, and offering it for takeaway or delivery. Restaurants cannot expect this situation to continue for the entire duration of corona time.
Eventually, even after the economy reopens, unemployment will probably rise much more — possibly to unprecedented levels — if businesses cannot go back to operating as usual and government stimulus and aid packages have run out. (In the U.S., some of the aid designated for small businesses ran out within weeks.) Unemployment has already surged despite programmes specifically designed to keep employees on payroll. As unemployment rises and wages shrink for those still at work, eating in restaurants will become even more of a luxury than it already is.
In short, pre-coronavirus restaurant business models cannot survive corona time’s physical distancing and economic fragility. And moreover, if corona time is not two to three months but up to two years long, restaurants will have to rethink their corona-time strategy to survive.
Every restaurant is different even in the most predictable and stable of times — and there is no tried-and-tested playbook for restaurants to deal with the enormous uncertainty created by the novel coronavirus. What works in corona time will depend nearly entirely on the particular context of the given restaurant — whether that’s a 10-cover wine bar in a part of London where many young singles live, an 80-seat mid-market restaurant in a New York neighborhood filled with prosperous families, or a 25-seat cafe in a part of Los Angeles without a grocery shop or supermarket.
In figuring out a corona-time strategy, the first question restaurants need to answer is whether they should just close for good. For most restaurants in major city centres — Mayfair, the City, Covent Garden in London, much of prime Manhattan — that used to pay their enormous rents and wage bills with high foot traffic from tourists and office workers, it will probably make sense to cut losses early. With no plans yet to reopen international travel at scale, and without any certainty on when offices will reopen and how many workers will be allowed back in under less-intense lock-downs, these restaurants should assume these customers won’t return to city centres in the same numbers until a vaccine is available. There will always be exceptions, but most of these city centre restaurants will not have access to enough customers to be viable.
Smaller, independent restaurants in more residential neighborhoods outside high-rent city centres may be able to tough it out for long enough to get to the other side of corona time. But they’ll only be able to do this by constantly thinking a few steps ahead to understand what to sell, who to sell it to, and at what price.
This will require a nearly total change in mindset and business model. Each restaurant will have to answer two main questions to figure out what its corona-time business model will be. First, who are the customers that will be willing and able to buy from the restaurant for the next 18 to 24 months? And what can it sell these customers that they will want, while being economically and practically viable during both intense and less-intense lock-downs? Every restaurant’s answers to these two questions will be different.
What is clear, though, is that pre-coronavirus business models built around attracting customers from across the country or around the world will not work in corona time. Even attracting customers from the other side of the city may be impossible during intense lock-downs. Because some level of physical distancing and travel restrictions are likely to be a part of daily life for so long, the customers who will matter most for any restaurant will be those who live close enough to collect their orders in person or to get food delivered quickly at a reasonable price.
As the months pass in corona time, how these local customers eat at home will inevitably change. In both intense and less-intense lock-downs, people will likely work from home more than they used to and have less money to spend than before. The routines they eventually settle into will probably involve much more cooking. Restaurants will end up competing not with each other but with the supermarket and its frozen ready-meal section. What restaurants sell will have to change as corona time proceeds — most importantly, it will have to become progressively less expensive.
To survive as the consumer landscape changes, restaurants will have to pay more attention to their local customers than ever before. If the neighborhood has many large families, a restaurant might succeed by offering cooked-to-order or reheatable meals in a range of portion sizes. If there are few grocers in the neighborhood, it might succeed by selling pantry and grocery items. If there are community organisations in the neighborhood, the restaurant might succeed by arranging to be paid to supply them with cooked meals — organisations to support this kind of restaurant response have emerged, for instance, in London, Boston, and New York. What works for one restaurant may not work for another.
Paying close attention to the local context cannot be a one-off, either. Restaurants will have to keep paying attention and responding to local customers as corona time unfolds, disposable incomes gradually fall, and customer demand changes. During an intense lock-down, a restaurant with a cooked-to-order takeaway menu might add lower-priced reheatable packed meals to its offering to draw customers who have become more price-sensitive because they’ve been furloughed. A few weeks later, if more of its customers are out of work, it might begin to phase out the relatively expensive cooked-to-order menu and add even lower-priced prepared ingredient boxes with recipes to the list of reheatable meals. Some weeks after that, if the trends continue, it might start to also offer even less expensive produce boxes and pantry items. Building business models that are viable even during intense lockdowns will make restaurants robust even when customer demand is lower than expected during less-intense lockdown periods — as restaurants in cities that have graduated to less-intense lockdowns are beginning to report.
Only restaurants that continually put effort into understanding their local context will be able to find local customers, then offer them what they want to buy at the price they’re willing to pay, as that price drops over time.
If there is a silver lining, it is that the overriding importance of neighborhood custom would make corona-time competition between restaurants fairer. It won’t only be restaurants with social media followings and internationally recognized brands that will succeed in corona time. In fact, those kinds of restaurants might have to learn how to find, understand, and serve local customers instead of critics, the PR industry, and influencers. In contrast, the low-profile but much-loved neighborhood restaurant with loyal local customers already has an advantage in this corona-time restaurant game where the goal is to make enough money to stay afloat until a vaccine becomes available.
Restaurants that successfully change their business models will be able to keep at least some staff on payroll and continue to pay some of their suppliers and distributors. In turn, this will be the only feasible way for them to be able to offer dine-in menus when intense lock downs are temporarily relaxed. Being able to take advantage of pent-up demand during less-intense lock-downs will also help them survive through the leaner weeks when intense lock-downs are imposed. And preserving this fragile web of employee, supplier, distributor, and restaurant relationships is essential if the restaurant industry is to recover after corona time.
Every restaurant’s corona-time business model will have to be fundamentally different from what it was as a dine-in restaurant. This business model will have to change continually as the situation changes. Pivoting to the numerous offerings this entails will require rethinking what it means to be a restaurant in the first place. This will be hugely difficult. Landlords which offer rental concessions to restaurant tenants will be instrumental in those restaurants making it through corona time. And even then it will take enormous agility, effort, and creativity from the restaurant. Fortunately, these are qualities independent restaurants have in abundance (and which large, investor-backed chains often lack).
Coronavirus will be with us for a while, but people will still have to eat. The restaurants that survive corona time will have figured out how to stay an indispensable part of that equation as the economy contracts and disposable income declines. To do this, they will have to realistically but imaginatively evaluate the situation and the resources they have, decide if they’re going to try and tough it out, then put tremendous, unrelenting work into changing their business models again and again until life goes back to normal — even if this takes years. Just boxing up the current menu won’t cut it.
Vaughn Tan is a strategy consultant, author, and professor at University College London. His first book is The Uncertainty Mindset: Innovation Insights from the Frontiers of Food. He also writes a weekly newsletter and can be found on Twitter @vaughn_tan.