2020-2021 Pandemic: An opportunity to rethink priorities and models in the restaurant business for owners and employees

Last summer, I stopped by Spice Catering Kitchen to meet Ben Bebenroth, founder of Spice Hospitality Group, Keep the Change Collective and other ventures which are headquartered at 5510 Tillman Avenue in Cleveland’s Detroit Shoreway neighborhood. Ben is a Cleveland pioneer in the food and restaurant industries, and I sought out his thinking on the effect of the pandemic on restaurants and their employees. In a wide ranging discussion on many topics, my takeaways from Ben included in the following observations:

• For too many years, restaurant owners operated to pay their rent, their food and beverage costs and their employees; profits, stability and predictability were often illusory in this industry. At the end of a year, leftover cash was used for maintenance and improvements. When the pandemic hit and restaurants closed, many owners did a deep dive into their own operations to ascertain, “Is it really worth it to work this hard to run a business that does not build appreciable wealth? Is there another way? Is there another model?”
• Similarly, restaurant employees undertook their own soul searching during the pandemic lockdown. With time off to think and explore options, Ben observed that employees thought about whether they wanted to stay in a business which provided no health care benefits, no paid time off, no retirement plan, no road to retirement, erratic hours, and rude customers to boot. Ben observed, “I think many of my former employees are using this time to think about their futures: do I need extra training? Do I want to change careers and work in a less exhausting environment? Is there a better and more satisfying way to make a living?”

In other words, according to Ben, the pandemic put the restaurant industry itself in the laboratory for review and analysis. A year and a half out after the pandemic – which is far from over as of this writing – what have the folks in the restaurant industry learned? Here are some thoughts and data:

• In June of this year, Bloomberg estimated that that nearly 90,000 restaurants remained closed permanently as a result of the pandemic. This represents 14% of the country’s restaurants – a less apocalyptic number than earlier estimates.
• According to the National Restaurant Association State of the Restaurant Industry Midyear Update, three in four operators say recruitment and retention is their toughest challenge despite some employment gains that have occurred since restaurant reopenings.
• Nearly four in five restaurants are understaffed. A solid majority of both full-service operators (81%) and limited-service operators (75%) said their restaurant did not have enough employees to meet customer demand in September of 2021. It looks like restaurant employers are still examining their life choices for alternative employment.
• Long overdue tech improvements occasioned by the pandemic may be improving profits of restaurants by increasing efficiency in providing service to customers. According to Douglas Trattner, restaurant reporter for Scene Magazine in Cleveland, owners think that handheld POS systems reduce the steps a waiter has to take and mistakes in the kitchen. Ultimately, this may result in better paid servers. 
• Look for more innovation in the food delivery sector such as Ben’s Keep the Change Kitchen Collective, which offers four menus for pick-up or delivery – Winner Winner Spatchcockery, Winner Winner Wing Shop, Leif and Woo! Noods and Rice and on Friday nights, Boom’s Pizza. 
• Further, keep an eye on the arrival of Cloud Kitchens in Cleveland, the international network of ghost kitchens, run by Uber co-founder and former CEO Travis Kalanick, which is scheduled to offer 29 rentable kitchens which range from 210 square feet to 280 square feet at 3917 Carnegie Avenue in Cleveland.  

In a word, as we look forward to 2022, there is reason for optimism in the restaurant industry. Changes that might have taken years have been accelerated. Danny Meyer, CEO of Union Square Partners and now Chairman of the New York Economic Development Corporation and one of America’s foremost entrepreneurs told Bloomberg, “Entrepreneurial spirit of leaders in the restaurant industry is at an all-time high; we are coming back in an amazing way!”