Independent restaurants prepare for a long disruption

Close to a majority are investing in permanent adjustments to pandemic conditions.
Photograph: Shutterstock

The emergency measures taken to survive the COVID-19 pandemic are being systemized into long-term norms for the nation’s hard-pressed independent restaurants, with 42% planning to invest in permanent safety enhancements and other changes to their physical setups, according to new research.

The findings suggest that operators within the sector do not foresee their plight improving near-term. About 28% of the respondents said the biggest challenge they face is a continuing slide in dining-out demand within their markets.

The difficulty of winning back customers was underscored by respondents’ stated marketing plans. About 31% said they are offering more promotions and discounts, and 12% said they were distributing coupons.

Overall, 60% of the surveyed operators said they are touting the additional steps being taken to keep customers safe.  

Second on the list of cited problems was a limitation on dining-room capacities. Sixty-eight percent of the operators said they were functioning at 50% or less of their pre-pandemic seating levels.  About one out of four respondents (24%) have yet to reopen at all.

More than 1 of 4 respondents (28%) said they intend to provide more seating by adding or expanding patios.

The participating operators expressed little concern that dine-in business could be cannibalized by to-go sales. Only 7% said they feared customers would opt for takeout or delivery over a sit-down meal.

Indeed, the research from Rewards Network, a program that rewards consumers who dine at participating restaurants, showed that off-premise business is becoming as important to independents as it’s proven for chain outlets. Nearly a third (31%) of the respondents said they intend to invest in a delivery program and the technology to support it. Another 21% said they are looking to buy the technology to offer contactless takeout service, or to-go sales where customers have virtually no interaction with a staff member.

About 3 out of 4 independent operators are using a third-party delivery service to transport meals to guests’ homes. A majority of those users said they have no plans to drop delivery or switch to a self-delivery model. But the survey also revealed significant desire to sever relations with the third parties, with the exact percentages varying by affiliation. Of those operators who were using PostMates prior to the pandemic, 18% said they did not plan to continue using that service.  An intention to sever relations was cited by 14% of GrubHub partners, 11% of DoorDash users and 10% of Uber Eats affiliates.

Only 11% of the survey participants said they do not intend to make any investments to contend with the ongoing pandemic. The most common sources of investment capital were not revealed.

The survey of 432 restaurant operators was conducted in early July. About 3 out of 4 of the participants said they operate one restaurant, and all but 2% operate five or fewer places. Most (60%) described their establishments as casual restaurants, and about a quarter said their operations were fast-casual. The remaining 13% run fine-dining places, according to Rewards Network.

The impact of the pandemic has been particularly severe for independent restaurants, in part because they lacked the capital to invest in delivery and takeout. Many have also noted that independents are often smaller than chain outlets, meaning they can use fewer seats and tables under state or county-mandated capacity limits.

CORRECTION: An earlier version of the story misstated the percentage of DoorDash-using respondents who said they intended to sever the relationship. The correct proportion is 11%. 

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