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Operations

Plotting a course in a perfect storm

RB’s Top 100 Independents are a successful, savvy—and optimistic—bunch. Here’s how they’re handling the year from hell.
Photo courtesy of Juniors

They’ve outlasted hurricanes, floods, forest fires, earthquakes, 9/11 and the Great Recession. Some have weathered more than a century of challenges. But it’s an understatement to say nothing prepared the country’s most successful independent restaurant operators for COVID-19. Sure, 2019 was a very good year for many, but from the middle of today’s war zone, last year seems like a faint memory, a cruel reminder of how things once were.

The stories are sobering. Junior’s, a Top 100 regular (Nos. 14, 43 and 77 this year), has yet to reopen its two normally bustling stores in New York’s Times Square, awaiting a return of tourists. Cliff House (No. 71), a San Francisco institution for 157 years, made a short foray into takeout when the city shut down dining rooms, but suspended all operations in July. Quality Branded permanently shuttered two restaurants, and a 1,200-person staff had shrunk to 150 people by early September. Boka Restaurant Group (No. 46 Swift & Sons and No. 84 Girl & the Goat) said it would lay off more than 500 workers in September. TomKats’ two Top 100 Nashville concepts (No. 69 Acme Feed & Seed and No. 89 Southern Steak & Oyster) remain dark; the owners have slashed expenses and are hunkered down, waiting for a vaccine and focusing on an unrelated business.

Despite all that, many operators—especially multiunit operators—remain bullish about the odds they will emerge from the pandemic relatively intact. Their approaches to making sure that happens vary as much as the concepts they run.

Farmers Restaurant Group hasn’t closed any of its nine restaurants, despite 90% of revenue vaporizing early in the pandemic. By September, the Washington, D.C.-based group had regained some ground, but was off its 2019 pace by about 40%; one restaurant was almost even with last year. But “downtown (D.C.) is a ghost town,” says Dan Simons, one of the co-owners. Government workers, office tower tenants and hotel guests are staying away in droves, a big blow for three-meal restaurants like these. “It’s not a city that a lot of people live in,” Simons says. 

Founding Farmers’ restaurants have managed to stay afloat through quick action, pivoting to curbside orders and creating a new marketing and grocery business—including a new line of housemade chocolate. Founding Farmers also slashed costs across the board: major layoffs, reduced salaries, lease negotiations, a closer eye on trash pickups and thermostats, and more affordable plateware and uniforms, among other things. “It has been about scrubbing every line of the P&L,” Simons says. By early September, as business picked up, about 700 furloughed employees were back on the job.

“There have definitely been a lot of learning curves,” Simons says, “especially since we’re striving to maintain really high standards and an incredibly low error rate. With curbside orders, home delivery or mail order, you can’t schmooze at the table or run out an extra peanut butter mousse pie when you make a mistake.”

Simons is not alone. Takeout and delivery typically represent a token share of business for many of the Top 100 restaurants. John Tallichet, president and CEO of Specialty Restaurants Corp., explains the prevailing mindset. “It was not something that we emphasized because our restaurants are so experiential,” he says. “We always felt that was a distinguishing factor in our business that would be a competitive advantage against delivery, ghost kitchens and other innovations.”

But when states and cities shut down all dining rooms in the spring, to-go meals preserved at least some income stream and kept a portion of employees on the payroll. So many restaurants made it work.

Outside-the-box thinking

Specialty Restaurants (No. 53 Rusty Pelican and No. 72 Castaway) used idle time earlier this year to double down on health and safety measures, streamline operations and look for ways to maximize the outdoor real estate at its California and Florida properties. Menus were updated, trimmed to focus on favorites and create service and inventory efficiencies.

Tallichet is convinced a clear commitment to safety will create loyalty going forward, and the company has invested heavily in equipment and training that exceeds CDC and National Restaurant Association guidelines for restaurants. Busser positions have been upgraded to safety and sanitation coordinators; their sole function is to thoroughly clean and sanitize tables before parties are seated. “Safety before profits: we believe in this challenging time you can’t make a quick buck; you need to position yourself for the long run and build credibility,” he says.So far, the strategy has paid off: some Florida restaurants are beating last year’s numbers, thanks to an influx of tourists, and the Southern California locations are often sold out because of pent-up demand. A new outdoor dining space at Castaway (No. 72) has been especially popular. Five of Specialty Restaurants’ SoCal spots will most likely remain dark until dining rooms are allowed to reopen.

Tavistock Restaurants closed all of its restaurants last spring except for takeout and delivery at two Orlando locations, and has gradually been bringing them back online. During the down time, the company developed a 40-page health and safety plan, then brought staff in for a week of COVID 19-specific training. “We wanted to make sure we were as professional as possible when we presented ourselves to our guests,” says COO Tom O’Brien.

It also updated two older restaurants in Boston (including No. 52 Abe & Louie’s) that were starting to show their age. “The idea was that as people returned from quarantine, they would see things in a fresh way,” O’Brien says. “Things like brand new bathrooms, bars and remodeled kitchens—anything that would let them know we are taking the team and guests’ health and safety seriously.” In the process, one restaurant was remodeled to carve out room for takeout and delivery orders, which it had not offered in the past.

Quality Branded founder Michael Stillman says the need to adapt has forced hard decisions to permanently shutter two restaurants from the portfolio. “The challenge is trying to figure out what’s the right balance, so a year or two from now we can have the most restaurants, the most people employed. We have to close the restaurants that can’t get through this to protect the ones that can.”

Two Quality Branded Top 100 performers,  Smith & Wollensky (No. 10) and Quality Meats (No. 31), remain idle for now. They weren’t good candidates for outdoor dining and takeout, and Quality Meats is recovering from a July fire. Even with Chicago finally allowing dining rooms to open at 40% capacity, they still might not reopen right away, but Stillman is confident they will eventually.

Quality Branded also had the misfortune of debuting a restaurant, Quality Bistro in New York, right before the city shut down. It was a home run, hitting 450 covers a night almost from the get-go. “We were the hottest restaurant on Eater.com March 13; it stayed that way for three months because no one was eating out,” Stillman says with a laugh. “Now we’re trying to figure out how to relaunch.”

Best of times, worst of times

For Myles Restaurant Group CEO Myles Chefetz, 2020 has been a roller coaster ride. The year started off in fine fashion, with his Prime 112 steakhouse (No. 12) scoring big with Super Bowl visitors to Miami, racking up $1 million in sales for a single week. But then the pandemic moved in and local authorities imposed a series of restaurant closures and restrictions, beginning just as high season kicked in. Restaurants were allowed to reopen at half capacity, and diners returned. “We all know what happened then,” he recalls. “A lot of restaurants let their guard down.” So just over a month after reopening, indoor dining was once again banned.

Curfews, established because of unrest in the city during the spring and summer, dealt the next blow. “This is an area where people go out to eat at 9. Places got closed down and ticketed because they had people finishing up at 10:05,” Chefetz says. Curfews were recently relaxed, but having to give customers the bum’s rush at 11 is still leaving a lot of money on the table.

After pleas from some operators, the mayor agreed to allow patio dining, which turned out to be a mixed bag. “I fought for this, but I hadn’t considered what outdoor dining means in Florida in the summer. It’s 100 degrees and it rains almost every night,” Chefetz observes. He wound up installing tents.

Throughout this, Chefetz says he has spent many hours negotiating with politicians and business leaders. “I don’t feel like I can just sit back and allow the process to happen; you have to lobby people to get the results you want. It’s very time-consuming and frustrating, but I think it needs to happen.”

Looking down the road

What’s ahead is anyone’s guess. Patios are likely to disappear from restaurants in frigid locations this winter, which will hit some operators hard. Most operators anticipate a tough winter, but look forward to a rebirth when spring rolls around—sooner if a COVID vaccine gets the green light.

“We have plans in place for September, those will change in October, but we try to be ready for all eventualities,” O’Brien says. “We don’t want to just sit on our hands and wait for this to end, so we’re trying to actively respond to what people need and want today.”

In the end, preserving jobs has been a critical focus for these operators. “I think companies will be judged on how they dealt with this,” Chefetz says. “It would be very easy for me to go away and not deal with this. If I had, all my employees would have been out of work.” He also thinks South Beach will always be an attractive destination, adding that “a lot of people are trying to figure out how to get people to come back, but we don’t have to. We just have to make it safe.” He says he’s taking things day by day and week by week.

Stillman feels similarly confident that New York City will bounce back, but adds, “If you look at the dynamics right now in the U.S., it’s almost impossible to see an end game for any restaurant.” At the same time, he says he’s “hopeful and excited.” He thinks the public’s love of dining out will prevail. “Americans are going to continue to come to the aid of restaurants because they know how important they are to the fabric of America,” he says.

Click here to return to the 2020 Top 100 Independents.

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