Covid-19 Resources

How to Pivot Your Restaurant Business Model in a Pandemic

Dec 21, 2020

How to Pivot Your Restaurant Business Model in a Pandemic

2020 has been full of ups and downs, to say the least. With local ordinances changing every few weeks it’s hard to keep up and still keep your business afloat. It will continue to be hard, but restaurant folks are great at rolling with the punches and changing course. In the face of so much uncertainty, how can you pivot your business model effectively?

A great place to start is by practicing Human Centered Design, another name for Design Thinking, a methodology for innovation developed at Stanford University that involves creative problem solving centered around, well, the needs of humans.

It may sound like tech start-up jargon. But using some of the tenants of Human Centered Design is a great way to adapt your restaurant business model to an environment of uncertainty.

Start by understanding the needs of your restaurant's patrons

At the start of a pivot, you may be tempted to think about what you would like to try or about things you've done in the past.

Instead, try to see the problem from your customers' perspectives. Study who they are and what makes them tick. Are they mostly people in their 20s and 30s looking for unique dining experiences? Or are they families looking for ways to feed themselves right now? These groups are obviously seek very different things from restaurants.

Make a special point of getting to know who your regular customers are. Who's coming back over and over? Who are the people engaging with you frequently? Understanding why they keep coming back will clue you into the strengths of your restaurant. This is the way your business becomes stable and sustainable, by building and maintaining a following of regulars.

You can get this information in a lot of ways.

  • First, check your social media. These platforms already offer some information about your audience that you can peruse.
  • Consider using social media like Facebook polls or Instagram questions to learn more about your audience.
  • Send an online survey to your email list via services like SurveyMonkey or Google Forms.
  • Talk it over with your staff. They have the most interaction with your customers on a day-to-day basis and will have some great insights.
  • If you can actually interview customers at the restaurant about what they want and need, even better.

When you're ready, write a profile of your customers in as much detail as possible. This is different from a marketing “persona.” This should be an expression of who your actual customers are, not who you think they are or wish they were.

Archipelago in Seattle in Seattle also did a great job building a take home program that spoke to their audience. Pre-pandemic, they were a Filipino tasting-menu spot that sourced all their ingredients from the Northwest. They pivoted to a CSA-type box with vegetables from their suppliers, wines from local wineries, meats from their in-house butchery program, and sauces, condiments, and ferments from their pantry. They knew their customers were either younger couples or families that still wanted high-quality ingredients and were interested in the experience of learning more about Filipino heritage and food, so they include stories of the dishes and the ingredients in each box. Plus, boxes are adaptable to the dietary needs of the customer.

Brainstorm without judging your ideas

Start generating ideas for what your customers need. Obviously, they need food. But what else do they need based on your research? Food for a family or food for one? What kind of food—healthy, comforting, exotic? Do they want consistency or to try new things? What are they looking for in an experience? Connection to others, socialization, fun, a learning opportunity?

If you start running out of ideas, browse social media or Google for inspiration. It might help to look specifically in your local area to see what others are already doing. Or it might help to look outside of your geography at restaurants with a similar customer base and see what they’re finding successful.

Resist the urge to shoot down ideas in this stage—that's the fastest way to inhibit your creativity. Just start writing down any and all ideas you can come up with. Don’t think about the logistics or feasibility. Consider writing them on Post-It notes, one per idea, and sticking them on a wall where you can see all of them at once.

OK, now you can get judgy

The next step is to prioritize which ideas you want to try first.

A good way to do this is a value and effort matrix. This is where the sticky notes come in handy. Create a graph for yourself with the vertical axis being the effort it will take you to implement the new idea. The horizontal axis will be its potential value to your business. Spend a minute or two for each idea finding its proper place on the matrix. If the idea is high value and low effort, this should go to the top of your to do list. If it’s high effort but low value, put it off until later or disregard.

However you choose to do it, boil your big list down to the top 2 or 3 ideas you want to take to the next level.

Test, iterate, fail forward

With your surviving ideas, you're going to come up with what's called a minimum viable product (MVP) for each. What is the absolute minimum you can do to test the idea?

Let’s take a customer example from earlier: people in their 20s and 30s looking for unique dining experiences that are spending more time cooking at home and experimenting. Your idea might be to convert your restaurant to a market to offer speciality ingredients and products. Your MVP could be to pick a couple ingredients you already order that are on the finer side (fancy flakey salt, marinated vegetables) plus some of your in-house products like pickles or sauces and repackage those in the simplest to-go containers. This is your MVP because you can test different products and the popularity of your new business model without investing in infrastructure or changing too much of your daily operations.

A great example of this is Olmsted in New York. Pre-pandemic, they were a fine-dining seated restaurant nominated for a James Beard Award. But since the pandemic hit, they’ve pivoted to Olmsted Trading Post, where they sell house-made baked goods and condiments as well as other locally-sourced pantry goods.

Once you have your MVP, you have to test.

  • Alert your existing customer base through your newsletter, social media, or by including information in your current takeout or delivery orders.
  • Get as many of your current customers involved as possible.
  • Set a period of time for experimentation and at the end of it, make sure you get a lot of feedback from people who tried it out.
  • Find out what they liked and what they didn’t. Did it meet their needs and their wants?

Once you experiment a bit and refine with the feedback you receive, you can test again in more depth to refine even further. This step is called iteration.

Tip: It’s a constant loop of tweaking and feedback. Set yourself some clear benchmarks to reach in a period of experimentation, like number of orders or a percentage of growth. If you don’t reach your benchmarks, time to move on to another idea.

This tool by Vaughn Tan, author of The Uncertainty Mindset and restaurant business consultant, is a great one to test out the financials of your business with different product offerings and scenarios. He also did this webinar with the James Beard Foundation about adapting to uncertainty, which has a lot of great insight into ways to test your business model.

A great example of a restaurant that has combined business models in order to stay afloat is Ever in Chicago. The chef is Curtis Duffy, formerly the chef of Grace (a 3-Michelin starred restaurant). When the pandemic hit, the team pivoted to doing more fine-dining kinds of takeout menus and limited dine-in, but the programs were not making enough to maintain their large space. So Ever has now introduced Reve Burger, a fast-food-style burger joint that they will operate using the Ever kitchen as a ghost kitchen. Nothing fancy, just simple, nostalgic burger and fry combos (featuring Simplot Conquest Delivery+ fries). This will allow the Ever team to sell a larger volume of products so they can make enough money to stay afloat.

Stay flexible in the face of uncertainty

Keep in mind that to successfully pivot, you have to be agile and flexible. The changes you make don’t have to be permanent. In fact, you should be evaluating and tweaking as you go. Pivoting is all about a series of small experiments to see what works and what doesn’t. Chefs and cooks do this all the time with new menu items, testing dishes and getting feedback from customers. The same thing applies to the business side of things.

At some point, the COVID-19 crisis will be over. But even with a vaccine or support from the government, the state of restaurants will remain uncertain. Many chefs and restaurateurs are warning that the industry will never go back to what it looked like pre-pandemic. So it’s more important than ever to learn how to adapt quickly and strategically based on your customers' needs. It may be your best bet for keeping your business alive and well.