Mark Jenson has been in the restaurant business for 20 years, trading through the global financial crisis, and several structural shifts in his industry.
But the COVID-19 pandemic is another beast entirely, he tells SmartCompany.
“Three weeks ago it was pretty much business as usual, 14 days ago it was business unusual, but now it’s business train wreck,” Jenson says.
“The GFC was difficult, but that’s turned out to be an ant compared to the mountain we’re facing now.”
Jenson owns award-winning Vietnamese restaurant Red Lantern in Surry Hills, Sydney, and is one thousands of business owners across Australia charting out a path to survival amid the coronavirus crisis.
After a national public health order forced every restaurant and cafe across the country to restrict their operations to takeaway and delivery, many high-end restaurants closed their doors. But Jenson is determined to try and trade through the pandemic.
He’s not the only one. Amidst the pain, many business owners are looking to innovate in the current climate; if only to give themselves and their staff the best chance of avoiding financial ruin.
New strategies, menus, delivery models and price points are emerging as hospitality business owners across the country pull themselves up by their bootstraps and combat crisis with creativity.
SmartCompany has spoken to those at the coal face about what it takes to trade through coronavirus and what ideas are emerging amid the chaos.
Delivery and takeaway doesn’t come easy to every food service business. Many have set up their entire business model to service dine-in customers at premium price points.
But as Jenson explains, that’s out the window now. Time to flip your business on its head.
“I had to think: what can I do with limited staff involvement that’s at a great price point, but also protects the products we make and what we’re renowned for?”
There’s plenty to think about here. After laying off 11 casual staff in recent weeks, there’s less resources on hand at Red Lantern, and takeaway orders are much less enticing at the restaurant’s usual $25 price point.
And while Jenson says the immediate thought may have been to start selling lower quality products, he was in no mind to sacrifice the brand promise he’s built up over two decades.
“It still has the same reputation of being a Red Lantern product, but it can’t be what would be available day-to-day,” he says.
After spending some time in the test kitchen, Jenson landed on an entirely new menu of five boxed meal options — designed specifically for pickup at a $15 a pop.
“We created a totally new business model on the fly,” Jenson says.
Jenson’s secret has been changing up the entire operating model of his restaurant to deliver the service effectively, while maximising margins. It’s much more than a new menu.
The Red Lantern website has also been redeveloped to enable in-house e-commerce. Two chefs now start in the morning and prepare boxed meals, which are then placed in a cool room.
Jenson and his restaurant manager show up in the evening, ready to provide same-day valet delivery to customers as they drive past in their vehicles.
It hasn’t been easy though. While the new vertical is helping bring much needed money through the door, last week it represented just 8% of normal weekly turnover.
Complicating matters, Red Lantern is known for ethically sourced produce, which is typically more expensive. To get around this, Jenson has switched out premium protein cuts in dishes for cheaper ones, while maintaining the same base supply channels for his meat.
Those looking to emulate Janson’s pre-ordered model rather than a strictly on-demand service, can learn from his approach.
Mark Calabro, founder of restauraunt technology platform HungryHungry, has been working with dozens of firms in recent weeks to develop similar models.
Calabro tells SmartCompany taking steps like cutting down the menu, pivoting towards more profitable products and producing ready-to-go meals like Jenson are all sensible steps.
“We have one operator selling one dish only each night and selling out by 7pm. It’s working really well for them,” Calabro says.
Evan Hanisimikali, co-founder of Manny’s Pizza Diner in Chippendale, NSW, has set up his own delivery app to create an avenue for customers to support his business without going through the commission-charging meal delivery platforms.
Pizza is a natural delivery and takeaway product, and in that respect Hanisimikali is lucky. But say you’re selling lamb shoulder, what do you do?
“No one wants to pay $40-$50 bucks if they’re sitting at home and eating it from a box,” Hanisimikali tells SmartCompany.
“If people are going to be eating at your restaurant three times a week, instead of maybe once every three months, you’re going to need to make some significant changes.”
Reducing prices isn’t easy, but Hanisimikali says there’s plenty of ways to get creative.
Lamb shoulder could become a sharing plate for a family dining in, and those potatoes and roast vegetables usually on the plate could become extra menu items in the form of sides.
Menu innovation like this has been the talk of the town in recent days as restaurants adapt to keep up.
Relaxation in alcohol licensing laws in Victoria, NSW, Queensland, South Australia and the Australian Capital Territory have also thrown a life line to firms, allowing alcoholic beverages to be delivered.
That’s great news for many, particularly because alcohol can be a higher margin add-on.
“You have to find some way to support margins,” Hanisimikali says.
Those venturing into delivery are coming away with some early learnings as well.
Three weeks ago ‘last-mile economics’ was something for mega companies like Amazon to think about. Today, independent cafe owners are trying their hand with some interesting results.
Queensland-based Miss Bliss Cafe owner Jacqui Tombas has been delivering orders to customers herself in recent weeks after being forced to lay off many of her staff last month.
The business owner now spends her evenings and early mornings preparing and packaging up meals before going on delivery rounds.
But where to deliver to? Tombas started by using her Google Analytics account to find out where most of her customers were coming from in Brisbane.
“I know we have a load of customers in Newstead, Carindale and Carina, so I made sure they were in my delivery zones,” Tombas tells SmartCompany.
“I’m not wasting any time.”
That planning has proven invaluable. Tombas modeled her new service in such a way that she could deliver meals to one area on one day, and another the day after.
It optimises her time, allowing the cafe to service the highest number of customers possible, and delivering much needed revenue.
The strategy centres around the idea that many customers are in self isolation, or are otherwise remiss to leave their homes.
With those people more likely to plan out their meals in advance, Tombas says getting around to everyone on a weekly basis is ultimately more cost effective than an on-demand service like UberEats.
Wendy Reynolds is the owner of Wasshoi in Sunshine West, in Victoria, and two recently established franchise operations, Capricho Sunshine West and Capricho Port Melbourne, and her focus is currently on leveraging her local community to keep orders coming in.
“We’ve been engaging local community groups, we’ve been very lucky we have some very strong community groups in Sunshine West,” Reynolds tells SmartCompany.
“They’ve been posting about us and they’ve been tagging businesses.”
Getting involved with community groups led to local MP Natalie Suleyman posting about Wasshoi on Instagram, helping to drive much needed business through their doors in recent days.
“You can see how there’s a momentum building, there’s #supportlocalbusiness out there,” Reynolds says.
As for paid ads through social media, Reynolds says: avoid. They tried this, but the results just weren’t there, and spending money on marketing at times like this can be hard to justify.
Instead, Reynolds is doubling down on the grass roots organic option.
“People are very community minded, especially around their own suburbs,” she says.
The strategy may seem simple, but doing the little things right is really the secret here.
That includes ensuring all social media channels make delivery and takeaway options clear to customers, and creating an easy to navigate e-commerce interface.
But it’s also about reaching out. Reynolds has been corresponding with prominent locals to try and drum up business and says it’s time to get proactive.
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