New Rules of Leadership in a Post-Coronavirus World
April 20, 2020 | 2531 Views
Everything is the same until it is not.
The coronavirus global pandemic took down the foodservice industry quicker than it took down its victims, effectively closing the US restaurant business on March 15, 2020 and leaving our bottom lines smaller than the period that ends this sentence.
The facts and figures are sobering:
Covid-19, the illness caused by the coronavirus, is arguably the leading cause of death in the United States right now. The virus has killed more than 1,800 Americans almost every day since April 7, and the official toll may be an undercount. By comparison, heart disease typically kills 1,774 Americans a day, and cancer kills 1,641. --Washington Post
According to Black Box Intelligence, grocery store growth lifted 15.5 percent in the week ending March 27. Yet that was muted only because the previous week saw sector sales skyrocket 73.6 percent, year-over-year. Online grocery growth, even with the moderate stabilization, was up 62.3 percent. In the 73.6 percent lift (the week ending March 22), consumer visits declined industrywide for restaurants and increased for all forms of grocery stores, Black Box said. To put this into perspective, full-service restaurant share-of-stomach spend fell below 5 percent. –QSR Magazine
Publicly traded restaurants in the U.S. lost $152b in market capitalization in 42 days (from February 10 to March 23). That’s equivalent to: 2.9 times the current total market cap of airlines, or 2.2 times the market cap of hotels, motels, and cruise lines, or 2.5 times the market cap of the clothing industry. Many foodservice companies are not ready to re-tool quickly enough. This can be seen especially in the casual dining category, which lost 62% of its initial market cap. Those with strong balance sheets will be best positioned to bounce back. It can be an especially challenging time for independents. Chains will find it easier to re-finance and work their way through debt and leverage that will be too difficult for the average independent to navigate. –AaronAllen & associates newsletter
The Coronavirus has exposed a plethora of problems that have plagued our over-built, over-leveraged, over-franchised and debt-laden industry for a decade (or more). We collectively failed to address the endemic economic and people issues that we created; not the least of which is that we have historically treated our workforce as parts not partners. Now this pandemic—unseen and unknown just six months ago--has collectively forced us all to face a harsher reality, uncertain future and a chance and choice to build a stronger industry as a result this catastrophe.
It’s challenging to find good news. The economic devastation the pandemic has brought to the US will be long-felt by its citizens, government and healthcare industry. And there’s no way of really telling what our future holds. What's for sure is that the other side of this pandemic will result in tons of debt and insolvency across the globe, with independently-owned (and under-capitalized) restaurants certainly being hit hardest. Some analysts say as many as 40% of independent restaurants may not survive the economic and "social-distancing" hit. On the plus side, restaurateurs will hopefully apply a new mindset of dignity, care, respect, empathy and equity to elevate their rehired team members.
That, of course, is presuming that there is truly a new “normal” awaiting us on the other side of this health and economic catastrophe. Its short-term and long-term impacts are still being felt and you’d be wise to remember that there is no guarantee of a clear and calendar-driven end to all of this. It is most likely that any sense of "normalcy" will arrive in waves, not in a tsunami of re-patronage by our diners. In addition, don’t presume that anyone can accurately and fully predict the future. Which is why you never see a headline that says: “Psychic Wins Lotto.”
What people really fear. And it isn't "change."
It's been said that the only person who likes change is a baby. But I challenge this assumption. So-called experts have long told us that people fear “change”. Anyone saying that always sounded to me like a manure salesman with a mouthful of samples. The fact is that people embrace change daily in their lives; they get married, divorced, accept new jobs, buy houses, have children , move cross-country, etc. What people really fear is The Unknown; uncertainty and a lack of clarity about what will happen next. For example, things like awaiting medical test results, being laid-off, awaiting a loan, what will happen with their job, etc. Coronavirus is cloaked in a myriad array of unknowns; that's a key reason why it's so unsettling. What most unsettling to me is that it doesn’t remind me of anything else I’ve ever seen before. And without context, uncertainty and angst abounds. Which is why clarity and communication are critical in these times for both our customers and crew. More on this shortly.
This isn’t the first time we've been in a hard place. And it won't be the last. But we will all have to dig deep into a reserve of self-determination we may not have known we had in order to progress. I’ve never before seen such a pervasive, perverse, devasting and invisible enemy with such murky beginnings and no definable end. Yet in the midst of this crisis there are indeed lessons to be learned from operators who have stumbled on or innovated their way through to something resembling forward motion in this Yet-to-be-Defined New Normal. Below are ten of those key learnings for you to consider and to help you and your teams manage and lead your way through these uncharted waters.
1 Questions. It’s important to first ask the right questions if you want to effectively guide your team, brand and business successfully through to the other side of this crisis. Going forward, your company should also shift its operating philosophy to be focused more on resilience than stability. A stable organization tries to keep things as they are, a resilient one readies itself for what is yet to come. Which option readies you best for a post-pandemic world? Here are questions for you and your leadership team to consider:
The most important question: “What—specifically--does ‘recovery’ look like?”
“How can we best reconnect with our guests, employees, and vendors?”
“What do we need more of/less of?”
“How, specifically, is foodservice distribution (and manufacturing) likely to change, what will that new relationship look like, and how will it affect the way we will be doing business in the future?”
"If we went out of business tomorrow, would anyone really miss us? If so, why? How do we give our customers, vendors and crew more of that?"
“Which specific elements of our design, throughput, process, facilities, communication and procedures failed or were the weakest as the virus expanded and the shutdown occurred?”
"Which full-service restaurant companies have had the greatest success pivoting to curbside/takeout/to-go, and, specifically, have they done to realize such success? What can we learn from them? What does this mean for our future design and technology integration?
Don’t ask: “How do we get our business back to normal?”
Ask instead: “Given what has just occurred what will our customers and crew want and need once we gear up for business again? How have their lives changed and what will their new behaviors and perspectives mean for our business?
Don’t assume that what came before will automatically be preferred again. Or even that things will ever be the “same” again. If the only new thing we have to offer is an improved version of the past, then today and tomorrow will be inferior to yesterday.
2 Customers. Strive to make employee and customer relationships transformative and not just transactional. Reach out regularly to your customers and let them know what you’re doing to help support your crew and community and how much you appreciate their continued support. Don’t ask customers for their feedback, we’re all dealing with way too much right now. Design and deploy an effective, robust, and secure Customer Loyalty program that maximizes capture and communication with your patrons. Many pundits assume that the end of the mandated self-quarantining this summer will result in a groundswell of guests rushing back to restaurants and bars. More likely it will be an initial trickle of guests, with cautious diners warily observing the health of the pioneers who ventured back first before deciding to return with their family and friends. Until we have proven cornonavirus testing methods, movie theaters, schools, sporting events, food shows and conferences are probably history. And as long as I've got your attention can I just say that I have a problem with the term "social distancing"? It’s not social distancing, it’s physical distancing. What we all need is stronger social connection.
3 Crew. Communicate regularly with furloughed team members. Where there is a void in communication, negativity fills it. Explain your plan to work through the crisis. The best operators have communicated quickly, consistently, honestly, with urgency, transparency, empathy and clarity with their managers and hourly team members. They helped crew register for unemployment benefits if laid-off or furloughed, provided regular family meals and funded employee assistance resources. The way you treat your furloughed crew during these challenging stay-at-home days will determine how willingly they will come back to work with you. And please be grateful for and show appreciation to all those team members you retained who are helping you redefine your business in new ways that will set you up for a stronger future. Define a plan NOW for how you can best re-recruit and reintegrate furloughed crew back into your restaurant after the crisis. Presume that employee antibody testing will be part of all new team member screening and onboarding processes in the future. Rethink and question all of your job roles and responsibilities. Do they still make sense? What could be consolidated/eliminated? Where are the inefficiencies in hiring, training, onboarding that could be eliminated or improved? Post-virus be sure to treat your returning teams with gratitude, compassion, care, and respect. Presume positive intent in your crew. Focus on improving your culture in these quarantined days and commit to building something that lasts. Put faith in the important role that engaged coaching and development will play in getting your team beyond this virus and to that next level of perennial excellence. You are still fighting a turnover and retention crisis when restrictions are eased and our business starts coming back. After 9-11, the US saw a surge in military enlistments as young Americans parlayed newfound patriotism into a more meaningful service career. Will we see a similar surge in healthcare careering as young Americans watch these frontline heroes risk their lives daily for the common good? Will that affect our already-anemic labor pool/puddle?
4 Corporate World. How will America’s workforce and workplace change post-coronavirus? Will businesses trim employees and will office space shrink if distance working proves long-term viable and productive? How will this affect unemployment and office-catering, business lunches, and client dinners? How will restaurants connect their services to a remote non-centralized business workforce? Is the traditional business conference and office meeting dead? Airline travel for business is probably fully on hold until there is a proven coronavirus treatment.
5 Vendors. As we see foodservice distributors like Sysco and US Foods pivot their services to supplement the strained capacity of traditional retail (grocery) distributors, we should all pay very close attention to what retail has done to attract, build and retain their customer base and team members (while keeping them safe). Is Panera's new grocery delivery alternative a strategy we should all pay more attention to? How about the successes Texas Roadhouse is seeing in their meals-to-go strategies? How will this affect traditional foodservice distributors and supply chains? (Peapod, we hardly knew ye.) This much I'm sure of: these New Times will radically alter restaurant food and beverage manufacturing, distribution, brokerage and delivery.
6 Design. It wasn’t that long ago that takeout from a full-service restaurant meant you had to call a busy hostess and pickup your order from a testy bartender upset by the interruption and additional task. Granted, we’ve come a long way with curbside/to-go in the last half-decade for full-service operators, but those gains were almost exclusively realized within the chain restaurant realm. We need to see improvements in the curbside/to-go process for independent operators too. The one big bright spot in these pandemic times is how quickly and effectively so many foodservice operators have adapted to and made a success of growing their takeout/curbside/to-go sales and marketing. Great lessons in leadership here for the future. Shortlist: touchless payment, dedicated pickup area/window, contactless delivery and latex gloves. Will quick-serve restaurant chains fast-track the new design prototypes they’ve been developing that have no dine-in area, just pickup and drive-thru ordering? Can a full-service restaurant or bar still survive if new laws require tables to be positioned 12 feet apart and bar stools permanently fixed to seven feet apart? Volume is the only way we've traditionally offset our razor-thin margins. Hard questions for hard times.
7 Technology. Touchless is everything. I believe that Americans have learned to be wary and avoid touchscreen ordering kiosks, gas pumps, ATMs and anything that isn’t their personal phone or tablet. During this pandemic Baby Boomers have learned to finally be comfortable with third party app ordering and delivery, a behavior that until recently was the bailiwick of younger generations. If you haven’t yet invested in creating effective, safe and secure third-party and contactless ordering apps, this pandemic should have revealed the absolute necessity of doing so. But pay close attention to those third-party delivery companies who are not offering any concessions or relief to stressed foodservice operators (I'm looking at you GrubHub, how can you be so tone-deaf in these times?) Pick the company that will share your customer ordering/delivery database as part of your agreement. And is it time now to cancel expensive conference calling services, swapping out your current vendor for more cost-effective alternatives like Zoom?
8 Cleanliness and Sanitation. Now more than ever customers will scrutinize the cleanliness of your operations.Re-assess all your processes for cleaning, disinfecting and sterilizing your facilities, work environment and customer contact points. When our teams are reconvened, should masks in the kitchen be mandatory along with gloves for all servers, cashiers, drive-thru, bartenders, food runners, bussers? Consider the myriad customer touch points in a full-service restaurant: menus, salt and pepper shakers, ketchup bottles, door handles, seats, tabletops, silverware, glassware, straws, drink garnishes, napkins, sugar caddies, tabletops, restrooms, etc. etc. How do we insure safety and sanitation in the traditional full-service restaurant in a post-virus world? We’ll have to think it through thoroughly before we re-open, and if you think the Health Inspector visits were challenging before, welcome to a whole new world of standards, enforcement, and multiple routine health inspections. Look for creating pre-sanitization areas in our kitchens for all incoming products from our distributors, Disposable menus in full-service operations, sneeze guards at the drive-through window, and seamless/touchless curbside/to-go systems will be standard features in the post-covid-19 world. Will every restaurant have to reconfigure its tables and booth and condiment stands while every bar requires its patrons to sit a minimum of six feet apart? Initially, yes. How will bartenders safely prepare, garnish and serve drinks in a post-coronavirus world?
9 Packaging. We’ve recently made great strides in to-go and delivery packaging but even greater innovation is needed to keep hot food hot, cold fold cold and the containers tamper-safe from delivery drivers. This new world will bring us those innovations. One concern I've heard lately is eliminating/improving packaging surfaces that could potentially hold a vrus. Is this the end of cardboard?
10 Training. Boston College put its 2020 Fall Semester on hold this week and intends to resume in-person classes in January 2021. Some experts question whether any traditional university or college will survive long-term post-virus given the price of education, and the pivot to and preponderance of distance learning. Why go to a classroom when the classroom can come to you? Apply that same logic to foodservice training teams. Will the new realities and opportunities for self-learning radically alter how we teach and train our managers and crew? Will it affect the size of training departments? Probably. But this much is certain: the time is now for the foodservice industry to go all in and radically improve the online learning and doing experience for every team member we teach and train. We need change our perspective; it's time to design experiences, not deliver content. We want team members to engage and energize with our training courses, not simply "go through" it. We can start by rethinking our curriculum; creating courses designed for how adults actually learn (as opposed to what we want to “tell” them). Then we should integrate insight on crisis management, sanitation 2.0, and what leadership and hospitality means in a post-covid-19 world into our courses. (Service has dropped to number two behind sanitation as a customer priority.) Meta-learning--or learning to learn--should be a key course and a critical focus area. You should be keeping detailed notes every day during this crisis on what you did do/didn’t do/should’ve done relative to leadership and communication during the coronavirus. Twice-weekly during these strange days I’m on conference calls with our foodservice clients sharing best practices, research and collective reflections on how the best operators have improved their people and processes and systems during this pandemic. The operational strategies vary weekly but everyone agrees on one thing: that the RIGHT KIND of employee training is more important and critical now than ever. If your current digital learning curriculum primarily consists of passive (boring) content, it’s time to invest in ways to make it more engaging; take your clue from the best podcasts you’ve heard or the most engaging short-format learning/DIY videos you’ve seen (but stop short of opening a tiger-laden roadside zoo in Oklahoma.)
As you consider strategies for getting the ten basics above in place in your operations, don’t forget that compassion is a fundamental, too. Show unfailing gratitude for your crew and customers Like Grandma Sullivan always said: “Give without remembering and receive without forgetting.”
School is never out for the pro, and now is the time to read more, learn more, and think harder about how you can build a stronger future for your team, company and customers. Please visit Amazon take a look at the brand new editions of our bestselling books Fundamentals and Multiunit Leadership. There is an audiobook version of Multiunit Leadership also available exclusively at Audible. All are on sale this month. End of sales pitch. Thank you.
So when do we get back to “normal”? Depends on how you define “normal” and how comfortable you are that people will go back to their old habits instead of adopting brand new ones that we can’t quite see or understand yet. The most optimistic guess from foodservice chain leaders is a return to "normalcy" by July 4. The pessimistic ones say Labor Day. Realistic operators say summer 2021.
The truth is that until widespread testing, tracking, and an effective vaccine are available, we simply do not know when, how and if this too shall pass. And no one can say with absolute certainty how all this will play out; will there be a second wave, a mutation, a new virus, a global economic collapse? All of these things are potentially realistic in a new world where nothing is certain and anything is possible. We’re laying track while the train is running and let's hope this new line will take us in the direction we need to go.
The truth is that a good number of restaurants will never reopen depending on the length and breadth of the shelter-in-place edicts and their cash reserves. Some pundits predict between 30% and 60% of independently owned restaurants/bars will not reopen. Let's hope those numbers are wildly exaggerated. For certain, the way we used to do business is probably gone forever. If you’re a full-service restaurant invest in better curbside/to-go/delivery options. If you’re a quick-serve operation, those expensive touchscreen ordering kiosks may now be obsolete, and you have to question why you even need a sit-down dining room as part of your design anymore. Consider the savings in real estate, labor, and sanitary peace-of-mind.
It’s challenging, and perhaps even imprudent, to suggest New Rules for the New Normal when we’re still truly in the initial stage of this puzzling pandemic. There is no proven playbook for this catastrophe, no timetable on its regression and too many conflicting messages from elected officials. So there will certainly be a lot of play-calling at the line of scrimmage as foodservice operators are forced to experiment with which strategies generate progress and which ones cause us to fall back even further. I’ll do my best to keep researching and sharing good ideas.
The best way to predict the future is to create it. And the key strategy is to focus your post-virus company on being resilient (adaptable to change) as opposed to focusing on stability (trying to keep things the same.) This is, an always will be, a crazy industry. My first restaurant GM told me something many years ago that I never forgot: “There are only two things to worry about in the restaurant business: one is that things will never get back to normal, and two, that maybe they already have.”
This article was originally published on LinkedIn April, 2020.