Who do I write for in these uncertain times? Is it the restaurateur trying to find their way through this mess? Is it the patron, curious about what the future of restaurants will look like? Today, it’s both.
Restaurateurs, we need to have an honest conversation about discounts and how we’ve created a culture where low price equates to high value. Patrons, we need to have an honest conversation about what you love most about us and why it’s killing us.
The idea behind happy hour is simple: Businesses offer discounts to entice guests to patronize an establishment during a period of time that’s typically slow.
What has that evolved into? A chronic culture of discounting that has brainwashed guests into believing that paying full price is a rip-off, forcing restaurateurs to create new and unique promotions that obliterate their profitability. There’s Margarita Monday, Taco Tuesday, Wine Wednesday, Thirsty Thursday, add in a Happy Hour, don’t forget Reverse Happy Hour, and, of course, Bottomless Brunch. Should I go on?
As an industry, we’ve conflated being busy and being profitable—all while asking the wrong questions. We wonder, “How do I get more business on a Monday?” instead of “Should I even be open on a Monday?” We think, “How do I compete with Taco Tuesday?” instead of “How can I create more value without lowering prices?”
As an industry, we have devalued what we do for a living. I am equally responsible for this problem. I have made the same mistake, but I am working to chart a new path forward.
This is the future as I see it.
Discounts will be eliminated; prices will rise
With 53% of restaurant closures listed as permanent, competition will be at an all-time low. This is my opportunity to incorporate everything into the price: subsidized health care, retirement programs, living wages, sustainable food practices, a 15-20% profit margin, etc. I’m going to establish a pricing model that works, and I’m not going to deviate. We’ll work feverishly to add more value through quality ingredients and customer experience, but we will no longer discount. The price is the price. The plan is the plan. If we go out of business because of this, then so be it.
Our service model will change
The service model at my restaurant is almost identical to the service model of a restaurant in a similar tier 100 years ago. A guest enters the restaurant, they’re greeted and seated, their order is taken by a representative from the restaurant, that order is then prepared and delivered. The customer issues payment for the food to the representative and vacates the premises. Very little has changed in the full-service dining model. Yes, the guestbook has been digitized, but at its foundation, the process remains the same.
With the skyrocketing cost of labor, how is it possible that our service model hasn’t evolved? I truly believe we can incorporate technology into the customer service experience in a way that injects more humanity, not replaces it.
We’re going to run things by the numbers moving forward. We’ll craft a labor strategy based on a 35% labor margin and let tech till in the gaps. We’ll need to get creative, but as long as the guest experience is the priority, I believe we can make the numbers work.
An overdue conversation must happen
To my loyal guests, you’ve been fooled into believing this was easy for too long. As an industry, we created this problem, but we’ll need your help to fix it. I understand these changes will result in pricing us out of many markets, but I can no longer attempt to be all things to all people. Just like your family is your main priority, my wife and daughter are mine. I can no longer survive working for free or, at times, paying to work.
These are not the exploits of a greedy capitalist trying to make more money. This is about finding the balance between my aspirations to serve my community and my responsibilities to provide for my family. In devaluing my products and services, I’ve underestimated your ability to understand and empathize with my situation, and that needs to stop.
Going out to eat is an option. Paying rent is not. I know that resonates with all of you at some level. And hopefully this is the beginning of a corporate initiative, a restaurant culture shift. Hopefully this is the beginning of a two-way conversation where we are able to better serve each other’s needs. Everyone’s talking about the long road back. I say we go somewhere new.
About the author: Josh Kopel is an entrepreneur, restaurateur, and host of Full Comp, a podcast for the hospitality industry.
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