Part of our You Belong in Business podcast
How to help save restaurants for the good of all business
February 25, 2021
Some of our best conversations with family and friends are over food. Before the pandemic, often these happened at a favorite restaurant.
Apollo Woods knows this better than most as founder and CEO of OKC Black Eats. He’s a marketing consultant in Oklahoma City who works with dozens of restaurants, specializing in solutions for Black-owned businesses in food and hospitality.
“There’s a story in the food,” Woods says, but not only in table conversations but also in how chefs craft the culinary narrative of their menus.
Trying to preserve the businesses that make space for these shared stories has been difficult as dining rooms emptied and customers scattered to order takeout through mobile apps.
The challenge: How can restaurants—the hardest-hit industry in the pandemic economy—rebound in 2021 and beyond?
Listen to the full episode for all the insight from our business-owner guest, Woods, and our resident business professional, Mark West, national vice president of business solutions for Principal®. Highlights of the conversation (with timecodes to help you easily skip to relevant topics):
Quantifying the economic impact to restaurants
The National Restaurant Association tracked a $240 billion loss for the industry in 2020. About 110,000 restaurants nationwide—17%—may be permanently closed.
Oklahoma City lost only three of its 89 Black-owned restaurants, Woods says—but that’s three too many. And those that survived still faced a massive drop in revenue (as much as 95%).
The pent-up demand of people wanting to return to restaurants, West says, on top of owners’ ingenuity, should offer some hope.
“They’re a very resilient group, hard-working, and creative,” West says. “A lot of them have found ways to keep their business going, but how long is that sustainable?”
Extra PPP help for restaurants
The latest wave of the Paycheck Protection Program (PPP) includes extra help for restaurants and hospitality:
- The available loan for these businesses increased to 3½ times average monthly payroll (over the last 12 months, or in 2019), up to $2 million. (Most businesses are limited to 2½ times payroll.)
- PPP also can pay for more types of expenses, such as supplies, personal protective equipment, and other pieces that weren’t originally included.
- The latest federal relief also encourages other businesses to support restaurants by providing 100% tax deductibility for restaurant meal expenses, up from 50%.
Is this enough federal relief for restaurants?
Bluntly, no, says Woods. More help is necessary in the months ahead.
The targeted PPP for restaurants in 2021 in part is recognition that federal relief last year was slow to reach those who didn’t already enjoy established banking relationships. Woods cites a study showing that of 49,000 restaurant businesses who received $150,000 or more in PPP’s initial round, only about 130 were Black-owned businesses. An Associated Press analysis also found disparities in PPP dispersal based on ZIP code.
How restaurants innovate in the pandemic
Take advantage of down time: One restaurant allowed to open only half the day because of pandemic restrictions, Woods says, used the rest of its time to enhance its website and accept more takeout orders.
Bring it in-house: Another restaurant pioneered its own delivery service to retain more of the profit margin rather than contract with mobile vendors and now serves a 15-mile radius.
Pivot pitfalls restaurants can avoid
Not all restaurants have been as successful with integrating curbside delivery into a new seamless workflow, Woods says. When an employee takes orders outdoors from a line of diners or cars, for example, often those orders are too slow to be relayed back inside to the kitchen.
Restaurants as cultural hubs in business communities
The 110,000 restaurants lost in 2020 that may be permanently closed on average had been in business 16 years—showing their status as community fixtures. To help maintain physical presence in our neighborhoods, restaurateurs can join forces: Two or more independent local restaurants can team up to serve complementary food in the same venue. Think of how craft breweries often feature each other’s brews in their tap rooms.
Seeking innovation grants and other local support for your restaurant
Pinpoint technology gaps in your business and seek out grants to bridge them, Woods says. A tech grant may offer $10,000, for instance, to build your own mobile delivery app. These grants often come bundled with external expertise (sometimes a graduate student, sometimes a midcareer professional) to help maintain the platform.
“People are still out there, they’re just not walking through your doors as much,” Woods says. “How can you get your great service offering in front of those customers that are more likely in the digital space and make it easier for them to buy from you?”
Expanding local dining rooms into the digital space is where restaurants may see significant growth in the months ahead, Woods says.
Which entrees are our podcast guests and host eager to order in a restaurant?
You’ll have to listen to the episode to find out!
- Try our 2021 Paycheck Protection Program forgiveness calculator for business owners to help estimate how much of your PPP may be forgiven.
- Reach out to your business financial professional or find one through Principal®.
OKC Black Eats is not an affiliate of any company of the Principal Financial Group®
This communication provides educational information only with the understanding that Principal® and its employees are not offering legal, accounting, investment or tax advice. Business owners should consult with their counsel or other professionals when making business decisions.
Guests may be compensated for their appearance and Principal does not endorse the businesses of its guests. Some guests may own Principal products or use our services. Unless noted otherwise, none of our guests are affiliated with Principal, Des Moines Iowa.