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There's no question the restaurant industry is among the hardest hit by COVID-19. And while the country begins to reopen, Canadian restaurant owners face several challenges—most notably, operating at reduced capacity.

For David Hopkins, President of The Fifteen Group, determining how restaurants can remain profitable while complying with capacity restrictions is key to reopening success. In a recent conversation with Laura Davy, RBC ‘s National Director, Retail and Healthcare, Hopkins discusses how restaurants can operate in the “new normal” and highlights ways owners can take advantage of specific government programs in the short-term that can set them up for long-term success in this new environment.

Here are three ideas for restaurant owners to consider:

1. You’re in a seller’s market.

    According to a recent survey, 60 percent of Canadians indicated they intend to visit restaurants once they reopen1. While that demand is down, early research has also shown that one in ten restaurants will not be reopening due to the COVID-19 pandemic and those that do open will only be able to operate at 50% capacity. When you consider the impact this reduced capacity has on supply and compare it to market demand, we find ourselves in an environment where there is more demand than supply. And for the first time in recent memory, it is predicted that restaurants will be in a seller’s market.

    As a reference point, Hopkins calls attention to popular tourist destinations, where there is often a large excess of demand over supply. In those circumstances, prices may be more than in less attractive markets. He suggests to his clients that the current seller’s market may provide similar opportunity to increase prices (not dramatically – by 10% – 20%). While every restaurant needs to evaluate their own opportunities and there is no hard and fast answer, Hopkins encourages owners to examine their potential for an increase to both prices and guest experience.

    2. You may be paying 1972-era wages

    If you qualify for the Canadian Emergency Wage Subsidy, the federal government will cover a portion of your employee wages. Hopkins estimates that restaurant owners who take advantage of this subsidy could be paying for labour at a rate that is the equivalent of 1972 wages, which presents a unique opportunity to improve your guest experience.

    Your employees directly influence the quality of your product, service, and atmosphere. With the wage subsidy, you now have the opportunity to adjust the number of employees on your payroll and optimize your team’s composition to create a 10 out of 10 guest experience. Not sure if a host will add to the guest experience? Want to add an employee to screen customers before they enter your space? Try it out at a reduced rate, “It’s a once in a lifetime opportunity,” says Hopkins.

    3. You have the opportunity to innovate

    While the pandemic has caused significant hardship and struggles for many restaurant owners, it has also presented opportunities for those with the foresight to think differently. Restaurant owners tend to be resilient, creative and ambitious, and there are new revenue and profit opportunities available. Many restaurants have created dinner packages, others have started selling wines not available in local liquor stores, and some have even partnered with theatre companies to complement virtual experiences.

    By using these three levers – a price increase to offset costs, the wage subsidy to offset additional labour costs, and new profit centres and revenue opportunities to improve margins and access new audiences – restaurant owners may be able to generate profits that match or even exceed pre-COVID levels.

    Sure, the model will look different, but that’s the point. What worked before won’t deliver the same results in the future, so restaurant owners must create their own unique models to drive success.

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