How dining will never be the same

CEOs from Taco Bell, Blue Apron, and Momofuku reveal how they've adapted during the pandemic and 

Jennifer Ortakales, Kate Taylor, and Irene Jiang 

May 12, 2020, 9:43 PM

Andrew Bezek; Checkers & Rally's; Restaurant Brands International; Ruobing Su/Business Insider

While the food and restaurant industries have faced major setbacks during the pandemic, many companies have found ways to serve customers in new ways. 

Many predict these new ways will become the new normal. We spoke to CEOs from Momofuku, Thrive Market,  Raising Cane's, The Boston Beer Company, and others about how their companies, their industries, and the world will change after the pandemic. "For the restaurants that are able to come out and are able to survive — I think we come out a lot stronger," said Todd Graves, CEO of Raising Cane's.This feature is part of a series based on conversations with more than 200 CEOs on how business will be transformed by the coronavirus. To read more, click here. 

Consumers who previously had only a passing understanding of how restaurants and food-focused businesses work have suddenly been given a front-row seat to the inner workings of the food system. The term farm-to-table has a different meaning for consumers today after they've been bombarded with news about COVID cases in processing plants and restaurant owners who fear they'll never open their doors again. 

It isn't all bad news, though. There's a lot of new, inspired ideas coming from these businesses as well. And as many leaders see it, the pandemic has ushered in much-needed change, even if some if it is hard to process. Many businesses will close, but those that remain will be stronger and ready to serve evolving customers' tastes thanks to the adjustments they've been forced to make.  

We asked top leaders across the food and restaurant industries three questions:

How will the coronavirus change your company, your industry, and the world?

Their answers, edited for space and clarity, follow.

Linda Findley Kozlowski, CEO of Blue Apron: "While awful, this pandemic has given us the opportunity to connect with consumers in a new way."

As the world continues to grapple with the effects of coronavirus on everyday life, there is no doubt that it has been a learning experience for us, our industry, everyday consumers, and the world.

For Blue Apron as a company, it has meant being categorized as an "essential business" practically overnight, and our teams have been working hard to provide consumers food directly to their homes.

As a player in the food industry, we are now focused on enhanced safety and sanitation measures on top of our already rigorous processes [tapping into alternate forms of supply chain] and being more connected to those resources. We feel fortunate that we already had that level of visibility into our supply chain, but we believe it has become more important for consumers to understand the origin and standards applied to their food as well, which is something we have always been proud to provide.

While awful, this pandemic has given us the opportunity to connect with consumers in a new way in unusual times and bring people together over a meal even as they social distance. While we don't know what the ultimate "new normal" will be, we believe, for now, it has brought a fresh perspective to the importance of limited resources and cutting down on food waste. And most importantly, we believe it reminds people of the importance of spending time with loved ones. We feel fortunate to continue to help our customers do that — with just a few quality ingredients and the power of technology.

Frances Allen, CEO of Checkers & Rally's: "Finally, for the first time in a long time...we're actually going to see some traffic growth."

I do believe, sadly, that we will lose a lot of units. That said, I think the industry was overstored. So, I look at it as an opportunity. We're going to see — finally, for the first time in a long time — we're actually going to see some traffic growth. And hopefully, what that will mean is that these price wars that just drive down the profitability of restaurants will start to abate. That said, we are, I believe, going into a recession. So price will still be important, but we're looking at it as an opportunity to upgrade the quality of our guest experience.

One of the challenges I think the industry has faced is the labor shortage and with the closure of the units with the recession there is going to be sadly more unemployment. But it will also give us an opportunity to give jobs back to those really good crew members and general managers that's going to enable us to lift the guest experience across the board. So, I'm excited about that. 

I also think from a selfish perspective that people are going to want to return to comfort food and comfort brands. There is going to be this cocooning going on, a sort of a relief that we survived. But at the same time, wanting to embrace the things that give them comfort and there's nothing like burgers and fries as comfort food. From a selfish point of view, we're also excited to be able to lean back into that. But I think sanitation is likely to stay...The entrepreneurial activity, the omnichannel focus where people have expanded their dining rooms to curbside and take-out is going to stay. I think we'll be handing guests sanitation wipes for a long time to come.

Tariq Farid, CEO of Edible Arrangements: "Major changes can be implemented just as effectively by introducing them via video conferences, emails, instant messaging, etc."

Tariq Farid, CEO Edible Arrangements Edible Arrangements

Advances in technology were already pushing us to minimize face-to-face communication — now we've seen firsthand just how possible and even more efficient it is to accomplish important tasks remotely.

For Edible, as a franchisor, COVID-19 has reiterated to us the importance of innovating in real-time to respond to constantly-evolving consumer behaviors and needs, which also requires communicating with the owners across our franchise network more efficiently. For us and the rest of the QSR industry as a whole, we've realized in recent weeks that not every business discussion requires traveling for a face-to-face meeting; major changes can be implemented just as effectively by introducing them via video conferences, emails, instant messaging, etc.

And the same will be said for delivery of our services. The QSR space has always been heavily reliant on our brick-and-mortar presences, with the majority of businesses launching as physical storefronts before eventually introducing digital and e-commerce services. Fortunately for Edible, our e-commerce business has been one of our strongest assets throughout our 20 years of business. But as a result of COVID-19, I anticipate more QSR businesses will enhance their e-commerce capabilities for the foreseeable future, and we may even start seeing a spike in new QSR concepts introduced with a primary emphasis on ecommerce over brick-and-mortar.

I also think companies in this industry are going to have to learn to do more with less — less store locations, less hours, and fewer employees — but fortunately, technology will allow companies to do so in a way that will enhance business, not detract.

 

Beth Ford, president and CEO of Land O'Lakes: "Farming and food production are not remote occupations, they too require a surprising amount of technology."

Land O'Lakes is a farmer-owned cooperative with deep roots in rural America. We see every day what these communities do to provide the food and keep our country operating, despite enormous challenges.

The coronavirus pandemic has highlighted not only how essential these communities are to our food security, our economy, and our national security, but it has also highlighted the ways they are left behind, with fewer hospitals, grocery stores, and other crucial resources. 

Many families in rural areas don't have the high-speed broadband connection that enable the telehealth, telework, and online school services that most of us have heavily relied upon during this period of social distancing. Farming and food production are not remote occupations, they too require a surprising amount of technology and internet connectivity, which more than 19 million rural Americans do not have.

As our nation and the world begins to recover, Land O'Lakes will continue to advocate heavily for these communities — both domestically and globally— by recognizing the contributions they make and calling for better public and private investment to support them. We all have a shared destiny.

Scott Svenson, CEO of MOD Pizza: "I think opportunities for humans to connect and gather will be more important than ever."

Someone said recently that COVID-19 is going to change everything in the future. And somebody else countered, "Well, in fact, it might not change everything. It might simply accelerate the trends that were taking place anyway." And that's the view of the future that I subscribe to. The move towards digital, the move towards off-premise, the move towards convenience were things that customers were asking for. But the timeframes that brands like ours have to now adjust and adapt to that new reality have been dramatically compressed.

I think a lot of people have speculated that with the fear around the virus, that social distancing would be something that is a bigger part of our future. I think that's true, but I think opportunities for humans to connect and gather will be more important than ever. And I think it may be that they have to gather in different ways, less frequently or just differently. It will likely be that a larger percentage of our business is off-premise, delivery, drive-through, and pick up.

But I think people thrive on human connection and so we're going to have to find ways for that to continue to be a part of our daily experience. And I think for brands like MOD, trust has always been important, but I think trust is going to be a bigger part of the relationship between any brand and its consumers. Trust that we're taking care of our people, trust that we're putting the interests of the consumer, the health and wellbeing of our consumers at the forefront. I think that's going to be paramount as we come out of this and as we build our relationships with customers going forward.

Marguerite Mariscal, CEO of Momofuku, which includes Fuku, Noodle Bar, and Ssäm Bar restaurants: "For us to take better care of our employees, we need to be profitable in and outside the four walls of a restaurant."

A lot of smaller restaurants and restaurant groups sit at the intersection of art and commerce. What that translates to over the next few months, a year, and beyond is still being written. How do you keep a connection while going contactless? The Northstar will remain the same: have someone leave our spaces better than when he or she walked in. But we'll just need to reverse engineer how we get there.

The pandemic has also pushed us to approach restaurants as one of multiple revenue streams. For us to take better care of our employees, we need to be profitable in and outside the four walls of a restaurant — whether that's through takeaway, products for the home, or content to cook along to. Diversifying our income means a more stable financial picture and better advantages for our teams in and out of crisis.

The last month has shone a light on some of the industry's practices that were previously barely tenable in the first place. We are hopefully going to see a reform that will better position restaurants, even after there's a vaccine. The worst thing a restaurant can do is go back to "normal." We need to all use this time to reevaluate industry standards. Does a tipped wage still make sense when a larger percentage of revenue will come from takeaway and delivery? Are delivery fees–sometimes up to 30%–defensible when takeaway is a restaurant's only source of income? Now is the time to recalibrate and come out stronger.

Todd Graves, CEO of Raising Cane's: "I think people are going to actually trust restaurants more than before the pandemic."

I think the industry comes out stronger. Now, there's going to be obviously closures that never come back. And I can generally say my heart goes out to these independents. These are restaurants that have soul, they have character. Their crew members are incredible. And I go to them all the time and some of them are not going to be able to reemerge and that's the tragedy for our industry that's going to come out of COVID. Now for the restaurants that are able to come out and are able to survive — I think we come out a lot stronger. 

When you go through something like this, I saw that with Hurricane Katrina, you have these team members that all say, 'Hey, we got through this together and we can do this.' There's a deeper connection with your customers, your communities, and your own business.

I think all these incredible ideas that are coming out ... are going to stay. This curbside delivery for restaurants that don't have drive-thrus – I think it's going to become a quick way to get people meals. I think we're going to be as an industry heightened sense of sanitization and making sure we're delivering food-safe products and keeping our crew members safe. So as a whole, I think people are going to actually trust restaurants more than before the pandemic.

Jose Cil, CEO of Restaurant Brands International, parent company to Burger King, Popeyes, and Tim Hortons: "We've never communicated more frequently or efficiently with franchisees and employees as we have in the last two months."

In many ways, the COVID-19 crisis accelerated much-needed change.

As a result of these trying times, we've become much better communicators to both our employees and franchisees, while enhancing the guest experience through digital platforms. We've never communicated more frequently or efficiently with franchisees and employees as we have in the last two months. Additionally, we were quickly able to evolve our digital infrastructure to meet our guests in their newfound realities by rapidly expanding the availability of delivery and curbside pickup, and enhancing our mobile app platforms across our brands. We believe the relationships we have with franchisees, employees, and loyal guests have all been strengthened as a result.

When it comes to the QSR industry, we see drive-thru and home delivery remaining as an essential part of the business. During this crisis, sales through the drive-thru continue to be strong and performing well on a year-over-year basis, as our guests access our products in a convenient and, more importantly, safe safer way. As more and more people stay at home to help combat COVID-19, we have seen a significant increase in home delivery. At Tim's in Canada, we brought over 1,000 restaurants online with delivery in just three months. In the US, the vast majority of our restaurants offer delivery through Uber Eats, Door Dash, Grubhub, Postmates, and our own delivery option on the Burger King/Popeyes mobile apps and websites. This is an excellent way for people to continue enjoying the best of our food without having to leave home.

 

Dave Hirz, CEO of Smart & Final: "The product supply challenges that grocery retailers have been experiencing during this pandemic have highlighted the downside of just-in-time inventory management."

Dave Hirz Smart & Final

The grocery industry is operating dramatically different than it was just 10 weeks ago.

Grocery shopping habits have changed in a way that will continue to impact our industry

for years to come. People are eating at home more than ever before. 

Prior to this pandemic, customers spent roughly 50 percent of their food dollars at home and 50 percent away from home. 

While the percentage of meals at home will decrease as the foodservice industry starts to reopen, the trend of eating at home could continue well into 2021, as

customers will be cautious about getting back to normal too quickly.

Before the COVID-19 pandemic, customers typically shopped for their groceries at up to

three or four different stores. Now, to increase social distancing and reduce exposure,

they're shopping less frequently, consolidating their trips to fewer grocery stores, and

purchasing more on each trip. The trends of larger basket sizes, making fewer trips and

visiting fewer locations will become the new normal for many customers, as will the

increase in purchasing of hand sanitizers, disinfectants, bleach and cleaning supplies as

recently acquired habits become permanent.

Many of the cleaning, safety, and distancing protocols implemented at stores will

continue in the future. While some of the customer spacing protocols will be reduced,

more attention will be paid to allow for greater social distancing and the enhanced

attention to cleaning "high touch-point" surfaces will be more of a focus going forward.

The product supply challenges that grocery retailers have been experiencing during this

pandemic have highlighted the downside of just-in-time inventory management, and this

will need to be reconsidered moving forward. Similarly, the amount of safety stock

historically considered sufficient will be reevaluated in the new post-pandemic

environment.

Mark King, CEO of Taco Bell: We're already seeing a lot of changes in the restaurant industry in Asia that will inform how we reopen our industry in the US."

Taco Bell

It's said a lot, but it's important to remember this is an unprecedented time and everything is changing and evolving so rapidly. One thing that hasn't changed is that the safety of our team members and customers remains our top priority. We're grateful that our operating system is incredibly flexible, and while we don't know exactly what the future will look like, we will be able to accommodate changes we need to make in order to keep our restaurants safe for everyone. Our research shows that customer behaviors changing today that make life easier and safer will be the behaviors that carry out into the future — like delivery and mobile ordering, as well as contactless payment and service.

We're already seeing a lot of changes in the restaurant industry in Asia that will inform how we reopen our industry in the US. Restaurants will have to make adjustments to seating areas, offer more sanitation options at high-frequency touchpoints and protective shields at counters so customers continue to feel safe. Team members will expect their employers to continue to provide protective gear like gloves and masks to ensure they are being taken care of, and the industry will continue to offer much less contact throughout the experience, including delivery and drive-thru. Overall, the restaurant industry will need to adapt to the needs of people in order to survive.

 

Dave Burwick, President and CEO of The Boston Beer Company: "We have a long road ahead. Reopening of states will be fractured, complex, and challenging."

For the craft beer industry, we have a long road ahead. Reopening of states will be fractured, complex, and challenging. Bars and restaurants, including our own taprooms, will have a slow return to a new "normal." That means we have to reevaluate how we call on and support our customers, and how we work together. We'll continue to rely on technology and new thinking to perform our jobs. And at least until there's a vaccine, we expect to be traveling less on planes and not interacting with large groups of people. 

These are uncharted waters, but our Boston Beer coworkers are resilient and we are finding ways to tap into our reserves of ingenuity, imagination, and problem-solving.  We're working hard, using all of our creativity and problem-solving skills to develop a plan that includes supporting our industry as it rebuilds, while continuing to provide drinkers with great beers, hard seltzer, hard cider, and hard iced tea.

We will continue to lean on our core strengths, which remain unchanged — our unique, passionate culture reinforced by Jim Koch and Sam Calagione, our diverse portfolio of brands positioned towards growth, and our #1 Sales organization in the industry. Although the world around us has shifted, our values remain the same, and one of those core values is "We are the Boston Beer Company and together we are heavy."

Nick Green, CEO and cofounder of Thrive Market: "We all need to be conscious consumers."

A lot has been written about the way the COVID-19 crisis has accelerated adoption of online grocery shopping. This is clear. In February, 5% of Americans bought groceries online; in March, 35% did. Even if half those people go back, we're likely to see a 4x increase in online grocery shopping in the "new normal."

As an online store known for the highest quality healthy and sustainable groceries, we've seen this trend first-hand at Thrive Market.

But we've also witnessed the acceleration of another consumer trend that we think is even more important: conscious consumption.

We're all thinking about the safety of the food we buy, about where it comes from, and whether it is clean and healthy. 

We're all suddenly aware that the products delivered to our homes are handled by people and we're wondering, "are they safe and healthy, for their sake and ours?" And at a time of so much uncertainty, we're all looking for brands and retailers we can trust - who deliver value but who also share our values.

At a moment when our world faces big problems beyond the pandemic, problems like growing inequality and the global climate crisis, we all need to be conscious consumers.

 

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