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I am indeed worried about restaurants short-term, because they are one business difficult to run under the current hygene rules. Many restaurants here in German
by _ph_ 7y ago
I am indeed worried about restaurants short-term, because they are one business difficult to run under the current hygene rules. Many restaurants here in Germany have switched to offer take-away food, so while drastically down, their business is not going away completely. And of course, the market isn't going away. As soon as restaurants can operate mostly normal again, the demand will be back, if not even much higher at least initially, because everyone is missing eating out at the moment.
So the question is more, can the restaurants survive the time in between? And this is not a question of margin, it is a question of fixed costs. The employee costs are quite reduced, as they are fired or on temporary leave. Here in Germany, the salaries are covered to large parts by the government and public insurance in times where there is not enough work for a business as a whole. This leaves the rent for the restaurant as the big cost factor and the rent is also the biggest cost factor which makes restaurants struggle in normal times. Which also kills all attempts an raising the margin as described in the article. And this isn't limited to restaurants only, the true reason small shops are disappearing isn't only online purchase, it is the real estate costs which keep rising until the shops and restaurants are operating at minimal margin. This is where in this crisis and going forward, the survival of restaurants and businesses is decided.
For the restaurants themselves, a lot can and should be improved to raise their margins. First of all, many restaurants are badly run. It is easy to cook and serve a burger, it is an entirely different challenge to run the business so that you make a profit. This is why some restaurants are in a constant struggle while others are hugely profitable. And of course, as with any lasting business, you have to put money aside in good times to survive bad times.
The post doesn't talk about beverages. At least here in Europe, the places often are just making even at the food while earning a lot with beverages. Especially as in the evenings, people don't leave the restaurant so quickly after the food has been eaten, but stay for some more drinks and conversation. This is why I always order a drink even when being out for lunch. When they serve me a glass of water for 2-3€, that is basically their profit.
But all of that goes to nothing, if all the profit is absorbed by the real estate costs. Short term, the landlords will have to waive quite a large part of their rent, or they are going to find out that a bankrupt restaurant pays no rent at all. Long term, the communities have to work at keeping costs reasonable.