The little grocery store with the strange opening hours, the electronics store next block where you can still get old spare parts, and the restaurant around the corner with the quirky (and therefore funny) service – many of them will soon disappear forever. Such a shame, really, isn’t it? A comment.
The Independent Restaurant Coalition estimates that up to 85% of mom and pop restaurants in the U.S could close forever if they don’t get any help by the end of 2020. The National Restaurant Association already identified 110,000 closures by December 2020 in the U.S.
According to a local report from the City of Smith Falls in Canada, only 50% of small businesses believe they will be able to recover from the pandemic; 37% are not sure. There is help like in the province of Ottawa where 75% of wages are covered, taxes are deferred and loans can be taken out more easily. However, taxes and loans must still be paid at some point. Where will this money come from?
In Europe, 72% of restaurant businesses in the U.K fear they will have to close, and the rest of Europe expects about one-third of restaurants will not reopen, despite government aid. Many of these restaurants are traditional mom & pop restaurants, family-owned, or with just one owner.
The retail sector is in a similarly precarious situation having to deal with restrictions, lockdowns, and fighting against the big players. Amazon, Walmart, eBay, and Apple currently have an e-commerce share of 52.4% in North America, of which Amazon alone holds 38.7%; in Europe, Amazon already holds more than 25% share.
What these numbers would really look like from 2021 to 2022 is pure speculation. However, what is certain is that only a few stand-alone restaurants will make the leap to become virtual brands or ghost kitchens, only a few small shops will switch over to ecommerce. Most don’t even want to because that’s not the business model for which they get up every morning.
We’re hypocrites when it comes to small businesses
Change of scene. Recently I was with my wife in a small family-owned store. There was just about everything from tools, metal goods, paints, and kitchen accessories. We have lived in this area for ten years, and it had not caught our eye until then. Looking for proofing baskets, my wife had come across the store, got the baskets there, and came back with bright eyes: “If you go in there, you won’t come out before 2 hours, it’s a dream!”. Sincerely, if you’re into cooking and kitchen equipment, the store just can’t be beaten. There’s everything up to the professional accessories that will make you lose track of your time. Two ladies run the store at their best age; they leave you alone when you like and assist when you need it. Competent, friendly, human.
Objectively, of course, this small store cannot compete with Amazon, eBay, and Co, neither in price nor in the offer. In addition, even if the two ladies like to order everything for you, Amazon Prime will probably still be faster.
You don’t have to think long about why the store still exists and why we felt so comfortable there: it’s less about preference, but more about quality, and the excitement of being able to touch goods, to turn them around and twist them, to feel how heavy the pot you’re holding in your hands is. It’s about appreciation and exchange. It’s about the flippant joke when you ask if you can exchange a casserole dish again (“Sure, if it comes back with a piece of roast in it…”). Also, at the risk of sounding corny, the point is that the products you buy there tell a story – even if it’s just of that brief moment when you were completely immersed in that store.
Mom and pop restaurants face the same problem as the two ladies: they can hardly survive in the tough competitive environment and are dependent on customers for whom service and individuality are important and who are willing to pay (more) for it. Advertising here works via word-of-mouth; there is simply no budget for advertising campaigns. Along the value chain, many independent restaurants are left with hardly more than is needed to cover costs anyway – and that is not a problem due to Covid-19.
“It’s not official yet, but I’ll probably close in 3-4 months. It just doesn’t make sense anymore,” a former colleague, let us call him Tom, tells me. He does not want to read his real name here. “We have enough guests, but it’s a never-ending price war. We’re only working with a minimal margin right now. Covid-19 is unfortunately not the cause, but has given us the rest.” Tom has been running the restaurant for several years, but he has not really been making money from it for a long time. If you compare his working hours with the monthly profit, he does not earn much more than one of his chefs. Hence, it’s not the salary he’s concerned about at all. “I don’t have the purchasing conditions from the big players who are in a much more powerful position and can also depress prices. I do not want that either – I want to sell dishes where the food has its value. I want the service we provide to have its value.” What could you add to that?
Why do we care so little?
We have a problem with fairly rewarding products and good service whether mom & pop restaurants or independent retailers. Examples are all around us: the XXL steak must not cost too much (but with a lot of side dishes, please), and all-you-can-eat remains a perennial favorite-which has disgusted me since I trained as a chef. Then there are the customers who like to walk through shopping streets and malls, check on the products in the store, get recommendations and good service in the store, yet prefer to order online.
That’s right; it might be a normal economic development, an adaptation to consumer behavior and supply and demand. Maybe it’s the Zeitgeist. Whatever the reasons, just because it’s economic or social development, it doesn’t make it right. Because in these moments, we literally decide with our feet who will make it or not.
The reasons lie not only in our changed consumer behavior. For example, although salaries and especially the minimum wage have risen in recent years, they have not compensated for the rising cost of living. That is another reason why there is less money available to shop in these businesses, even if people would like to support them. Who wants to blame parents on the brink of financial collapse for shopping as cheaply as possible?
However, the sense of the true worth of service, as Tom mentioned, has been lost to us at all societal levels. Even worse, we are no longer empathetic enough to want to solve this injustice. It is simple: it does not make sense to want stand-alone businesses if the revenue flows past them. It makes no sense to always have everything available and yet insist on sustainability. It makes no sense – no, it is mendacious – to weep for independent restaurants and stores when we are slowly but surely bleeding them dry.
No easy way out.
Independent restaurants are particularly affected by staff shortages, fluctuation, rising wages and costs of raw materials, an almost impenetrable flood of regulations, and the lack of time needed to realign the business. Not every business can or wants to suddenly become a delivery service, virtual brand, or ghost kitchen. But times are changing rapidly, and the foodservice industry must keep up.
It makes sense for mom and pop restaurants to take a closer look at how the market is changing around them and what they can quickly profit from.
Changing consumer behavior – pre and post Covid-19.
The pandemic has caused us to dramatically adjust our behavior; however, it even started before the pandemic. Going out less and relying on delivery services was already trending before lockdowns and restrictions. Online orders increased by about 40% on average. This increases the need for digital solutions to capitalize on this new delivery or pick-up business.
An upgrade for the menu
We are changing our eating habits much faster today than in the past. Special diets, allergies and intolerances, ethical reasons, or simply the pleasure of trying new things contribute to an ever-increasing customization of the menu. Restaurants can benefit from this trend by adapting their menu while remaining authentic. No need to chase every food trend: adding a Thai Panang curry or a buddha bowl to the menu only makes sense if it fits the restaurant. 25% of the menu should change regularly so that returning customers find new culinary incentives.
Value for Money
Many people expect to have less money to spend in 2020 and 2021, with figures varying between 55-75% in the U.S and Europe. This naturally increases the need to offer dishes with a good price-performance ratio. This is also, but not only, about further reducing the cost of goods. Many customers are willing to pay a higher price if the food is of high quality, regional, or even organic. Very important here: doing good and talking about it. Good storytelling can give a decent boost to the sale of dishes, even if they cost a little more. Customers understand that a restaurant cannot do a 180 in the blink of an eye, but they support and appreciate it when someone tries.
It would be dangerous and negligent to trust that things will somehow keep going – those days are certainly over. However, it is worth it now more than ever to show that you are still there and that you have more to offer than the chain around the corner, even more so now.
Hopefully we care in the end
Small businesses are not dead. Mom and pop restaurants are not dead. Not now. It is too early for an obituary. However, it is up to us to decide what we really want: that the pizza and pasta always taste the same no matter if we eat it in Berlin, New York or London, that the eternally same sauce hold the burger together, or if we want variety and individuality. Do not get me wrong; the QSR sector and system gastronomy have their place, they are important. There is a lot we can learn from them – especially in terms of flexibility.
Nevertheless, it often remains the same – predictable, impersonal, and boring. However, suppose we want a vital, varied, and exciting restaurant scene and thriving individual shops. In that case, we need to have started supporting these businesses yesterday. It is not about black and white, all or nothing. It is about a healthy, responsible measure that secures businesses for the owner and their employees.
They have a lot to offer; you will see when you only step in. Believe me; we will terribly miss them when they close up the store for good.