As restaurants temporarily close dining rooms and many struggle to stay afloat, we’re starting to hear from specific businesses about their strategies for dealing with a world where “open for business” means being able to take and fulfill off-premises orders and no one is clear on when they’ll be able to once again open the dining room.
One such business is Wahoo’s Fish Tacos. Wahoo’s is based in Southern California and currently operates about 60 restaurants across several U.S. states (as well as a location in Japan). The chain was founded by Chinese-Brazilian brothers Wing Lam and Ed and Mingo Lee back in 1988 as a way to bring their different cultures’ culinary traditions and styles together into a single restaurant.
Being around for 30-plus years means the brothers have seen their share of ups and downs in the restaurant industry, which so far is helping them better navigate the sudden and abrupt shift to off-premises business resulting from the spread of coronavirus.
“We started delivery a week ago because we knew that was coming,” Ed Lee said of the mass restaurant closures that started last week.
During a phone call with me last week, he and Wing Lam explained that Wahoo’s has dealt with having to temporarily close before (after the 9/11 attacks), but that what we’re dealing with now is far more severe. “This is the first time we can’t get ahead of ourselves because everything continues to change,” says Lee.
That’s a polite way of stating the situation. The National Restaurant Association anticipates a $225 billion decline in restaurant sales over the next few months, and the loss of potentially millions of jobs. As mentioned above, entire states are mandating that restaurants close their dining rooms. Major chains are voluntarily shutting down all operations in certain parts of the world. And everything continues to shift so rapidly there’s no telling what the restaurant industry will look like in two days, let alone two weeks.
“Right now we’re looking ahead about two weeks at a time,” he told me. “Our number one goal right now is to make sure we take care of our customers and our employees.”
Wahoo’s is committed to offering delivery (“It is a battle that we’re stuck with,” says Lee). Another strategy that could be more financially beneficial to restaurants and workers is to emphasize takeout, where customers order ahead online then come to the store to collect their food.
The biggest challenge here is actually getting customers to understand the restaurant is still (for now) open for takeout orders. Whereas the vast majority of customers automatically associate quick-service restaurants like Wendy’s or even some fast-casual chains (think Chipotle) with to-go orders, there are many more restaurants in America people still think of as sit-down establishments. But with 100 percent of orders now being off-premises ones, more has to be done to remind customers the takeout option exists.
Incentives for pickup orders are one way Wahoo’s is doing that. For example, customers who order a family-style meal for pickup and get free desserts as well as a gift card as a reward. There are deals on kids meals for those ordering food for pickup. Lee says the point of these incentives is to get customers to come back to the restaurant, both now and later.
Pickup orders also make more financial sense for the restaurant itself, because the commission fee owed to third-party services like Grubhub or DoorDash is much lower (there’s no driver to pay). Lee is quick to note that Wahoo’s doesn’t want to “get into a war with the delivery system.” That said, he adds that delivery “doesn’t make us a single dime.” Promoting takeout orders is a way around that.
As an added benefit, it’s also a way for employees making the food to directly receive tips, something that doesn’t happen with delivery orders, where customers pay and tip online and the money only goes to the driver.
Questions around takeout as a business model remain. For now, it’s a viable way for restaurants to offer off-premises ordering and, unlike third-party delivery, connect directly with customers. That could change as the number of COVID-19 cases goes up and more restaurants close up entire operations. And unfortunately, it’s impossible to say right now if a state like California would implement mandatory closures for all restaurant operations, takeout included.
Lee and Lam said they don’t anticipate seeing full restaurant openings until the end of May at earliest. Until they, they are trying to react to the ever-changing situation as best they can.”
“This is not going to be a tomorrow morning turn the lights back on. It’s going to be tough,” says Lam. “As a community we really need to get our act together and rally.”