Sep 24, 2020
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Open For Takeout: Part 1: A Restaurant’s Journey Through The COVID-19 Pandemic

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The restaurant industry is dying. Since March 1 the industry has lost more than 3 million jobs and $25 billion in sales and roughly 50% of restaurant operators anticipate having to delay more people in April  the National Restaurant Association reported. Restaurant sales declined 47% nationwide from March 1-22 in keeping with a survey the association conducted of over 5 000 restaurants

Moreover 3% of restaurant operators have already got closed their restaurants permanently 44% have closed temporarily and 11% anticipate closing permanently in the next 30 days


Chef and owner Kenneth Lee cashing in on an empty dining room to do a deep clean

It all happened so fast. President Donald Trump announced social-distancing guidelines on March 16 urging the general public to prevent bars and restaurants and banning congregations of more than 10 people

The following day all bars in Hawaiʻi were ordered to close


By March 23 Honolulu Mayor Kirk Caldwell mandated that Oʻahu residents stay home and restaurants switch to just takeout until April 30 and likely later. What does this appear like during the eyes of a cafe owner? Over the next month I am going to be following the adventure of XO Restaurant as it navigates the COVID-19 pandemic

Giga Initiative Aims To Connect The World s Schools To The Internet XO Restaurant on Oʻahu is famous for its creative avant-garde rule-breaking service and style

Not at each of the variety of food that comes to mind when you think takeout


Takeout only mandate forces XO Restaurant to head from fine dining to frozen food

As a mom-and-pop spot offering food not designed to-go this restaurant must have closed already. So why hasn’t it? In this six-part series I register weekly with chef and owner Kenneth Lee

Lee shares his theories perspective ideas and strategies as he has been preparing for this scenario all along


Today s post starts with the thoughts that ran through Lee s mind during the second and third weeks of March. In this time (before switching to takeout only) XO Restaurant saw a 44% drop in average daily sales

From here follow us every Thursday to monitor whether XO Restaurant can weather this pandemic


Timeline: 3/11-3/21 Q: What were the 1st things facing your mind when Trump made his announcement on the 16th? A: I used to be thinking well we are able to serve people if we limit the room to ten people

[laughs] Q: … Did you believe that you were going a great way to outlive on that? A: On 10? Oh yeah


Q: Yeah? Yeah I mean  our restaurant s like a cockroach. It s really hard to kill us. [laughs] Q: Why is that? The manner the restaurant was built was around scarcity and always being ready for the worst-case scenario

It s not a very lavish throw-caviar-on-everything variety of restaurant or like afford to have extra staff and all that so just commonly it s a very tight and skeleton crew that produces everything super efficiently


… We re built to kinda be as efficient as possible when it comes to labor food

I mean rent we are able to t be efficient. We re on the same page as everyone else. It just gave us the advantage if everything was normal but now that everything is trimmed down and everything must be skeleton everyone else has to conform to becoming skeleton crew when we re already at that capacity so we haven t had to lay off any of our kitchen staff

I m not paying myself but … Q: In order that s among the reasons you ve been able to keep your staff on is you’ve eliminated your salary for the time being? A: Yeah


Q: It almost sounds like you are not stressed about this at all?. Are there any varieties of daily practices or somebody or people you talk over with on a regular basis that help keep you grounded like this? A: No

Just me. [laughs] Q: Is this just your nature? I believe it s because I ve always thought about the macroeconomics and the microeconomics on restaurants and specifically like this size of restaurant and prefer the fashion of food we do and like: What would I do if this happened? And What would I do if this happened? And the image of I always inspect every option whether it s a good thing or a bad thing and then I always think What’s going to we do to make the best of it? And not the image of this coronavirus thing is something that s happened to everyone around the board but like understanding like who your competition is and the dimensions of restaurants that they’ve and how much staff they have

One simple thing that gives me peace of mind is understanding there s … about 4 000 restaurants on Hawaiʻi and there s let s say a million people


So the restaurant-to-population ratio 4 000 is kind of like that tipping point where … if another restaurant opens then another one has to shut since it s just oversaturated

… The tipping point for that is: You don t should be the best restaurant to survive. You just have to not be the worst


And everyone s situation is different. Like some restaurants like Waikīkī all of these restaurants are becoming destroyed immediately since the playing field isn’t even

Everyone s doing takeout and delivery and whatever in order that s the even playing field but because their rent is like triple to quadruple of let s say Kaimuki or wherever else they re at a disadvantage for negative cash flow each month unless like a number of them gets their rent forgiven

… Q: Yeah their rents are thrice more and also you ve just wiped out all in their clientele because there are no tourists coming here right now


A: Yeah they re in a very bad situation. And also the labor there their base pay in Waikīkī in general is higher than everywhere else so either everyone has to take a pay cut or just get laid off completely

Q: … You got a collection of factors from FISH Restaurant when they closed


How have you either helped or been helped by other restaurants that have had to temporarily close their doors even for takeout? A: They just gave us product and … I knew that they were just gifting away all of these things and I may variety of like it s like shop till you drop where you run into a grocery store and you’ve got to like variety of imagine the costs on everything to get the most costly cart

So I saw these chemicals and stuff that I knew were super expensive like for the dish machine and whatever and obviously we don t have a dish machine but … I grabbed a collection of like chemicals and stuff and … dropped by restaurants that we knew like MW and whatever and just dumped sanitizer solution and that variety of stuff on them and prefer a couple hundred dollars of chemicals and whatever

You recognize might besides help other restaurants out and lower their costs on the things that they have to use


Q: How long do you believe you guys will have the ability to sustain this and especially if this mandate extends through May? Have you considered what you will do if you wish to shut XO for good? A: So my logic on this is not about Do we have enough money? Like because there s so many variables in it

The most competition immediately isn’t about getting cash or breaking even


It s about losing less money than everyone else. . … So we re among the restaurants losing a dash bit of money. So if we re losing $1 000 a month or something then in the complete year we’ll only lose $12 000 which isn’t very much at all

Then for eaterie groups that have multiple restaurants but they shut them all down and they re still paying rent on three obviously their negative cash flow is triple on the rent side


Cause for the main part everyone who s doing takeout it cuts back to compare how much takeout they re doing right now

And because my staff is so small it was already trimmed down. We didn’t must trim it down more or add on any staff to convert to takeout so we didn’t must do anything


But most other restaurants had to diminish like 20 employees down to four to do takeout since you don t need 20 people to do takeout

… So the labor cost around the board is pretty equal food cost is equal but everyone s rent and situation is different. So the image of the Waikīkī restaurants they re all gonna shut down faster so for each restaurant that shuts down it s one less individual that s grabbing on the same pool of cash

So at a undeniable point when let s say there s 1 000 restaurants immediately and day-to-day one restaurant closes … for each restaurant that closes the money that was in the restaurant that closed down redisperses into each of any other restaurants which are still open


So it s not about getting cash right now

You could do what you do and you could find more niches and whatever. Like for us in a week or two we re going to start selling waffle dogs. But that s like diversifying and opening up more options that s one thing


But like macroeconomics thing immediately is it s not that important to unless you’re among the bottom those who find themselves just hanging on for dear life

But in case you re higher up in the food chain  your main goal immediately is to just outlast any other restaurants. . Let s say day-to-day on average I m making $700 immediately but to break even I need $800 and then everything past that is profitable


Immediately I m making $700 but let s say in a week 20-30 restaurants close and then my average per day goes up to $800

Then I m breaking even. So the main goal immediately is to outlast other restaurants and then that s how you’ll grow to be making money. . Stay tuned for a continuation of this conversation on Thursday April 9th


The conversation has been edited and condensed for clarity

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