Happy business owner opening the door at a cafe wearing a facemask

Keeping Restaurants Working

Keeping Restaurants Working

In order to avoid exposure to the coronavirus, millions of Americans have had to forego dining out during the pandemic, resulting in billions of dollars of lost revenues for restaurants. The economic value of restaurants cannot be overstated: restaurants are both the largest purchasers and suppliers of many types of foods. For the health of our economies and communities, restaurants are a vital resource.

During the best of economic times, operating a restaurant is demanding and difficult. During the COVID-19 pandemic, it has become so difficult that the very existence of many restaurants is threatened.

Amit Sharma, professor of hospitality management, associate director of the School of Hospitality Management, and director of the Food Decisions Research Laboratory, leads a team of researchers who are developing and distributing strategies to help restaurants survive and even thrive in this challenging environment. The researchers are developing strategies for increasing profits, realigning businesses, and alleviating customer concerns.

Year-over-year daily change in seated restaurant diners worldwide from February 24 to November 28, 2020 (Data from nearly 60,000 restaurants)

Year-over-year daily change in seated restaurant diners due to the coronavirus (COVID-19) pandemic worldwide from February 24 to November 28, 2020

Improving Restaurants’ Financial Planning

This summer, Sharma and his colleagues began to distribute a profit planning tool for restaurants that they developed using COVID-19 seed funding from the Huck Institute. This easy-to-use spreadsheet allows busy restaurant operators to plan necessary income in order to achieve desired profit levels. The tool requires just a few basic inputs and can be used in less than thirty minutes.

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Unemployment rate peak in April 2020.

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Unemployment rate remained elevated in October 2020.

The researchers surveyed hundreds of restaurant owners in the North East and Midwest and conducted in-depth interviews with several more to gather the facts and perspective they needed to develop the tool. Despite the demands on their time, restaurant owners told Sharma that they understand the importance of profit planning. 

“Sometimes, restaurant operators don’t know where to start with profit planning, and this tool can provide a starting place,” Sharma explained.

“Restaurant owners, as a general rule, understand their business’ finances very well. They could create this tool on their own, but none of them have the time. By investing just thirty minutes of time using this tool, owners can begin to make better informed choices about how they operate their businesses.”

Amit Sharma

Professor of Hospitality Management, Penn State

“Restaurant owners, as a general rule, understand their business’ finances very well. They could create this tool on their own, but none of them have the time. By investing just thirty minutes of time using this tool, owners can begin to make better informed choices about how they operate their businesses.”

Amit Sharma

Professor of Hospitality Management, Penn State

“Restaurants have been so creative in order to survive. Our team has been so impressed with the adjustments many businesses made in order to survive the pandemic,” Sharma continued.

With the tool beginning to help restaurant operators, the researchers have next turned their attention to a series of publications that will explore how restaurants can respond to future crises.

Planning for Future Crises and Dealing with the Current Crisis

“Our research team’s objective is to develop strategies that will relieve some of this immediate pain for foodservice businesses and help them see beyond the immediate present and into the near future,” Sharma said. “Unfortunately, the negative impacts of the pandemic will not be over soon. The goal of our research is to help businesses recover quickly as life returns to a new normal. We believe these insights will be useful to the industry as we address the current crisis and future crises.”

Profit Planning Tool

The profit planning tool has been downloaded hundreds of times. Any interested restaurant operators can download the tool for free.

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