Restaurateur: Coronavirus Forced Me to Rethink My Business Plan

Since COVID-19 reached the United States, restaurateurs have been forced to decide for themselves how to keep their businesses afloat amid changing mandates. In some places, restaurants are limited to contactless delivery, in others takeout is still okay, and still other cities are keeping dining rooms open.

In Indiana, where Martha Hoover has 12 restaurants with Patachou restaurant group, the current recommendation is that people “stay at home,” which is not quite an order to shelter in place. “It was a very confused message from the governor’s office that needed remarkable clarification,” Hoover says. And in the week since receiving that message on March 16, Hoover has closed the dining rooms of 11 of her restaurants, pivoted one — Napolese Pizzeria — to carryout only, and at one point, even entertained the idea of opening a completely new takeout pop-up called Apocalypse Burger. Eater talked to Hoover about making those decisions as the head of a 400-person company, in a near constantly changing environment.

On reacting quickly:

“It just so happened that we have somebody on my team who was taking pre-doctoral classes at Harvard in risk management, and we were able to put a team and playbook together very quickly. We did that on March 10 and 11. We went through a variety of scenarios that were truly ahead of what the governor was mandating. We had enough control in our own ecosystem so we were not merely reacting to what we were hearing, but we were able to do some planning ahead of mandated closures.

“At the beginning of March when everyone’s awareness level regarding COVID was heightened, we enhanced all of our external messaging, making sure that customers knew they could trust us to do the right thing with our sanitation and food safety. We then enhanced all our internal operations, our protocol regarding handwashing, glove use, deep cleaning, all that. It became obvious to me on Sunday, March 15, ahead of the governor’s call that Monday [that a mandate was coming]. So I made the decision that we would close the minute there was a mandate.”

On closing 11 restaurants:

“Closing a restaurant is not as easy as turning off the lights and locking the door. We went into true triage mode. We have 12 locations, so that meant organizing an incredible team to execute a plan. Firstly, we needed to do inventories: all the serve-by dates of the perishable product, product that was quasi perishable, product that was shelf stable, product that could remain. Then we took it all to a central location where we re-inventoried, evaluated, packed it up, figured out what to do with it. And then we of course had teams go back into each of our locations to do deep cleaning and shut off gas and utilities.

“Then the admin part of our company went into their triage mode: We were delivering messages in person to people about layoffs, and giving them resources that included help filling out unemployment applications. But there’s a lot more to telling people they’re laid off than [that]. We divided food and made meal packages for anyone in our company who could come to our commissary kitchen and pick up. We served over 125 people and families with those items. One of our vendors very graciously donated pasta and pasta sauces. So we had items to divvy up that would give people some food security, and we’re doing that again this week.

“Six years ago we established what we called the PEER fund. That stands for the Patachou Employee Emergency Relief fund. It is run by employees, not by me, and the whole purpose of the fund has been to help employees in their times of great financial need when their security systems cannot serve them. One hundred percent of the proceeds from our Napolese carryout operation go into the PEER fund, and that’s what we’re using to help people pay the rent, be able to buy food. We prioritized that we would help as much as financially possible with their shelter, food, and medical needs.”

On adapting business models:

“We really believe that the restaurant world will be impacted for a long period of time. Consumer confidence will not be what it was a year ago; we have to be remarkably reactive and strategic in how we are going to reopen. We also know from looking at this process that we were very top heavy with salaried people. As much as we do for our people in terms of providing livable, above-survivor wages, doing our company-matched 401k, providing health insurance and the PEER fund and a robust and actively used [Employee Assistance Program] for every team member — beyond all that, we were not offering sick leave or personal time off for hourly people. That is now a priority for us, so we are looking at how we can alter our business model and reduce our salary load so that we can not put money in our bank — in other words, not save — so that we can put money towards programs that benefit our hourly workers.

“We also know that delivery will be the new norm. We’re in Indianapolis, which has completely different demographics than more densely populated cities. Anything we can do to increase the bottom line by increasing our non-brick-and-mortar opportunities is where our business model is going. I don’t think we’re revolutionary; we’re on an island thinking about what we are going to do post-COVID and how we’re going to operate differently. We will 100 percent use data way more effectively than we have in the past.”

On coming up with new ideas in the middle of a pandemic:

“My family decided to have a Zoom cocktail hour on Sunday, and out of that came the idea for Apocalypse Burger. My son-in-law, who is an extremely gifted artist, came up with both the name and the logo and by 10:30 at night, I filed for trademark protection and started working on a menu, pulled together a team within my company and said, ‘Hey, this is what I’m thinking. Let’s do a pop up.’ Everyone was very excited. I think it coincides with people’s need to know there is a future and we’re not just all stuck, because so many people feel very paralyzed by this.

“People really got excited that we were doing something forward thinking, that would employ people, and get people to feel like they were serving their Patachou family. We were going to take the proceeds and funnel them to the PEER fund. But today [Tuesday] when I re-read the governor’s order, I felt uncomfortable asking staff to come out and further put themselves and their families at potential risk.

“We decided to pivot rapidly. We all love the idea of Apocalypse Burger. We are going to execute on it, but this gives us two or three weeks — we hope — to get the details locked in place so that when we do open post-COVID, we open a really sound, well-thought-out business. We’re doing it the way we would be doing it if we were opening a real restaurant, the only difference will be that Apocalypse Burger will open, at least initially, as a carryout and delivery operation only. The pivot was born out of our need to really consider where staff is right now and weigh that against the greater good and what the governor has asked of us.”

On Patachou’s future:

“We’re starting mid next week to put together a reopening strategy. But of course we’re missing a huge piece of information, which is when we will be able to safely reopen. We believe it’s not going to be a Kimmy Schmidt moment where people come out of the basement and the sky is blue and life returns to normal. We will need to stagger our openings and stagger in staff so that we can best utilize our resources.”

On what she couldn’t have planned for:

“I could not have planned for the lack of leadership at the government level. I could not have planned for the confusing and misleading statements and for the lack of general direction, which made us realize that we just had to do what we felt was truly in the best interest of three constituencies — the business, the staff, and the community. It was a balancing act.

“Obviously we weren’t prepared as a country and I don’t think our city was particularly well prepared. It’s very difficult to lead an organization when you do not have the best information at the ready. I feel like that ambiguity created a lot of panic and fear. I’m someone who truly believes in science; I’m listening to the CDC and the World Health Organization. I’m also in frequent conversation with restaurant colleagues from around the country, especially my restaurant friends in Seattle, where they had a full month head-start on us in terms of everything. I’m really listening to them and learning from their playbooks.”

On what she thinks Patachou has gotten right:

“At the beginning of 2020 we launched an open information site called PatachouPeople.com that allows anyone to look at what our benefits and practices are. That has become ground central for Patachou’s dissemination of critical information. It’s so much easier to execute on ideas when you have systems in place for distribution of information. From the feedback I have received from members of the Patachou community, people are extremely appreciative of having accurate information.

“It is not radical thinking to just do carryout and delivery. I think that restaurants — I don’t care if it’s a single-unit independent, multi-unit independent, whatever — we all need to be looking at running organizations that maximize results. And by maximizing results, I mean not just the traditional bottom line, but also for their staff and for the community. I believe restaurants will continue to be the centers of the community, but we’re now required to be thought leaders, too. This moment in time is really showing us the cracks in the restaurant industry business model, and now is the time that we have to fix them. That’s how I’m using my time off: working with key members of my team on how we can become a better organization.”

https://www.eater.com/2020/3/25/21193916/martha-hoover-coronavirus-business-plan-reaction-patachou-interview