They are now in a position of strength, ready to fill the void left by restaurants that have not survived.
“The pandemic has put a lot of young freelancers out of business,” said Joe Pollack, principal at Technomic. They didn’t have enough money [or] Evolution to achieve this.
Access to capital and economies of scale have allowed large chains to sink deeper into the pockets and make the strategic shifts that lay them for success today. Many smaller operators did not have this option.
This upended pre-pandemic trends, where chains were taking a bit of a pick-me-up, but at a slower pace. “On an annual basis, it was a very small creep,” Pollack said. “We’re talking about tenths of a point a year.”
Now, when consumers decide where to dine outside, they are more likely to see larger chains of smaller eateries or independent restaurants. The landscape can become a new normal.
“I think it’s a permanent shift,” Pollack said. “It’s more of a market chain now.”
Independent restaurants are often at the forefront of innovation, testing culinary trends and concepts later picked up by larger chains. Without it, the restaurant landscape can become more boring – and lose its character.
“Small restaurants like mine are … the heart and soul of local communities,” said Jamie Rizvi, a New York City restaurateur.
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“We have not yet looked two years into the future. We are looking hourly and weekly at the moment,” he said. “But we think our situation helps us get stronger when we come out of this.”
But Cardenas was right. Since then, the company’s stock has recovered, and then some, hovering around $135, or about 12%, above the price in late February 2020. The company announced record sales in December 2021.
Darden is now in a position to pick customers for restaurants that haven’t been able to survive the pandemic.
“There are fewer restaurants today than there were last month, the month before and the month before,” Cardenas, now COO, said during a call with an analyst in March. “These restaurants will eventually fill up.” “What we want to do is be there to fill some of these restaurants and get that market share.”
But as these chains thrive, freelancers have been – and still are – struggling just to stay afloat.
Capital is king
When the pandemic hit, companies like Darden and The Cheesecake Factory took measures like suspending dividends and withdrawing credit to free up money to stabilize business.
For smaller freelancers, of course, these lifelines weren’t an option.
“The biggest challenge is access to capital,” said Rizvi, owner of New York City’s GupShup, a contemporary Indian restaurant, and Chote Miya, a kiosk-like place serving Indian street food that opens during the pandemic. He said that without government support such as the Payroll Protection Scheme, his business would not have survived.
Rizvi, like most operators, has struggled to hire staff. This means that he had to wear many hats himself.
“I have to be on the floor, I have to be the manager,” he said. Restaurant fills mean Rizvi has less time for administrative tasks. Because of that, he said, “we’re way behind on our paperwork.”
Rizvi has managed to keep his restaurants open, but they haven’t quite worn out. “At the moment we are not making a profit,” he said, adding that he expects a year or two to pass before his restaurants recover.
For James Moore, executive chef and partner at Fully Belly — the delicious breakfast and brunch venue that opened in San Antonio, Texas, in February 2020 — keeping the business means relying on personal finance. Along with his business partner, “We did everything we could to keep him alive.”
“We haven’t been open long enough to stay open only for takeaway and delivery,” he said. “It was definitely a hit.”
Moore also referred to government support as a lifeline, saying, “Every dollar we received in aid we totally saved.” Today, Moore considers himself lucky. Although Fully Belly isn’t profitable yet, it’s growing — and Moore even plans to open at least one more location this year.
The thought of restaurants that did not survive “hurts me,” he said. “I want everyone to succeed.”