The Snug is a bar-forward restaurant in San Francisco serving modern California comfort food, cocktails & craft beer offered in chic, comfortable quarters. As one of 7shifts’ most tech-savvy restaurant clients, the founders of The Snug always have their fingers on the pulse of the restaurant industry.
We spoke with Zack Schwab, one of The Snug’s co-founders, to learn about how their tech-savvy business evolved during 2020 and where they see the future of restaurants heading.
Evolving restaurant operations during COVID-19
At the start of the COVID-19 pandemic, like many restaurants, The Snug closed its doors to diners. After two months, they reopened with just the four main co-founders running the operation. Here’s how they evolved their operations to sustain their business during the pandemic.
One way they evolved their operations was by taking advantage of San Francisco’s new shared spaces program to extend their dining outdoors in order to keep revenue up.
“San Francisco did this shared spaces program, like a lot of cities. So we took over five of the parking spaces along our restaurant, which basically provides somewhere between 80 and 100 seats, which is technically more than we had inside prior to COVID. So the warm weather has been very good to us out there, and we’re investing a lot to make it look nice and be comfortable.”
According to an upcoming 7shifts study on the state of labor in 2020, outdoor dining was the largest revenue-driver during COVID, as reported by 37% of restaurants.
Delivery & takeout
Initially, The Snug followed what many restaurants were doing by implementing their own takeout and delivery service. Zack himself took up the role of delivery driver and spent his evenings driving food orders across the city. However, self-operated delivery was not sustainable for their business concept and staff.
“I was physically driving the orders and I found it to be a nightmare logistically. Everybody wants their food at the same time of day. So if you don't have a pretty large fleet of drivers, you're really not going to be able to get in the window that most people want.”
Implementing self-operated delivery is not always a viable option for restaurants, which is where third-party platforms come in. While they do charge fees on orders to use their platform, they also provide restaurants with a new marketing channel, access to their driver network, and access to a whole new audience of diners looking for local restaurants.
“Third-party apps have a massive leg up on getting you food within 20 to 45 minutes. When we opened [our delivery service] for requests, everyone wanted everything at 7:00 PM. So there was no way for one driver, even two of us at one point, my partner, to get hot food to that many people across the whole city. Delivery has never been and will never be what helps us thrive. But it's ancillary sales that, with minimal effort and trying to maintain our brand as much as we can, we can drive a bit of revenue. And every bit counts right now.”
While delivery and takeout may not be right for The Snug’s unique concept and brand, it’s a great revenue driver for many restaurants—especially fast casual. Zack offered insights for restaurateurs on how to ensure success on these platforms.
“For concepts, obviously, that are heavily driven by takeout, you really have to double down right now and make sure your packaging is great, your food's traveling well, and you just have good systems in place to keep your staff happy because it’s a lot of logistics that don't necessarily impact their income. A lot of restaurants here did a full pivot where they were like a marketplace and a store and were trying to do anything they could to drive revenue. And I totally understand why, but there can only be so many little boutique marketplaces. And I think what everybody needs to realize is, you still need a unique selling point. You need to double down on what your strength is and what you're known for. Trying to rebrand entirely is very difficult. We’re investing a lot in our outdoor seating because our whole unique selling point has always been our vibe and our cocktails and the design of the place. And we can't do that to-go.”
Optimizing staffing & labor
Many restaurants cut down on their staffing during COVID-19 to keep their margins and labor costs in check (26% reduced shifts and staff), and The Snug was no exception. After their two month shutdown, they reopened with just the founders working shifts initially. However, they did slowly add back additional staff, keeping an extra close eye on their labor dollars and sales.
“Before COVID, we had about 33 employees and now we have about 14. Fortunately for our bottom line, unfortunately for the economy and society, I don't really see that ever going back to what it was. For the most part, we have an order window where guests can order takeout or the delivery drivers can pick up or people that want a table can check in. But once they're sat, we really encourage people to just order on their phone with the QR code. And I can pull up the numbers, but it's now, I think, 60 to 70% of our in-house revenue is through the phone, Order & Pay versus people wanting to come up and order with our window."
With Toast’s new Order & Pay system, The Snug was able to reduce their front-of-house staffing and keep their labor costs optimized. Within 7shifts, we’re also seeing trends that move away from a traditional BOH and FOH split, and more to non-traditional roles like delivery and more management being scheduled.
With the technology available, it’s likely that we will see many restaurants reduce their FOH staff to not only reduce contact but also to optimize their labor spending.
“It's the future to me, and we all have to accept it. And if you want a phone-less experience, you're going to be at a fine dining restaurant where they're building in that cost and people are going to pay for it.”
The Snug also relies on 7shifts to manage their labor and scheduling to keep their costs in check. The integration with Toast POS allows the management team to project their labor needs based on sales data.
“I came from a world of Excel spreadsheet schedules and HotSchedules. I know some of your competitors, I did find 7shifts to be the most compelling.”
The future of restaurant concepts
The COVID-19 pandemic accelerated the restaurant industry’s evolution, and many of the lessons learned and changes made are here to stay.
When we asked Schwab about his thoughts on the matter, he sees restaurants going to more contactless experiences.
“I think servers in midscale restaurants are not going to be a thing. China especially has been way ahead of us on this. And almost every place here in SF, at least the more midscale places, are using QR code ordering. The margins for mid-scale restaurants were just too thin before, and [COVID] broke everything. And we're resetting, and I think that places that are going to thrive in the future are going to have to reset as well. If to-go is [becoming] a thing, there's going to be more labor allocated towards the back of the house and the expediting and the logistics of all of that. And if you want the in-house experience at a not-super upscale place, it's going to be a little more ordering on your phone, and everybody is going to have to get used to that.”
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