Restaurants have no crisis reserves – money is locked in real estate, furniture, kitchen equipment, knives and forks, owner and CEO of the OKO restaurant chain Tõnis Siigur says.
Please describe how the coronavirus crisis has changed the restaurant business.
Beyond recognition. When the emergency situation was laid down in mid-March, our clients disappeared overnight. We are not talking about a 50 or 80 percent drop, business disappeared completely.
What are your staff doing if there are no customers?
I’m currently at Tuljak (one of OKO restaurants – ed.) taking care of some things. We have an employee draining the pool, another oiling the terrace, yet another cleaning chairs, while a fourth one is in charge of takeaway orders in the kitchen. We are doing everything we’re normally too busy to do, preparing for life to get back to normal.
Not all our restaurants are closed. OKO and Paju Villa have terraces where you can eat on location. We are offering takeaway everywhere.
How are you doing in terms of takeaway?
We do not use the services of Wolt and Bolt couriers. We have created our own social media solution for taking orders. We have a good deal with Citybee who supplies us with delivery vehicles. We buy our own fuel and deliver food to clients free of charge ourselves. It’s not 24/7, of course, home delivery takes place in certain areas and at certain times.
People also increasingly want to pick up the food themselves. It’s understandable as many people spend days on end sitting at home. A little walk might just be what the doctor ordered.
We have been brainstorming over the past four weeks in terms of new business ideas. The thing that has worked best is a precooked and flash frozen stone oven pizza that is completely unique. Our clients say it is in no way inferior to a fresh-cooked pizza. Naturally, it’s not enough to keep the entire business going, which is why we are actively working on new solutions.
You said you do not use the services of Bolt and Wolt. Why is that?
For purely economic reasons. In the conditions of virtually nonexistent turnover, it is not sensible to pay 20-30 percent on every order to mediators. Everyone who is familiar with the restaurant business knows how difficult it is to generate a net profit of 30 percent, for instance.
Also, delivering food in a backpack impacts quality – soup and pizza toppings get spilled. We do not want that. That is why we are forced to look for different and cheaper options. And we’ve found them.
How much have you lost in terms of turnover?
The things we’re doing now make up roughly 5 percent of pre-crisis revenue. We employ a hundred people! A turnover that small is not enough to pay everyone. Therefore, we need to restore turnover at all cost.
If at first, the most important thing was to understand what’s happening and what we should do, our priority today is to reopen the restaurants from May 1. We will be opening the terraces first and dining halls some time later. We will have enough room between the tables and chairs to comply with hygiene and social distancing rules. We will also be using a mobile application that will allow clients to order drinks straight from the kitchen. Contact with waiters will be minimal.
How has your team held out in this difficult situation?
Very few people have left. What’s interesting is that people we had doubts about and didn’t really understand have really stepped up, while there have also been opposite examples. A crisis is a good way to learn what people are made of.
Will the restaurant business recover and when?
We’ll be happy if we can restore 50 percent of turnover by year’s end. But it could also be 30 percent. Anything beyond that would be great, while I’m not one for dreaming.
It is important to cut costs, especially on luxuries. We have around 12 carpets per restaurant that require very specific cleaning. We call our employees taxis after they’ve been working late and procure cleaning services. All of those things will end.
Some people think that going to the theater will mean 50 people sitting far away from one another in the pits and hundreds watching a broadcast online in the future. How could going to the restaurant change?
It is not going anywhere! Social life has continued throughout major wars. Going to the restaurant is more than just eating and nutrition – it’s an experience! It contributes to babies being born, making new friends and keeping one’s spirits up.
It is impossible to unload one’s brain online, it requires meeting other people. I believe that online takeaway is here to stay, while volumes remain to be seen.
How many restaurants will go bankrupt in this crisis?
Let’s say we can already see some places packing their things. I would refrain from naming any names, but I know large established restaurants that will not be opening their doors after the crisis. My bet is that around 30 percent of restaurants will go bankrupt. The wave will start a few months from now.
That said, I also know of opposite examples. A restaurant in Finland has found new life after struggling for years. They dropped their old menu and started making burgers one day. The owner says they’ve never had such a turnover before.
How long can your restaurants hang in there?
Typically to the restaurant business, we have no reserves. We have invested everything in the company. Our money is locked in real estate, furniture, kitchen equipment, knives and forks.
We have been growing every year and planned to grow this year. We even wanted to open a restaurant in Finland next year. While we have not given up on that plan completely, the main focus is on getting back in the saddle at home.
We have borrowed money using KredEx surety to be able to pay salaries. Provided people start going to the restaurant again in the next few months, we will be okay and manage to ward off bankruptcy.
Can we say the catering market was overheated before the crisis? There was a plethora of cafes that sold pastries for five euros a pop but lacked any kind of proper business plan.
Definitely. The market was overcrowded to the point of bursting before the crisis. Many didn’t realize that you should stick to what you love and know how to do. There were people and companies active, for example, in the timber industry who had enough money left over to invest in opening a restaurant. These will likely be the first to close their doors.
The crisis will take us back to the basics. The previous crisis in 2008 didn’t.
The state has promised to help the tourism sector with €25 million. Is it enough and how much of it will come the way of restaurants?
There should be more. To the best of our knowledge, support will be paid out per legal body and not based on the amount paid in taxes, for example. We have five restaurants that are operated by a single company. This means we are on an equal footing with small restaurants or pastry kiosks in the eyes of those in charge of decisions. We do not think it fair as we contribute far more in terms of jobs and taxes.