Ivar’s president expects ‘new trends’ to stick at restaurants post-COVID

Unemployment numbers are trending higher than ever, and a lot of Americans now unemployed work in hospitality, food service, or the restaurant industry. Nationwide and locally, restaurants are struggling to survive without dine-in service.

Luckily, Ivar’s, the Seattle based seafood restaurant chain founded in 1938, is surviving the closures with takeout and pick-up orders, and four drive-thru locations.

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“On the bad news front, in Friday’s payroll, we had 769 fewer employees than the same payroll a year ago,” said Bob Donegan, Ivar’s president. “On the good news front, the 22 stores that we have open are doing almost as much volume today without dining rooms as they did the same week a year ago with their dining rooms open.”

Grim outlook for the restaurant industry

While Ivar’s customers have adapted to the new normal, Donegan does recognize that all restaurants are not in the same position as Ivar’s. He worries what the rest of the restaurant industry might look like as businesses start to reopen.

“We had a hospitality association board meeting two weeks ago, 31 different hotel and restaurant operators from around Washington state, Clark County over to Spokane, northeast corner up to Bellingham, down through Puget Sound,” Donegan said. “And we estimated that half the restaurants and hotels in Washington state are already closed today.”

“And I think when the governor lifts the order to allow people to go back to restaurants, we’ll see 30% of those restaurants not reopen, and then of the restaurants that do reopen, I would guess another 10% will not survive the first year after they reopen,” he added.

That means that in a year from when restaurants are approved to reopen, Donegan thinks 40% of the restaurants that were here three months ago will not open again.

New dining trends will last

Ivar’s has adapted as best they can to the closures. Three months ago, Donegan reported, about 5% of customers at Ivar’s were delivery orders. This past week, nearly 40% of orders were delivery.

“On March 16, when the stay home order went into effect or was announced and dining rooms closed, we expected we would be able to do half the number of customers that we did a year before. … That first week, we did 44% of the customer accounts we did a year ago, and the week that ended [Sunday, May 3], we did 94% of the customer accounts that we did a year ago, the same week,” Donegan said.

When dine-in service returns, Donegan does expect a shift in customer behavior to stick around.

“I think you will see a number of new trends. First, there will be all new segments, like the delivery and pickup segment where Dori gets up at 5:00 in the morning and texts an order into his favorite restaurant and says, ‘I’m gonna be there at 4:45 to pick up dinner,'” he said. “There’s another segment, which is the people who love to go to their neighborhood bar and watch the Seahawks game, or listen to the Mariners and chat with their friends. There’s a group of people who will go out to eat because the restaurants can make better drinks and better food than they can make at home.”

Even Canlis, known for its fine-dining experience, has shifted its model to only delivery service. Owner Chris Canlis told Donegan that in the first weeks, Canlis was making 200 meals a day. Now, they’re doing 1,000 meals a day, delivered by their own staff direct to customer homes.

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No one had thought of these new customer segments or new habits six months ago, Donegan admitted.

“So, yes, there will be many new models for what works and doesn’t work in restaurants a year or two years from now.”

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