”You’ll see a lot of restaurants shift their menus. And probably shrink their menus too,” he said. “They don’t have to buy as many products that they have to store.”
Broad Efforts
Menu trimming is just one part of the defensive steps restaurants are taking.
Large chains including Denny’s Corp., Cracker Barrel Old Country Store Inc. and Olive Garden-owner Darden Restaurants Inc., have drawn on and expanded credit lines. Some companies, like Chipotle Mexican Grill Inc., are talking to landlords for flexibility on rent payments. Executive pay cuts are starting, too, with Darden and McDonald’s CEOs included.
Restaurants are finding other ways to cut costs as well. Domino’s Pizza Inc., for example, is telling its franchisees that it’s OK to shut down early and open later in the day.
Taco John’s is paying for trash pickup twice a week rather than three or four times -- there’s much less waste because the dining rooms are closed. And like Domino’s, its locations are closing early. These small changes add up to about $1,000 of monthly savings per store at Taco John’s mostly franchised restaurants.
“Utilities, labor, it saves all of that,” Creel said.
Carl Howard, CEO of Fazoli’s Restaurants, says his Lexington, Kentucky-based company is “planning for the worst” since consumers may be reluctant to dine out again after economic activity restarts.
“When the stay-at-home orders are removed, we will still see a pretty severe decline,” he said. For that reason, the 216-location chain is scrutinizing every penny and has negotiated deals with its vendors. Trash pickup has been halved, and many stores have switched to smaller garbage containers to save more.
“Every dime adds up,” Howard said.
This article was provided by Bloomberg News.