“It’s about 20% of our sales—it’s significant,” Dog Haus owner Kirk Hermansen said of the incorporation of virtual concepts, including Bad Ass Breakfast Burritos. “And it will grow. We’re at the tip of it.”
Dog Haus is one of many Richardson restaurants that have risen to meet the challenges of the coronavirus pandemic, which has inflicted unprecedented strife on the local and statewide dining industry.
A recent analysis by the city of Richardson’s Retail Committee, combined with reporting by Community Impact Newspaper, shows that 26 local restaurants have closed since the start of the pandemic. The Texas Restaurant Association estimates that more than 10,000 restaurants have closed and 150,000 restaurant jobs have been lost statewide.
“Pre-pandemic, the restaurant industry [in Richardson] was running on all cylinders, with optimism abounding,” said Bob Young, executive managing director at Weitzman, a Dallas-Fort Worth-based real estate services firm. “COVID took a roaring economy and stopped it.”
In the wake of the pandemic, restaurant owners have been forced to navigate ever-changing rules and regulations as state leaders scrambled to mitigate spread of the disease. Many of those who survived have done so by pivoting to meet an evolving set of consumer demands, from heightened expectations of cleanliness to emboldened requests for convenience.
Young and other industry experts have said many of these changes are here to stay. The ongoing distribution of vaccines means sales are likely to rebound, but the culture of dining out has seen an irreversible shift. The industry’s survival will depend not only on its individual members’ willingness to change but also on flexibility from entities that govern how restaurants operate.
Quick pivots sustain business
COVID-19 caused “the biggest disruption of retail” the Dallas-Fort Worth market has seen in the last 30 years, Young said during a Jan. 14 Weitzman event. In Richardson, nearly 280,000 square feet more of retail and restaurant space was vacant at the end of 2020 than at the end of 2019, making it one of the hardest-hit markets in DFW over the course of the pandemic, the Weitzman report concluded.
Still, that loss represents only about 4% of the city’s total retail square footage, so in the grand scheme of things, Richardson has performed fairly well and is below the state average for closures, said John Jacobs, executive vice president of economic development for the Richardson Chamber of Commerce.
Hermansen, who owns not only Dog Haus Biergarten but also the entire Richardson Restaurant Park where Dog Haus is located, said the pandemic has been as challenging for landlords as it has for restaurant owners. Helping existing tenants survive while seeking to fill vacated space has become a constant balancing act.
“It’s hard to find new tenants in an environment where there is still so much uncertainty,” he said. “You have to make some pretty aggressive deals to get people introduced in the short term.”
Rent relief was one way Hermansen sought to relieve strain on some restaurant owners, but he also encouraged tenants to embrace new services. Dog Haus incorporated curbside pickup, alcohol to-go, a food truck, food drives for local charities and virtual concepts, which are delivery-only brands that operate out of brick-and-mortar kitchens.
The crisis triggered unprecedented demand for food brought directly to the customer, Hermansen said. Dog Haus already offered delivery through third-party providers, but in the wake of stay-at-home orders, the restaurant saw delivery orders jump from roughly 10% of total business to 75% at the peak, which came at a hefty cost, Hermansen said.
“Most consumers don’t realize the significant commissions associated with third-party delivery,” he said. “A lot of restaurants, including ourselves, do mark up the menu online to help offset some of that, but you generally can’t get away with marking up 30%.”
Restaurants with well-established to-go and delivery models had an easier time adapting. At Pizza Americana, takeout orders increased from 20% of business to 90%, and partner Jordan Swim said the restaurant expects that trend to outlive the pandemic.
“The availability of takeout is not going to go anywhere,” he said.
But not all restaurants were equipped to pivot. Jasper’s at CityLine relied heavily on providing customers with an experience, a service that was essentially wiped out amid stay-at-home orders. The business made the difficult decision to temporarily close in April after seeing an 85%-90% drop in revenue, Director of Operations Robert Foltz said.
“People go to Jasper’s for an experience and a full ambiance of hospitality,” he said. “It was tough for us to make that transition to takeout ... because we were also competing with every other restaurant in Dallas and Richardson that was doing the same thing.”
Jasper’s has since reopened, and while it remains committed to providing the same level of quality in food and service that the restaurant is known for, Foltz said staff has embraced new avenues of bringing in revenue, such as curbside pickup, family-style takeout meals and reduced prices on popular menu items, such as the prime rib.
“Our biggest goal right now is to let residents and our guests know that we are back and that all we want to do is put out great food at a great price,” Foltz said.
Flexibility key for industry’s future
Restaurants will look different as a result of this pandemic, Young said. Plans for projects now include larger outdoor patios, modular indoor footprints and convenience amenities, such as drive-thrus.••But a restaurant’s ability to respond to post-coronavirus demands will depend largely on flexibility from governing bodies, Young said.
“[Municipalities] can’t go back to a pre-COVID mentality on certain things—they have to be really sensitive on zoning that creates happy places for people,” he said.
Since the beginning of the pandemic, Richardson city officials have fielded multiple requests for relaxed restrictions related to signage and outdoor seating, among other such items, Richardson’s Deputy City Manager Don Magner said. Staff has been understanding of those requests and recognizes the increased need for flexibility moving forward, he said.
“We are thinking about how we may need to at least evaluate and assess our current regulations and decide if they might need to be updated so they can be contemporary and work with some of the more up-to-date business models,” he said.
Other changes have seen less municipal approval. In early December, Hermansen appeared before council to request a zoning change that would allow for conventional drive-thrus at the restaurant park. Several members of council were reluctant to accept his argument that the need for this service had been heightened as a result of the pandemic.
“The struggle that I have is that we know where we are today, ... [but] I don’t think any of us really know what things are going to be like post-COVID,” Council Member Steve Mitchell said.
In the meantime, the Richardson Chamber of Commerce is actively working to provide resources to and increase visibility for the city’s restaurants by promoting them online and through weekly email promotions. In recent months, a handful of new restaurant members have joined the chamber, which Vice President of Member Services Bill Ballard said is a positive sign for the local dining industry.
“The Richardson [restaurant] community has been really resilient during all of this,” he said. “We’re looking forward to 2021, and we’re optimistic that things are going to continue to improve.”