The Truth About Coronavirus and the Viability of U.S Food Service Businesses

Chris Rumpf

Founder and CEO, 15+ Years of Restaurant Technology Innovation

Those that know me well know that in a former life, I used to be a much cooler version of myself, making enough cash to live promoting bands around the Midwest. Being St. Paddy’s day, and knowing that my punk rock roots were calling me to the live streamed Dropkick Murphys concert Tuesday night, I did what any 30-something with too little time would do – I took a run and listened to the live stream. I take a picture at the exact same spot each time I finish a run, and tonight was no different. The world we wake up to tomorrow will be considerably different than today, and most likely more sobering, but this spot continues to remind me of the power we humans have to exist with overwhelming joy. I have confidence despite the trials ahead, the outlook will be bright soon enough.

These past days have been tough. I’ve spoken with friends who have asked 90% of their employees to head to the unemployment line. I’ve listened to people cry. I’ve talked to one business owner whose father is 1500 miles away and can’t, for good reason, fly home. Yes, this situation is dire, but the day and the world are not lost. We had one customer tonight in Louisville, KY have a 60-minute expected time for orders because they were so busy. Many others shared similar results, and in a fair amount of cases, business today was roughly 60% of normal. As this new (and temporary) reality sets in, those numbers will rise as consumers become more accustomed to the takeout/delivery model (and get sick of cooking at home.) Today, my message is as real as it gets, but it’s still incredibly important to know that there are opportunities afoot that if executed properly will allow our businesses to survive this difficult time.

First, the truth.

This is bad. We know it’s bad. Information released by researchers at Imperial College in the U.K. Tuesday gives the best estimates for the outbreak at a minimum loss of life in the United States of roughly 25,000 people. That’s assuming there are critical care beds available in hospitals for patients. Once that limit is reached, the mortality figure jumps to roughly 100,000, and that’s still assuming all of the following are true:

  1. Symptomatic cases stay at home for 7 days (not tested positive, but symptomatic), reducing non-household contacts by 75% for this period. Household contacts remain unchanged. Assume 70% of households comply with the policy.
  2. Following identification of a symptomatic case in the household, all household members remain at home for 14 days. Household contact rates double during this quarantine period, contacts in the community reduce by 75%. Assume 50% of household comply with the policy.
  3. All households reduce contact outside household, school or workplace by 75%. School contact rates unchanged, workplace contact rates reduced by 25%. Household contact rates assumed to increase by 25%.
  4. Closure of all schools, 25% of universities remain open. Household contact rates for student families increase by 50% during closure. Contacts in the community increase by 25% during closure.

Simply failing to adequately contain the hopes listed above could increase the loss of life by over 100,000 or more. In short, there are plausible scenarios in which somewhere between 25,000 and 500,000 Americans will perish between April and August of this year. Feel free to flame me for this – I hope I’m wrong, too, but these are the truths based on the facts I’ve gathered.

I know I just said the “A” word: August. These models show the infection rate to peak sometime in early June, then fall sharply into July. Restrictions on travel and otherwise will generally be relaxed once cases fall below 25% of the peak, which is effectively early July. That tells me that we should prepare to live in a new world for the next 15 weeks, unless we can curtail spring breakers and get our nation to take this seriously.

So let’s end the doom-and-gloom part of today’s writing, and let’s get pragmatic, instead. We can assume that our nation will quickly restrict human contact in the entirety of our country (i.e. restaurants go carry out and delivery only and most humans significantly reduce non-family human contact.) However, over 50% of the money spent on food in the United States is served from restaurants, and there is no possible way the grocery industry can virtually double its capacity overnight. You’ve seen the bread aisle this week. The entire country is going to rely on U.S. restaurants to get good quality food into its hungry mouth, which is why food service businesses will continue to be excluded from severe restrictions in the wake of the Covid-19 crisis, which we’re already seeing in and around San Francisco, where a “shelter in place” order has been enacted since Tuesday.

To summarize:

  1. Most or all states and cities that have not yet imposed restrictions on restaurant activities will mandate carryout and delivery only within the next few days.
  2. Severe restrictions on restaurant activities will continue through June 30 in most areas.
  3. Take out and delivery services will be unrestricted throughout the entirety of this crisis.

I started a list earlier, so, second, what should foodservice businesses be doing?

We covered this in detail on Monday, and I encourage a good pre-read there because this is a time to market more, not less, and being creative, bold, and continuous is the way we’ll reach a customer base that may not be accustomed to carryout or delivery from a particular business. If you’ve started this new model within the last several days, remember that everything takes time, just like a good marinade. Continue pushing, and you’ll continue to see a steady rise in your new business. Aside from marketing tools though, the first two steps are clear: 1) setup online ordering that flows into your point of sale system, and do it yesterday; and 2) put some of your people back to work and get to delivering. If you haven’t gotten through both 1 and 2, light the fire and get moving.

Third, we keep harping on this, but we’re doing three things today to help effected foodservice businesses:

  1. We are waiving all fees for online ordering, including setup fees and the first month of service. Restaurants can be up and running within today (no joke!) with Flyght Online Ordering without a single dollar of upfront investment (a $700 value). Call us at 419-724-3115 to get started. Please call us. This is our gift to you and we wish nothing more than for you to accept our love.
  2. Consulting fees for existing customers are now complimentary. Normally, our rates to consult high-level business practices are several hundred dollars per hour. Now, through at least March 27th, this service is free. We have a wealth of resources and have aggregated best practices from our customer base. Ask us anything, and we’ll help with everything, from setting up your delivery and carryout processes to facilitating employee wellness protocol. Scheduling time is as easy as one-click at
  3. We are hosting a real-time discussion for foodservice professionals every Monday, Wednesday, and Friday at 3 pm EDT to share best practices, receive updates on relief, and provide a common place to voice concerns and make positive action a reality. Please join us as often as you can.

Fourth, what steps can businesses take now for immediate financial relief?

  • Reach out to landlords to request deferment, easement, or short-term lease changes. Many leases contain Force Majeur (Acts of God) clauses which could be invoked during this time.
  • If you have a loan, contact your bank immediately to request relief. We have heard of Fifth Third, Bank of America and Chase all offering favorable options to effected businesses within the past 24 hours.
  • Most major public utility companies have indicated that they will waive penalties and cease shutoffs during this situation.
  • The State of Ohio (and many others) are offering a one-time buyback of wholesale, unopened alcohol through the distributor where the product was originally purchased to help ease the pain of stagnant product.
  • The IRS has confirmed that tax payments can be deferred without penalty past April 15, 2020 (however, you must still file on-time for an extension).

Fifth, what action has the government already taken?

Last evening, Congress passed and the President signed Families First Coronavirus Response Act which provides free Covid-19 testing, expanded family and medical leave, paid emergency sick leave, expanded unemployment benefits, food assistance, and protections for health care workers.

Congress is expected to stay in session this week to pass sweeping legislation aimed at small business relief, which we will relay in detail over the next several days.

The Small Business Administration has also opened up to $2,000,000 in loans, at 3.75% interest, for up to 30 years, for small businesses affected by Coronavirus. The downside? Only businesses in areas that have been declared a disaster are eligible. UPDATE: all cities, counties, and states in the U.S. are now eligible for this disaster relief.

Sixth, what action should we take going forward?

  1. In a similar fashion to post 9/11 legislation, congress should act to force insurers to include interruption from a pandemic inside existing business interruption insurance language.
  2. Legislation should be enacted to provide property tax relief so that landlords have greater flexibility to work with tenants to provide long-term relief.
  3. Federal and state payroll taxes should be forgone for at least the next three months, and sales tax should be waived or deferred for the same timeframe.
  4. Unemployment benefits should be adjusted to account for tipped workers.
  5. Grocers should work directly with restaurants to offer local, pre-packaged, high-quality restaurant meals inside the grocery.
  6. Alcohol laws should be temporarily relaxed to allow restaurants to provide curbside and home delivery to closed-container products, including custom-mixed cocktails.
  7. Utility companies must cease shutoffs, defer past-due payments for up to 90 days, and the FCC must remove the Universal Service Fee (which is over 20% in Q1 2020) for the next 90 days.
  8. Vendors/partners in the foodservice space should give back to their effected customers value equal to 15% of their 2019 gross income. In the past two days, we’ve given back over 5% of our 2019 income, and we intend to get to 15% as soon as possible. I guess what I’m saying is, if we can do it, so can everyone else.

These steps will begin to afford most food service operators the tools they need to continue operations past this pandemic. We hope this is helpful, and thank you for reading. We’ll be back next week with more.