Launch Tennessee sporadically publishes essays written by entrepreneurs, investors, and supporters of the startup ecosystem here in Tennessee and across the southeast region, sharing thoughtful and unique observations and perspectives on the business landscape and the challenges they’re encountering.
By Michael Robinson, Co-Founder, Proof Bar & Incubator
Just a little over a year ago, my business partners and I were on the cusp of opening a brick-and-mortar incubator in Chattanooga, TN. Our mission was (and, for that matter, still is) to support food and beverage entrepreneurs by providing the programs and resources necessary to help them get off the ground. Indeed, our initial plan was to open a brick-and-mortar concept that met light manufacturing needs, as well as an available rotating kitchen for chefs to test out new dining concepts, all supported by our front-of-house team and cocktail bar program.
Our grand opening date was March 14, 2020 – a date we, with both laughter and simultaneous pain, now also call our “grand closing.” Like all too many businesses across the country, we faced unprecedented challenges practically overnight, coupled with the immediate need to adapt to stand any chance of survival.
Luckily, our team collectively had 50+ years of experience in food and beverage, and we had already worked with economic development partners in our region to develop programs for entrepreneurs in the industry, like the Consumer Goods Accelerator we produced in partnership with CO.LAB. Now, under the curtain of significant pandemic anxiety and uncertainty, we quickly pivoted our focus towards helping others in the dining industry navigate these uncharted waters alongside ever-changing regulations and constantly-evolving information from authorities, all struggling to keep up with a fast-developing global health crisis.
Within a matter of weeks, we had huddled with the team at the Chattanooga center of the Tennessee Small Business Development Center, in the hopes of figuring out how to best support the dining and hospitality industry, which had, arguably, experienced the most immediate and severe impact from the pandemic. And later that summer, we launched the Restaurant Recovery program.
Restaurant Recovery was designed to be a fast-paced course that covered everything from navigating relief funding to optimizing operations and costs to managing communications. In addition to this curriculum, we offer one-on-one coaching with each participating business to help them work through their unique challenges and find a pathway towards stabilization and growth.
Said Josh Brown, senior small business specialist at the TSBDC Chattanooga office, “We recognized early on that if we could help steady restauranteurs in hospitality-related businesses, we could stabilize the owner, preserve the jobs they provide, and, hopefully, help them weather the storm.”
In a few short months, we were at the table with other ecosystem partners across the state of Tennessee, who were actively seeking support for their restaurant communities. It was at this point we realized our potential to carry out our mission in ways we hadn’t imagined pre-pandemic.
The economic impact of the restaurant industry is vast, both here in Tennessee and nationwide.
For example, according to the National Restaurant Association, before the pandemic, the industry was on track to employ 1 in 10 Americans and contribute more than $2 billion annually to the national economy. Unfortunately, as a result of Covid, the NRA estimates that restaurants nationwide lost about $25 billion in revenue, plus 3 million jobs in just the first 22 days in March. Equally heartbreaking, the Independent Restaurant Coalition reported that 85% of independently owned restaurants became at risk of closing.
In addition to the overall economic impact, there was little support for independent restaurant owners and operators, and that’s where Proof came in.
What Do Restaurants Need?
In Chattanooga, as in many cities across the state and country, we were dealing with rapidly changing policies dictating every element of restaurants’ ability to operate from curbside and/or outdoor dining and limited dining room seating to ramped-up online ordering and delivery capabilities, mask mandates, enhanced sanitation needs and supply shortages, and, perhaps most of all, major cost increases.
However, in a furious storm of high-energy troubleshooting and frantic problem-solving, we began to realize that much of what restaurants needed could indeed be solved. Below are some key areas where we’re able to dig deep and make a real difference with our program participants:
> Managing a digital presence. Historically, restaurants have relied on in-person customers dining and then spreading word of mouth recommendations, as well as a direct face-to-face communication style with guests. Now, in the wake of Covid, all of the traditional channels, procedures, and systems in the time-tested playbook were thrown out essentially overnight. Some restaurants that already had delivery and robust fast-casual models were able to pivot and actually grow, while others struggled to implement new systems or handle the increased volume for call-in and online orders. Even months later, with dining rooms across the state reopening, many patrons are still not comfortable eating indoors, and some markets have been shuttered for over a year.
All of these changes to typical business operations meant restaurants had to push out information about changing processes and procedures regularly and urgently. We helped restaurant owners identify the best channels of communication and provided tips and actionable training for updating websites, branded social channels, and more.
> Setting and meeting customer expectations. It’s important to remember the earliest days of the pandemic, when there was widespread anxiety around the safety of purchasing groceries off the supermarket shelves and great debate about the need to disinfect them once home. Because of the nature of the situation — few, if any, of us had ever experienced a crisis like the Covid pandemic before — customer expectations varied dramatically. A restaurant might hear from one customer who felt their safety procedures were too strict, immediately followed by a complaint from someone who thought they were too lax. To meet these concerns head-on, we helped restaurants develop proactive communication strategies and coached owners on training their employees to handle new and developing needs both in the work setting as well as on the fast-and-furious wild west of social media.
Indeed, perhaps one of the most valuable components of the course is the training and staff module. We offer a refresher on best practices, staff communication, and empowerment. Unfortunately at this point, everyone has experienced challenging outliers with strongly-worded opinions on business practices, particularly intimidating and overwhelming for a junior staffer or inexperienced employee without extensive practice in negotiating tense political exchanges. Training in this area has helped a lot of operators get staff, particularly younger hostesses and servers, ready to diffuse difficult situations.
> Supply chain and costing. Supply chain issues have affected nearly every industry over the course of the past year, and the food and beverage industry is no exception. As access to supplies decreased, costs went up. For example, paper products and dry goods, a particular pain point that, if left unchecked, were crushing profit margins. As many restaurants pivoted to all-disposable materials for safety and to save on labor cost and dishwashing, the increase in demand, paired with manufacturing and overseas shutdowns, caused the price of a to-go box to rise from 15 cents to nearly 75 cents. Add that up to a few hundred a day, and margins were decimated.
Restaurants struggled to determine whether they should pass costs to customers, remove pricey items from menus, or do business as usual and absorb costs when many were already treading water financially. We offered coursework to address these issues and helped restaurants make decisions that would set them on a path to more stable operations.
Working with Partners Drives Results Statewide
We are proud to say that today our Restaurant Recovery (now known as Restaurant Resilience) program has launched into five markets in Tennessee, with three additional markets coming online later this spring. We have helped over 155 companies and are hopeful we can continue to add value and resources to our state’s food and beverage ecosystem for years to come.
To us, it’s not just about saving restaurants — it’s about protecting and improving the quality of life for our communities and independent restaurants, which are the backbone that support vibrant communities all across Tennessee.
Michael Robinson is a food & beverage industry expert focusing on coaching and mentoring early stage companies. He is the co-founder of PROOF Bar & Incubator in Chattanooga, TN. Previously, he was Founder and Partner at the Naked River Brewing Company, LLC, and COO of Chattanooga Whiskey, as well as Entrepreneur-in-Residence at LaunchTN’s network partner The Company Lab (CO.LAB).