The restaurant industry as a whole is suffering due to the COVID-19 pandemic – and that includes concepts that have the infrastructure to stay afloat amid strictures necessitating only takeout and to-go options.
Sun Holdings Inc., a multi-concept franchisee with brands such as Burger King, Popeyes, Arby’s, Krispy Kreme and Taco Bueno, has temporarily closed some restaurants due to the shelter-in-place-environment or significant losses in sales, the company’s founder, Guillermo Perales, said. For instance, 32 Cici's Pizza and 20 Golden Corral restaurants that Sun Holdings’ operates are temporarily closed.
Sun Holdings has some quick-service restaurants that haven’t been able to fully recover the 30 to 40 percent loss in sales from dine-in customers and shift it to drive-thru, Perales said.
“On a day-to-day basis, you get sales reports, information and trends and try to analyze the situation, but all we can do is react to the situation,” Perales said.
Sun Holdings, which has about 1,000 locations, has furloughed at least 2,000 employees, Perales confirmed in an email. Since the beginning of March, the entire restaurant industry is estimated to have lost about $25 billion in sales with seven out of 10 restaurant operators having laid off employees and reduced hours worked, according to a report from the National Restaurant Association.
Golden Chick’s President Jim Stevens said that the company has also experienced some pressure from having to translate the loss in dine-in sales and bolster its drive-thru execution, he said.
The chicken restaurant chain, which has about 187 restaurants, has on a daily basis been down about 5 percent to 10 percent in same-store sales since the middle of March. The top tier of its restaurants generate about $1.4 to $1.5 million in sales.
“The restaurant industry operates on low margins and relies on a level of revenue to stay afloat,” Stevens said. “When that revenue stream goes down and fixed costs don't go down, it makes it challenging for the whole community. But again, we're lucky enough to have the drive-thru so that business is still faring well.”
To help avoid furloughs and layoffs, Stevens said he and his executive team have volunteered to take pay cuts that total $600,000. Once Golden Chick’s middle management found out, some volunteered to take pay cuts as well, which led to additional savings of $75,000.
“It might be kind of corny, but character really is defined in times like these,” he said. “We always say and suggest that we're a family organization because we are.”
Stevens said that as not only president of the company, but also as a franchisee, he understands the pressure that comes from declining sales and revenue.
Often the instinct is to cut salaries, employees and hours to maintain profitability, Stevens said. However, he said Golden Chick is focused on keeping the organization intact, communicating with his employees and reassuring employees that no one will be losing their jobs.
Perales said that although these are challenging times, various partners, vendors, lenders and landlords have been understanding about adjusting terms of their agreements because of the unprecedented circumstances the coronavirus pandemic has caused.
“I mean, it's amazing how people help each other,” Perales said.