For Fast Company’s Restaurant Diaries, we’re asking chefs, restaurateurs, and food-world employees to take readers inside their businesses and lives at this critical moment for the industry.
In the span of a week last month, both of Nick Kokonas’s businesses ground to a halt. His restaurants, which include Chicago’s award-winning Alinea and Roister, were forced to close their doors to stop the spread of COVID-19. And Tock, his restaurant reservation platform, which was used by more than 3,000 restaurants, came to a virtual standstill. So Kokonas pivoted both businesses by turning his restaurants into carry-out venues and transforming Tock into Tock to Go, an ordering platform for restaurants that want to offer customers pick-up or delivery options. Here, he talks about how he’s future-proofing his businesses for the COVID-19 era and why he thinks other restaurants should follow his lead.
I gathered my team in early March and said, “This is coming, and we need to get through it.” Before I became involved in the restaurant industry, I was a derivatives trader, so I follow markets and worldwide events. Tock, our reservation management platform, also has clients in 30 countries. I could see the restaurants in Hong Kong that we serve going from 96% full to zero in a week.
We decided to turn the five restaurants in the Alinea group into carry-out places. We furloughed all our 300 employees right away and gave them the percentage of healthcare coverage that would still let them get unemployment, along with $1,000 each from our capital fund.
We then looked at Alinea’s menu. We realized the world does not need a $375 meal right now—and anyway, we can’t offer customers the restaurant experience. Our team of chefs started to get very creative, but I pushed them to keep the carry-out menu simple and the price of each meal under $40. Four days later, we sold 500 Beef Wellingtons, and by the following Tuesday we were doing 750 meals per night. Now, we’re doing 1,250 meals a night at Alinea, and it’s making about 75% of its previous revenue.
We reconfigured Tock to offer two-way communication with our customers. They pull up in their cars during their 15-minute pickup window and pop their trunk, and we put the food in. There is no direct contact. We can get through about 350 different cars in about two hours, and no one waits more than a minute or two. People are amazed by this, but it’s easier than what we normally do.
We now have hired back 62 of Alinea’s 85 employees. The other restaurants are doing a little less [carry-out] volume, so we have rehired 40 to 50% of the other employees. Ownership—myself and [chef and co-owner] Grant Achatz—aren’t taking any salary. Everybody [else] gets $15 an hour. We’re going to take the money that we make and put it into a recapitalization fund that will help rebuild the restaurants. When we are allowed to reopen, we will give everyone some back pay based on how successful we were during this time. It’s about making a bridge to the future and keeping our businesses viable so that they can reopen.
Our other business is Tock. When the coronavirus hit, we went from having millions of reservations and prepaid events to zero. We decided to use the platform to help other restaurants do carry-out.
Within five days we had a working prototype [of Tock to Go]. We realized that [most] delivery apps charge between 20 to 30% commission. Tock charges a flat 3%. Delivery apps also don’t have the same order management [system] that restaurants use. The way restaurants work is that every 15 minutes, a certain number of tables are seated, so the kitchen doesn’t get slammed all at once. The delivery apps just put in orders as they come. But restaurants trying to do really high-quality carry-out are not going to work like that. So we structured the data on Tock’s back end to look more like the way restaurants work, which makes processing orders easier. Tock also lets restaurants see the contact information for the people the food is going to. As a restaurant, you have to know your customer.
Tock doesn’t have a fleet of drivers. We let restaurants handle that themselves. The other apps are saying, “Hey, we built this network and we’ve got this fleet of drivers, so you don’t need to worry about anything.” I remember when my local pizza place had a pizza delivery guy. Everyone had one. [Managing deliveries] isn’t that hard. It’s not worth 30%.
We have about 450 restaurants [offering carry-out] on the platform. We have about 300 more in the queue and another 800 in the process of getting there. I’ve told a few restaurants, “Do what you do really well. Pick a meal that can be reheated, and get it out the door. Simplify.” In normal times they might have 500 things on the menu, so that there’s something for everyone. But what restaurants should focus on now is creating a great experience for people, one that is fast and safe for pickup.
Barring a cure for coronavirus, when the government reopens restaurants, our occupancy [may need to be] half of what it used to be. If your business plan was built around serving 200 people a night and you have to operate at 50%, you’ll lose money. So I think you’re going to see the creative adoption of carry-out. At the Alinea group, we’re going to be able to do carry-out at all of our restaurants. We’ll do cocktail kits out of the Aviary. We’re going to design dinners at Roister that are delicious [to eat] at home. The takeout food is not going to be the same food we serve in the restaurant.
One of the things that’s been frustrating for me is listening to everybody on Twitter, on TV, and in interviews saying that running a restaurant can’t be done [right now] or that we can only do it because we are Alinea. If you’re [a restaurant] owner who says, “We could barely make it last year,” to me, that says you weren’t running it right. You’re saying it was boom time and you could barely make it. I want us to learn from this, and I want these restaurants to reopen in a sustainable manner.
Some restaurants have stopped doing carry-out and closed entirely because they can’t argue with [their] landlord about rent abatement or deferment if [they’re] occupying the space. How do you sue an insurance company for a business interruption if you’re still doing business? Some people want insurance companies to take the hit and for restaurants to get paid out. That’s going to take years. I want to figure out what to do in the next two weeks. I’d rather rely on myself and my team to feed people and do what we do creatively than rely on lawyers and Congress.
I think that the desire for people to have a great meal together to celebrate some aspect of their lives is universal. Fine dining will come out of this. That doesn’t mean that some giant percentage [of restaurants] won’t go out of business. Your favorite place might close, but we don’t know which one is going to open in its place.
More from Fast Company’s Restaurant Diaries:
- Chef Thomas Keller is suing his insurer to save American restaurants.
- Chef Kwame Onwuachi of Washington, D.C.’s Kith/Kin on his decision to close his restaurant and lay off his employees.
- ‘I’m at risk’: What it’s like to work at McDonald’s during the pandemic.
- How Panda Express is fighting COVID-19 racism.
- Chef Daniel Humm of Eleven Madison Park isn’t sure fine dining can survive the pandemic.