Tales of COVID-19: How small restaurants have adapted to years of turmoil

The COVID-19 years have been tough, and continue to be tough, on the restaurant business: Lockdowns, labor shortages, inflation and, now, increased cases of flu and COVID-19, have all contributed to the industry's woes.

Restaurants have been trying to adapt in a number of ways. How successful have they been? We took a look at two —The Pancake Pantry in Nashville and Englewood New Jersey's TJ's Southern Gourmet—to see how food service businesses, especially small operators, are coping with the hard times.

The Pancake Pantry has been particularly successful, its owner explained, in adapting to the new world order of the restaurant industry. Online ordering and focusing on takeout—and initially partnering with the delivery service, DoorDash, (DASH)—has even helped expand its customer base.

“One of the greatest parts of the pandemic is [that] it's allowed a bigger reach for our guests that can't come in,” managing partner Chip Bradley told Yahoo Finance Live during its Small Business Spotlight segment (See video above). "We've learned a lot about how restaurants have to adapt quickly. If you did not adapt quickly at the onset of the pandemic, then you were pretty much dead in the water, so we adapted quickly."

The strategy seems to have worked for Bradley. While some 90,000 restaurants have closed since the onset of the pandemic, per the National Restaurant Association, The Pancake Pantry opened a second Nashville location.

TJ’s Southern Gourmet has a different story to tell, which reflects a lot of the industry's struggles. Results, in other words, have been mixed.

“Honestly, we're one day at a time,” owner Tia Jackson told Yahoo Finance Live.

TJ’s, for instance, now offers corporate catering, which Jackson hopes will help the restaurant survive.

“There are companies out there who are looking to bring our restaurant to their corporate offices. And so, we partnered with some ... to focus more on corporate catering,” Jackson said. “And we’re literally focusing on that a majority of our days."

In addition to in-person dining during the traditional, and crucial, Friday, Saturday and Sunday cycle, Jackson hopes the catering operations "will give us a nice balance over time to get through this hump.”

Both businesses, however, are facing the same problems. Inflation is up 7.1 percent from a year ago, leading to increased prices for everything from food ingredients to labor.

“The biggest challenge in the Nashville market— and this is pretty much everywhere— is the cost of food,” said Bradley. “You know, one year ago, one egg cost me $0.10. Today, an egg costs me $0.37."

Added Jackson of TJ's: “What cost me $20 is now costing me $100, and, you know, it's very difficult. It's become difficult to not pass those costs, or at least share the costs, with our customers who, for the most part, understand.”

The labor shortage also poses a serious threat.

The industry is 462,000 restaurant jobs below pre-pandemic levels, according to the National Restaurant Association. Jackson said she'll continue to struggle run TJ's unless she can hire more workers. "I'm just hoping that this is over soon," she said. "But we're doing our best to try to have the balance that we need to get through it.”

Ditto for Bradley and The Pancake Pantry, which is straining to retain workers. “We're paying substantially more per hour than we've ever done,” he said.

Despite the challenges—and possibly facing another winter of spiked COVID-19 rates, the restaurant owners remain optimistic. Bradley, for example, said his second location is a hit.

“You know, to open a second restaurant in a pandemic is unheard of we have been very successful this last year opening our restaurant,” Bradley said.

While TJ’s Southern Gourmet has struggled, Jackson said her work goes beyond business and even food.

“One of the things that I think has helped me is knowing why I started this in the first place is connecting with our customers and reminding myself every day that it's bigger than even the food that we serve," Jackson said. "It's about connecting with our clients.”

Dylan Croll is a reporter and researcher at Yahoo Finance. Follow him on Twitter at @CrollonPatrol.

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