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Business Lessons Learned from the COVID Pandemic

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Business Lessons Learned from the COVID Pandemic

To say a lot has changed in more than three months since the COVID-19 pandemic started to affect America is an understatement. No one hands you a playbook detailing how to respond in a crisis. In a crisis, you lead best when you anticipate what can go wrong, expect problems to occur, presume others will let you down, verify supposed facts, respond to everything in a timely manner and then put a plan in place accordingly. As we start to settle into a new normal, whatever that may be, it’s a good time to look at the lessons learned from leading during a crisis.

Overt communication is critical. 

Whether you are a CEO of a large corporation or a small business owner, communication skills are some of the most important for a leader in any circumstance. Over the last three months during a pandemic that resulted in an economic shutdown, regular and effective communication with employees and customers has never been more critical.

During a crisis, candid, unfiltered, regular communication is vital. Be candid, honest, and share information often. The worst thing you can do is let employees or customers draw their own conclusions. Communicating often allows you to control important messages, provide extremely relevant and timely data, answer the plethora of questions you may be receiving and keep rumors to a minimum. During the COVID pandemic, we sent out daily memos to franchisees for the first 40 days about what was occurring in the system and the industry. Afterward, we sent weekly updates when the information was not changing as quickly.  This constant communication helped make sure our franchisees were informed and not making wild guesses.

Close and constant communication with vendors and suppliers is also imperative. The COVID-19 pandemic affected the supply chain for many products, and businesses in a variety of industries had to respond to these impacts. Frequent—sometimes even daily—conversations with key supplier partners helped mitigate many of these issues.

In addition, some contracts were renegotiated, leading to future benefits. This was not done because of leverage with the supplier, but rather to ensure them we were going to be around for the long term. Offering an extension of our contracts during the crisis had a calming effect because it allowed them to focus on other problems and not worry if we took our business elsewhere.

Core values matter.

Core values define how a business and its employees operate, and good ones can help you persevere during hard times. For example, at Penn Station, we have a top to bottom ownership mentality throughout the system. This meant we had general managers working longer hours with less crew—often for many days in a row—because they felt ownership in the restaurant and invested in its success. The efforts of these managers led to an increase in sales and profit for them and the franchise owners.

Cash is king.

Stating the obvious, in addition to driving sales during the pandemic, it was imperative for businesses to create opportunities to drive cash flow. This crisis intimately reminded us that businesses that are highly leveraged have a much greater risk of failure. We viewed our profit and loss statement from 30,000 feet and said if we do not need the expense to keep the door open, we should consider eliminating it completely and permanently. As things begin to return to normal, businesses should continue to seek opportunities to drive cash flow, and as importantly, not simply maintain, but enhance the integrity of the brand and its products or services in the long term.

In every industry, people were laid off and businesses closed. Some of these may have closed in three to four years under normal circumstances, but COVID-19 really showed that survival of the fittest is true for businesses. Speed, efficiency, and adaptability have been key in the last three months. Businesses with poor cost structure, too much leverage, and a lack of specific focus and core values suffered and many of them were forced to close permanently.

Some changes are here to stay.

Businesses that have survived this long inevitably made changes to their model. It’s logical to assume that some of the temporary adjustments leaders made to survive will be here for the long term. Some changes may have been a natural extension. For example, most fast-casual restaurants were already seeing an increase in off-premises consumption, so it isn’t surprising that carryout and delivery increased during the COVID-19 pandemic and will likely stay higher for the rest of the year and perhaps beyond. Other changes may have been unexpected, but don’t rush to return to the old normal just because you used to do it that way.

One change we are certain is not temporary is enhanced compliance with local ordinances, and leaders should assume that officials and customers will be reviewing compliance under a microscope. Customers have never been more cognizant of hygiene, handwashing, masks, cleanliness, and overall sanitation procedures and practices. Restaurants, for example, have all experienced the health department being summoned because of one disgruntled customer complaint, and for the foreseeable future, we expect this trend to be highly exacerbated. Training, education, and display cleaning are all now even more critical, even for businesses that aren’t evaluated by the health department.

 

Recovery has begun in the restaurant industry and beyond, but we aren’t yet close to returning to “normal.” Leaders should take these lessons and look at what they have learned specifically about their business in the last three months. Many of these lessons and tactics will continue to be important for the rest of the year and beyond

Craig Dunaway has been president of Penn Station since 1999. Before joining Penn Station Inc., Dunaway was a partner at the regional accounting firm of McCauley, Nicolas & Company, LLC in Jeffersonville, Indiana, where he had worked since 1982 in various staff and managerial positions. Dunaway has a bachelor’s degree in accounting from Indiana University and is still a licensed CPA. Dunaway formerly had ownership interests in a Papa John’s® franchisee that owned 11 stores, and he served as the secretary/treasurer for that Papa John’s® franchisee. In addition, he had ownership interests in Coastal Cheesesteaks, LLC (headquartered in Raleigh, North Carolina) until June 2011 and in Louisville Cheesesteaks, LLC (headquartered in Louisville, Kentucky) until January 2014, both of which are Penn Station franchisees. While a shareholder in those Penn Station franchisees, Dunaway served as secretary/treasurer. Penn Station was named one of the Best Franchises to Buy by Forbes in 2016 and 2018 and one of the Best Franchise Deals by QSR Magazine in 2016 and 2017.

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