The Confessions of a SMB series focuses on the stories, struggles, and successes of small and medium businesses (SMBs) as they attempt to navigate the current economic climate.
As 70% of merchant acquiring net revenue is attritbuted to SMBs, their performance greatly influences the payments industry.
Previous articles in the series include features on an optometry practice as well as upscale restaurants.
In this interview, TSG’s Market Intelligence team-member Alex Ferguson sat down with Lansky’s® General Manager and Owner Chris Hoffman to learn more about the struggles his small business has faced dealing with the COVID-19 pandemic.
Lansky’s® has been serving the Omaha metro area for over 20 years with 3 locations in Omaha, Council Bluffs, IA, and Bellevue, NE. Lansky’s® offers authentic Philly steak sandwiches, freshly made pizzas, and a wide range of pasta dishes, calzones, and roast beef sandwiches. Under normal circumstances, Lansky’s® operates as a fast-casual restaurant that provides dine-in and carryout service.
Lansky’s locations shown on map above. The Omaha Metropolitan Area, officially known as the Omaha-Council Bluffs, NE-IA Metropolitan Statistical Area (MSA), is an urbanized region centered on the city of Omaha, Nebraska. The region extends over a large area on both sides of the Missouri River in Nebraska and Iowa. The Omaha Metropolitan Area is the largest in Nebraska and is the 59th largest in the United States, with an estimated population of 933,316.
Alex’s Question: How has the COVID-19 pandemic impacted your sales and/or your general operations?
Chris’s Answer: All three locations are, obviously, doing less meals per day but, the ticket (meal) average (in dollars) has risen dramatically across the board. When people do come in, they are buying more food at a higher price point because people are buying less of our daily lunch specials and individual orders, opting for food that could feed multiple people at once. This may be for at their home or at their place of business. The pandemic has had a large unique impact on all three operations’ sales. Our Omaha location has seen the least impact overall. The lunch sales have dipped dramatically, roughly 50%. With that said, the dinner rush for Omaha has increased enough to almost balance out the sales to a pre-pandemic level.Our Council Bluffs location has seen a significant dip in sales. Fortunately, they landed a very large recurring order with the Google Data Center nearby That has helped offset a lot of loss in day to day cash flow because its some of the biggest orders I’ve ever seen go out at once and it’s three days a week right now.Bellevue has been impacted the hardest. Their overall sales are down almost 50%. Bellevue isn’t getting the night business in replacement like Omaha. I can’t say with certainty what the reasoning is for that. I do know that adverse weather, graduations, local events, etc. have always impacted that location more than the others. So, while its unfortunate, it is basically what we expected to happen at that location, so it didn’t come as a surprise and we were able to prepare for it.
Q: What are some of the additional unanticipated struggles your business has had to face beyond a loss of customers due to COVID-19 restrictions?
A: Getting our products in has been very difficult. The supply chains are not running efficiently and that is one thing I didn’t see coming. I knew we would have struggles, but not to this degree. Furthermore, it’s hard to get a straight answer from our distributors because they can’t get straight answers from their suppliers. We have had to source all sorts of different items from different vendors over the last few weeks. But, if that is fairly invisible to the customer (quality, flavor etc.), we are happy to use whatever we can get. We have also been doing a lot of buying from one location to another. For instance, we needed about 20 cases of assorted products for our Bellevue location that they couldn’t get on Thursday. So, Omaha brought in those products on Friday, that’s when they were available, and Omaha “sold” those products to Bellevue. We can get any off-time deliveries as of now, so that’s what we have had to do. This, in turn, is having a massive effect on the numbers I use to make sure we are hitting our goals as a company.
Q: How have you modified the operation of your business? Are you taking any special measures outside of your normal business operation in order to stabilize revenue?
A: We have gone to carry-out only, per the directed health measure. We also cut a lot of labor off the schedule, roughly 200 hours per week per store. I have employees who are still currently in high school and living at home with their parents. I also have employees who have children, and this is their career. I have had to be sure our people who rely on this business to put food on the table get their hours and their pay. Luckily my younger employees understand the situation and I haven’t received any backlash about it. The only other thing we have done is to try our best to not carry a surplus of stock on the shelves. The money can be in the bank, or it can be in boxes on shelves. We have had to work very hard to carry enough stock to get the job done, but low enough to keep money in the bank as well. That has been a true balancing act.
Q: Has your payment processing provider contacted you since the COVID-19 pandemic began?
A: Yes, Toast has been in contact multiple times and even waived our fees for two months. They sent out the letter shortly after this all started. That was a wonderful gesture on their part. We already had online ordering through them, but I know for places that didn’t, they were offering that service for free. Online ordering has been critical throughout all of this. I’m sure there are plenty of places that took advantage of that. I certainly would have had I not been using it already.
Q: Do you feel there are enough resources available to you and your business provided by the government to help you weather the pandemic?
A: The PPP was a massive help. We were able to retain 100% of our workforce, keep salaries paid, and pay all of our other bills. We actually made rent in April at all three locations because of it. We were able to keep our key employees above water in their personal lives also. I personally took a pay cut for one payroll so we could bonus our key people to keep their pay where it usually is, after they gave up their overtime that we typically authorize for them. They willingly took a pay cut for the betterment of the company through a reduction in hours. These are hard working people. They want to work and earn money but not at the expense of the company. I wanted to thank them the best way we could, and that was to keep them paid as normal.
Q: Since the COVID-19 pandemic have you noticed a difference in the way customers are paying? i.e. have you seen an increase or decrease in the use of particular payment methods?
A: I haven’t seen much change. I thought I would see a lot less cash and more card swipes. But the change has been minimal, if there’s been any change at all.
Q: Have you experienced an increase in fraudulent transactions at your business since the start of the pandemic?
A: We haven’t seen anything to this nature.
Q: Have you experienced more chargebacks at your business since the pandemic?
A: Not at all. In fact, tipping went through the roof. We are a fast-casual operation with no wait staff, so tipping is not something we get a lot of as most of our stuff is self-serve. We have had more customers tipping larger amounts than anytime I can ever remember. It’s been very interesting to see.
Q: Do you feel optimistic or pessimistic towards the future and the potential recovery of your business in the aftermath of the COVID-19 pandemic?
A: I’m very optimistic. Everything before the pandemic was going along great. We were having one of our best first quarters in recent memory. Also, people are still coming to eat. Omaha has been doing well, all things considered. Bellevue is lagging behind the other stores but we expected that. If Omaha was lagging very far behind, I’d be worried. Customers are keeping the ticket averages high so they are still willing to spend and the last two Friday’s have been incredibly busy. Those are all good signs to me so I’m really looking forward to getting some normalcy back in place. One thing is for sure, we have made it this far, getting some in house dining can only help from here.