Over the last year, we have taken a general look at the industry through the lens of property management and at the specific impact on retail. In each case, we heard disparate stories of struggle and success. In this month’s newsletter, we look at a single business operating a family of restaurants to understand how they weathered 2020, and what they see for the future of retail and restaurants in Portland and beyond.
Rock Solid Restaurants is, well, solid as a rock. Even after the unprecedented events of 2020. HopsnDrops, the company’s family of “neighborhood gathering places,” started with a single restaurant in Bonney Lake, Washington, in 2009. Over the next 11 years, the Eggen family built a reputation for friendly service and high-quality food, a culture of trust, and a commitment to community giving that propelled them to success in the form of 21 locations.
Business in the before times
Business was good in early, pre-pandemic 2020. Sales were growing year over year, with plans in place to open two to four new restaurants per year. Vice President of Development and Construction Kevin Eggen and his team were close to signing leases on several new locations that would open in 2020 and 2021. Those plans, like most at that time, ground to a halt when the pandemic hit. Suddenly the company’s strategy had nothing to do with growth, and everything to do with survival, maintaining a viable cash position and protecting employees. Already, HopsnDrops was using software and a 3rd party delivery partner to manage a successful, albeit small presence online, with “off -premise” (take-out and delivery) accounting for 8 to 12% of sales. Still, the idea of shifting a family of businesses across three states that had been conceived of as traditional, dine-in restaurants to 100% off-premise needed careful consideration; was there even time for that?
Act, don’t react
Rather than being reactive, the HopsnDrops management team considered their early response, laid off their entire staff of nearly 900 employees (allowing them to file for and collect unemployment benefits immediately) and closed all 21 restaurant locations for six weeks. That might sound extreme—reactive even—but the plan allowed them to assess, adjust and control the situation. Now in a position to observe how similar businesses would navigate the new landscape, their unique perspective offered an opportunity to come up with a masterplan that would give HopsnDrops the best chance to come back stronger and smarter than ever.
After implementing systems to meet employees’ needs, including upgrading their Zoom account and scheduling voluntary weekly meetings with managers and interested “employees,” it was time for upper management to share the same transparency about the wellness of the company with their landlords.
Compassion creates loyalty
Across all locations, HopsnDrops works with both small, independent commercial firms and large, publicly traded real estate companies. On the subject of rent relief, some responded with solutions (including one of the two HopsnDrops landlords in Colorado and all three in Oregon), while others offered nothing. “The more open and communicative we were about our situation and what we needed to move forward, the better it worked out,” Kevin observed. In all, an impressive 75% of landlords (for approximately 15 locations) offered meaningful assistance. The solutions ranged from negotiating a percentage rate (a set percentage of the original monthly rent, and no deferment), to deferment with varying terms, to no offer of forgiveness or to renegotiate the original terms of the lease.
In their conversations with both staff and their landlords, “There was definitely the sense that we were all in this together,” Kevin said. “We were in uncharted territory, and making decisions about our collective futures together.” In hindsight, the fact that they made these decisions as a team, taking time to consider how the various scenarios could play out, is the reason they were able to meet the needs of all parties.
Off to the races with off-premise
Having navigated those important conversations with staff and their landlords, the management team was poised to shift their model to 100% takeout and delivery. After evaluating the locations individually, to gauge how well the new model would succeed, HopsnDrops added two more 3rd party delivery partners (for a total of 3), allowing them to respond to the large number of customers eager to support their business. At the height of the pandemic, “off-premise” accounted for 70% of the company’s sales. When they reached the point where the states in which they operated were allowing in-door dining at 25% and then 50% capacity, their sales numbers were up over 2019.
The year was a rollercoaster, with highs and cause for optimism in June, 2020, when sales were robust, to lows six months later, when everything shut down completely. By late February, 2021, Kevin began to feel like they’d rounded a corner again.
Salute to 21! (and counting.)
Though the pandemic had an effect on the restaurant and service industry that is still being measured, HopsnDrops managed not to close a single one of their 21 locations. Even though the next opening is unlikely to happen in their planned or preferred timeline, Kevin’s team is searching actively for locations to open by the end of the year. As they work on deals in their current markets of Washington, Oregon and Colorado, they’re optimistic that they’ll be able to resume their pre-pandemic growth trajectory of 2 to 4 new locations per year beginning in 2022. If they do, innovating, stretching and adopting new technology around real estate modeling and forecasting, and site selection software will have played a significant role in making that growth a reality. Still, the personal connections remain the most impactful.
When all is said and done, it's about relationships.
“George is the man.”
“Can I say that?” Kevin asks. NAI Elliott Retail Brokerage VP, George Macoubray has worked with Kevin and Rock Solid for four years, helping HopsnDrops build a presence up and down the I-5 corridor, in Western Oregon and Vancouver. His intimate knowledge of the Oregon market, in combination with his familiarity with the HopsnDrops business model and brand, means George knows exactly what they’re looking for in their next location. “I enjoy working with a local company that is able to compete with the national restaurants by providing great food and customer service,” George says. He and Kevin didn’t talk business for more than a year (they did stay in touch, and check in on one another), but George kept a pulse on market and had sites lined up for Kevin and the team to check out when they were ready.
Bigger than ourselves. And gritty!
We didn’t need a global pandemic to remind us that coming together, being a part of something bigger than ourselves feels good. Vital, even, to being human. The HopsnDrops team had already shown themselves to be a tight-knit community of restaurants and workers guided by empathy, compassion, dignity, fairness and, respect. Having strengthened relationships with their partners, and forged new ones through curiosity and innovation, they’re still rock solid.
