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How This Problem-Solving CEO Is Keeping Her Restaurants’ Doors Open

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October 21, 2020 8 min read

Dawn Lafreeda is President, CEO and founder of Den-Tex Central, Inc. dba Denny’s Restaurants. In 1984, she opened her first Denny’s and since then, has built an incredible 85-location operation. Lafreeda, like so many business owners in the restaurant space, has been massively impacted by the pandemic but has found a way to manage her way through this incredibly destructive crisis. 

Or more appropriately, has found ways to manage her way through the crisis. Lafreeda’s operation is challenged to follow safety protocols that vary from state to state, city to city, and frequently change with little or no warning. “In some instances, we had less than six hours notice to shut down dining rooms,” she told Entrepreneur. “We have had to learn and adapt to new ways of doing business to sustain.”

Related: Check Out Denny’s Inc. Franchise Information

In the following interview, Lafreeda breaks down the challenges that she and other multi-state business owners continue to face, and how she is fighting every day to keep her business, employees and customers healthy.

 You have locations in multiple states. Can you explain the challenges this has presented?

I have restaurants in seven states and the rules vary from state to state and the challenges are never-ending. We typically follow the rules of the governor, but we have situations where the mayors also exercise authority that we need to take into account. This presents a huge challenge in ordering and staffing as we are unable to predict from week to week what we may be up against.  

In order to stay compliant in each city and state, we have a spreadsheet that details PPE requirements, social distancing rules, hours of operation, curfews and allowed capacity. The rules can be a moving target and they change frequently, sometimes on a daily basis. 

There are also challenges in dealing with the human resource aspect of things as there are many different employee situations that require a lot of sensitivity while trying to keep business open and save jobs. For instance, you may have an employee who lives with a family member who is elderly or compromised so they may be afraid to come to work. You may have a person who tests positive, so you must close for a period of time, and this affects the livelihood of your whole staff.  There have been supply chain issues, staffing issues and widespread fear of getting sick.  

How has Covid affected your overall business?

We have had to make some extremely hard and painful decisions to survive, this includes closing locations. We are not able to run our business in the way we know makes it successful. In certain industries, we no longer are in control of our destiny but instead, we are at the mercy of the rules enforced on us by civil authority due to the pandemic. Additionally, this hit us very quickly without a lot of time to prepare. In some instances, we had less than six hours to shut down our dining rooms with no known date of when we could reopen. In some states, we reopened and then had to close again adding even further strain to operators. The restaurant industry at large is dealing with a lot of unknowns, but dining restrictions being re-enforced have now been built into Denny’s contingency plans for restaurants around the country, including mine. Where we have been able to reopen and operate, we are trying to offer the best customer experience we can. We pride ourselves on delivering the best dining experience imaginable and that has not changed, even with new challenges to overcome.

What solutions and innovations have you seen that are working for restaurants?

The level of innovation at Denny’s I’ve seen during this pandemic has been incredible, and most of it has come straight from the restaurant teams. At the restaurant level, we feel empowered by Denny’s to ideate, innovate and help grow our businesses. This is how outdoor dining at select locations was born, to help compliment the curbside and dine-thru services we have in place to feed our guests while socially distancing. We have also added booth partitions, a digital menu via scannable QR code, touchless options and more portable meal options.

Has customer feedback affected that way you are running your business? 

Absolutely, we believe it is important to listen to our guests and our number one priority is keeping our customers and our employees safe and top of mind. Earlier this year, Denny’s created the Sanitation Specialist position to help keep restaurants safe and sanitized. These individuals are trained on the proper cleaning and sanitizing procedures, and how to clean using the proper tools and approved disinfectants. That, along with other safety and satiation protocols have helped make our guests feel more comfortable having a meal with us. We deep clean all high-touch and non-contact surfaces regularly. Employees are required to wear face masks and gloves, take a mandatory temperature check before work, fill out a health screening questionnaire and wash their hands thoroughly with an alcohol-based sanitizer every twenty minutes. Additionally, all of our dining rooms have been rearranged to accommodate social distancing.

Related: Why Denny’s CEO John Miller Prioritizes People and Purpose to Deliver Profitability

We are heading into truly uncertain times, with the election and colder weather on the horizon. How are you preparing and how would you recommend other business owners to prepare?

We are paying close attention to every line item on the P&L and looking for opportunities for improvement to carry us through the winter and get us through to the other side. Some specific things we are doing is analyzing hours of operation, menu size and simplification, staffing hours, and contract renegotiations. We are creating food offerings that are portable as well as family meal packs. We are learning to be more flexible and open to ideas that do not necessarily fit our traditional business model. We are looking at this as an opportunity to add offerings and ideas to our 67-year brand and heritage. 

What are some of the positives you see for entrepreneurs who are able to come out on the other side of the pandemic?

There will be some silver linings from this pandemic for the restaurant industry and for entrepreneurs in general. While sadly many businesses have closed, the positive side is this will offer a bigger pool of employees to businesses that have been struggling to find enough help. Pre-pandemic, record low unemployment made staffing a huge problem for many years.

Unfortunately, while not all will not survive the pandemic, the ones who do may see an increase in volume as there will be fewer choices for consumers.  Many markets have been over-saturated for a long time making it difficult for some to sustain. 

Entrepreneurs who can get through this will be able to take advantage of the vacant locations that will come on the market and at more favorable lease terms. It will be an opportunity to expand.

The pandemic has spawned new products, industry and innovation which will move us forward into the future and create new jobs and opportunities.

What do you advise for people who are scared to try and start a new business now? If you were starting your career all over again, what would you do if today was day one?

Don’t let fear keep you from your dream. I see this as a prime opportunity for entrepreneurs. There are so many demands for new products, services, and innovation that it can be an entrepreneur’s dream. This is a unique moment in time and with the right idea and business plan, you can experience huge success. I see opportunity everywhere. While the pandemic is bringing us great grief, it will also bring us new and unexpected gifts.

If I were starting my career all over again, I would do many things the same. People are always going to eat and I believe 100% in the benefits of a franchise system. I would take my learnings from this period of time and make different building design decisions and menu decisions. I would negotiate my leases, contracts, loans, and insurance policies to better protect my business from things like civil authority, terrorism and pandemics. I would do everything in my power to ensure I have a sustainable and scalable business that would endure the test of time and unpredicted threats. 

There is nothing that would ever prevent me from starting over. We are fortunate to live in a place where the American dream is at our fingertips if we want it. I wanted it and I will always want it.

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The Trump campaign celebrated a growth record that Democrats downplayed.

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The White House celebrated economic growth numbers for the third quarter released on Thursday, even as Joseph R. Biden Jr.’s presidential campaign sought to throw cold water on the report — the last major data release leading up to the Nov. 3 election — and warned that the economic recovery was losing steam.

The economy grew at a record pace last quarter, but the upswing was a partial bounce-back after an enormous decline and left the economy smaller than it was before the pandemic. The White House took no notice of those glum caveats.

“This record economic growth is absolute validation of President Trump’s policies, which create jobs and opportunities for Americans in every corner of the country,” Mr. Trump’s re-election campaign said in a statement, highlighting a rebound of 33.1 percent at an annualized rate. Mr. Trump heralded the data on Twitter, posting that he was “so glad” that the number had come out before Election Day.

The annualized rate that the White House emphasized extrapolates growth numbers as if the current pace held up for a year, and risks overstating big swings. Because the economy’s growth has been so volatile amid the pandemic, economists have urged focusing on quarterly numbers.

Those showed a 7.4 percent gain in the third quarter. That rebound, by far the biggest since reliable statistics began after World War II, still leaves the economy short of its pre-pandemic levels. The pace of recovery has also slowed, and now coronavirus cases are rising again across much of the United States, raising the prospect of further pullback.

“The recovery is stalling out, thanks to Trump’s refusal to have a serious plan to deal with Covid or to pass a new economic relief plan for workers, small businesses and communities,” Mr. Biden’s campaign said in a release ahead of Thursday’s report. The rebound was widely expected, and the campaign characterized it as “a partial return from a catastrophic hit.”

Economists have warned that the recovery could face serious roadblocks ahead. Temporary measures meant to shore up households and businesses — including unemployment insurance supplements and forgivable loans — have run dry. Swaths of the service sector remain shut down as the virus continues to spread, and job losses that were temporary are increasingly turning permanent.

“With coronavirus infections hitting a record high in recent days and any additional fiscal stimulus unlikely to arrive until, at the earliest, the start of next year, further progress will be much slower,” Paul Ashworth, chief United States economist at Capital Economics, wrote in a note following the report.

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Black and Hispanic workers, especially women, lag in the U.S. economic recovery.

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The surge in economic output in the third quarter set a record, but the recovery isn’t reaching everyone.

Economists have long warned that aggregate statistics like gross domestic product can obscure important differences beneath the surface. In the aftermath of the last recession, for example, G.D.P. returned to its previous level in early 2011, even as poverty rates remained high and the unemployment rate for Black Americans was above 15 percent.

Aggregate statistics could be even more misleading during the current crisis. The job losses in the initial months of the pandemic disproportionately struck low-wage service workers, many of them Black and Hispanic women. Service-sector jobs have been slow to return, while school closings are keeping many parents, especially mothers, from returning to work. Nearly half a million Hispanic women have left the labor force over the last three months.

“If we’re thinking that the economy is recovering completely and uniformly, that is simply not the case,” said Michelle Holder, an economist at John Jay College in New York. “This rebound is unevenly distributed along racial and gender lines.”

The G.D.P. report released Thursday doesn’t break down the data by race, sex or income. But other sources make the disparities clear. A pair of studies by researchers at the Urban Institute released this week found that Black and Hispanic adults were more likely to have lost jobs or income since March, and were twice as likely as white adults to experience food insecurity in September.

The financial impact of the pandemic hit many of the families that were least able to afford it, even as white-collar workers were largely spared, said Michael Karpman, an Urban Institute researcher and one of the studies’ authors.

“A lot of people who were already in a precarious position before the pandemic are now in worse shape, whereas people who were better off have generally been faring better financially,” he said.

Federal relief programs, such as expanded unemployment benefits, helped offset the damage for many families in the first months of the pandemic. But those programs have mostly ended, and talks to revive them have stalled in Washington. With virus cases surging in much of the country, Mr. Karpman warned, the economic toll could increase.

“There could be a lot more hardship coming up this winter if there’s not more relief from Congress, with the impact falling disproportionately on Black and Hispanic workers and their families,” he said.

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Ant Challenged Beijing and Prospered. Now It Toes the Line.

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As Jack Ma of Alibaba helped turn China into the world’s biggest e-commerce market over the past two decades, he was also vowing to pull off a more audacious transformation.

“If the banks don’t change, we’ll change the banks,” he said in 2008, decrying how hard it was for small businesses in China to borrow from government-run lenders.

“The financial industry needs disrupters,” he told People’s Daily, the official Communist Party newspaper, a few years later. His goal, he said, was to make banks and other state-owned enterprises “feel unwell.”

The scope of Mr. Ma’s success is becoming clearer. The vehicle for his financial-technology ambitions, an Alibaba spinoff called Ant Group, is preparing for the largest initial public offering on record. Ant is set to raise $34 billion by selling its shares to the public in Hong Kong and Shanghai, according to stock exchange documents released on Monday. After the listing, Ant would be worth around $310 billion, much more than many global banks.

The company is going public not as a scrappy upstart, but as a leviathan deeply dependent on the good will of the government Mr. Ma once relished prodding.

More than 730 million people use Ant’s Alipay app every month to pay for lunch, invest their savings and shop on credit. Yet Alipay’s size and importance have made it an inevitable target for China’s regulators, which have already brought its business to heel in certain areas.

These days, Ant talks mostly about creating partnerships with big banks, not disrupting or supplanting them. Several government-owned funds and institutions are Ant shareholders and stand to profit handsomely from the public offering.

The question now is how much higher Ant can fly without provoking the Chinese authorities into clipping its wings further.

Excitable investors see Ant as a buzzy internet innovator. The risk is that it becomes more like a heavily regulated “financial digital utility,” said Fraser Howie, the co-author of “Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise.”

“Utility stocks, as far as I remember, were not the ones to be seen as the most exciting,” Mr. Howie said.

Ant declined to comment, citing the quiet period demanded by regulators before its share sale.

The company has played give-and-take with Beijing for years. As smartphone payments became ubiquitous in China, Ant found itself managing huge piles of money in Alipay users’ virtual wallets. The central bank made it park those funds in special accounts where they would earn minimal interest.

After people piled into an easy-to-use investment fund inside Alipay, the government forced the fund to shed risk and lower returns. Regulators curbed a plan to use Alipay data as the basis for a credit-scoring system akin to Americans’ FICO scores.

China’s Supreme Court this summer capped interest rates for consumer loans, though it was unclear how the ceiling would apply to Ant. The central bank is preparing a new virtual currency that could compete against Alipay and another digital wallet, the messaging app WeChat, as an everyday payment tool.

Ant has learned ways of keeping the authorities on its side. Mr. Ma once boasted at the World Economic Forum in Davos, Switzerland, about never taking money from the Chinese government. Today, funds associated with China’s social security system, its sovereign wealth fund, a state-owned life insurance company and the national postal carrier hold stakes in Ant. The I.P.O. is likely to increase the value of their holdings considerably.

“That’s how the state gets its payoff,” Mr. Howie said. With Ant, he said, “the line between state-owned enterprise and private enterprise is highly, highly blurred.”

China, in less than two generations, went from having a state-planned financial system to being at the global vanguard of internet finance, with trillions of dollars in transactions being made on mobile devices each year. Alipay had a lot to do with it.

Alibaba created the service in the early 2000s to hold payments for online purchases in escrow. Its broader usefulness quickly became clear in a country that mostly missed out on the credit card era. Features were added and users piled in. It became impossible for regulators and banks not to see the app as a threat.

ImageAnt Group’s headquarters in Hangzhou, China.
Credit…Alex Plavevski/EPA, via Shutterstock

A big test came when Ant began making an offer to Alipay users: Park your money in a section of the app called Yu’ebao, which means “leftover treasure,” and we will pay you more than the low rates fixed by the government at banks.

People could invest as much or as little as they wanted, making them feel like they were putting their pocket change to use. Yu’ebao was a hit, becoming one of the world’s largest money market funds.

The banks were terrified. One commentator for a state broadcaster called the fund a “vampire” and a “parasite.”

Still, “all the main regulators remained unanimous in saying that this was a positive thing for the Chinese financial system,” said Martin Chorzempa, a research fellow at the Peterson Institute for International Economics in Washington.

“If you can’t actually reform the banks,” Mr. Chorzempa said, “you can inject more competition.”

But then came worries about shadowy, unregulated corners of finance and the dangers they posed to the wider economy. Today, Chinese regulators are tightening supervision of financial holding companies, Ant included. Beijing has kept close watch on the financial instruments that small lenders create out of their consumer loans and sell to investors. Such securities help Ant fund some of its lending. But they also amplify the blowup if too many of those loans aren’t repaid.

“Those kinds of derivative products are something the government is really concerned about,” said Tian X. Hou, founder of the research firm TH Data Capital. Given Ant’s size, she said, “the government should be concerned.”

The broader worry for China is about growing levels of household debt. Beijing wants to cultivate a consumer economy, but excessive borrowing could eventually weigh on people’s spending power. The names of two of Alipay’s popular credit functions, Huabei and Jiebei, are jaunty invitations to spend and borrow.

Huang Ling, 22, started using Huabei when she was in high school. At the time, she didn’t qualify for a credit card. With Huabei’s help, she bought a drone, a scooter, a laptop and more.

The credit line made her feel rich. It also made her realize that if she actually wanted to be rich, she had to get busy.

“Living beyond my means forced me to work harder,” Ms. Huang said.

First, she opened a clothing shop in her hometown, Nanchang, in southeastern China. Then she started an advertising company in the inland metropolis of Chongqing. When the business needed cash, she borrowed from Jiebei.

Online shopping became a way to soothe daily anxieties, and Ms. Huang sometimes racked up thousands of dollars in Huabei bills, which only made her even more anxious. When the pandemic slammed her business, she started falling behind on her payments. That cast her into a deep depression.

Finally, early this month, with her parents’ help, she paid off her debts and closed her Huabei and Jiebei accounts. She felt “elated,” she said.

China’s recent troubles with freewheeling online loan platforms have put the government under pressure to protect ordinary borrowers.

Ant is helped by the fact that its business lines up with many of the Chinese leadership’s priorities: encouraging entrepreneurship and financial inclusion, and expanding the middle class. This year, the company helped the eastern city of Hangzhou, where it is based, set up an early version of the government’s app-based system for dictating coronavirus quarantines.

Such coziness is bound to raise hackles overseas. In Washington, Chinese tech companies that are seen as close to the government are radioactive.

In January 2017, Eric Jing, then Ant’s chief executive, said the company aimed to be serving two billion users worldwide within a decade. Shortly after, Ant announced that it was acquiring the money transfer company MoneyGram to increase its U.S. footprint. By the following January, the deal was dead, thwarted by data security concerns.

More recently, top officials in the Trump administration have discussed whether to place Ant Group on the so-called entity list, which prohibits foreign companies from purchasing American products. Officials from the State Department have suggested that an interagency committee, which also includes officials from the departments of defense, commerce and energy, review Ant for the potential entity listing, according to three people familiar with the matter.

Ant does not talk much anymore about expanding in the United States.

Ana Swanson contributed reporting.

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