Impact of the Coronavirus on Restaurants
Updated: Sep 22, 2020
The coronavirus pandemic and its resultant economic crisis are truly an unprecedented one. The world has never witnessed a healthcare crisis on this level before and with thousands getting infected even today, the economic fallout of lockdowns and shutdowns has rocked the market conditions.
Questions, everyone in the world have been pondering upon includes
Is ‘contactless’ the new normal?
To go out, or not to go out?
One of the worst-hit industries can be Hospitality & its various sectors
With the fast-spreading nature of this novel coronavirus, people are apprehensive of travelling to places without being certain of how well "hygiene" is maintained there. Apparently, hotel bookings are witnessing a drop in occupancy rate to around 25% from the usual and seasonal 85-90% rates, the lodging and recreational industry has achieved only 30% operational capacity, while the airline and event industry has almost come to a halt.
A recent CNBC report estimated the hospitality sector's revenue loss at almost ₹90,000 Crore in 2020. Considering how much overhead expenses, massive payrolls and raising operational crunches can boil down to bottom line, these businesses are not only incurring huge losses but are almost on the verge of shutting down.
The hospitality industry, however, has been trying and doing their utmost best to adjust to these conditions as well as provide people and the corresponding government, with as much assistance as possible. We all have seen — how countless hotels have been converted to quarantine centres — and many restaurant chains, chefs have come together to distribute food on a massive scale. This solidarity, palpable almost globally, is not only heartwarming to witness but also extremely necessary to combat and finally emerge victorious over the status quo. However, these steps towards helping the community are not complimenting the supply chain deficit, and many restaurant chains are grappling with the dichotomy of whether the cost of re-adjusting is less than shutting down.
Even Primary business units like b&b's, hostels, restaurants and cafes, bistros, beach bars, pubs and clubs etc. are probably bearing the brunt of the worldwide pandemic. Along with this, it might prove to be a tough time for small and family-owned businesses too. The uncertainty in the supply chain coupled with lesser demand can lead to the partial or full closure of many businesses. Innovation is the only way that the hospitality industry can choose to survive with coronavirus induced losses growing with operations of its service outlets.
Now, it is quite natural for a customer to be worried about transmission of the virus from other guests and members of the staff that they have to encounter in a restaurant, and thus the health of both the patrons and the employee has to be prioritised if businesses are to be sustained. We can also safely assume that over the course of the next few months, there will be a shift of preference to quality over quantity, in the sense that consumers will also be looking at healthy ingredients of good stock, than just the portions or the ambience and experience.
According to McKinsey, the Four Forces that are shaping the Next Normal
Metamorphosis of demand
An altered workforce
Understanding the virus
What is The New Normal?
What needs to be done as a first step is winning the confidence of the customer back and one of the only ways to do this is with strict adherence to the sanitation and hygiene-related advice issued for the public by the World Health Organisation (WHO)
Some of the basic precautions that restaurants will have to guarantee,
Constant hand-washing to kill viruses that may be on your hands,
Use of alcohol-based sanitisers for the purpose of hygiene,
Cleaning and sanitisation of tables after every order cycle,
Promoting good respiratory hygiene standards,
Wearing masks and gloves by staff and management,
Ensuring social distancing norms are followed diligently,
Temperature screening of patrons,
Sanitising personal belongings of individuals and staff members,
Cleaning of workstations and other touch points frequently.
With no respite from the virus, experts say that it may take at least 2 years to go back to the way things were, and a business plan, looking to survive amidst this pandemic needs to be very adaptive as well. They have to work smarter and persevere come what may if they want to sustain themselves. Reimagining and reformation of business models, making efficient executive decisions and the ability to quickly adapt to these uncertain times are the weapons businesses should have in their repertoire to combat these tumultuous times.
Is Technology The Only Answer?
Some Customers are paranoid and are unsure about how safe it will be to come in contact with the staff of any establishments, and this is one of the major reasons why most restaurants are going empty every day. One way to fix this could be by establishing a speedy hospitality system, with automated processes for more efficiency of existing resources. Use of technology will not only lower costs, reduce chances of transmission, but also help in creating an online database that can be used for serving long-term loyalty programs.
While tech support was provided for POS used in restaurants in the pre-COVID times as well, a lot of these software interfaces can be considered "outdated" in crisis-situations like this. The need for an improved SAAS, ideally built with real-time assistance and adherence to current norms is important. Innovation and an upgrade in the form of robotic bartenders, servers in Chennai & Mumbai based fine dining outlets are also seeing a lot of successful implementation, winning over the customer confidence.
Similar innovation in technology adoption which promotes a human-tech collaboration can help the hospitality industry to revive their businesses.
Some areas where this might come in handy are with
Robotic interference and assurance.
Digital check-ins, onboarding and checkout experience,
Digitising the menu, and contactless order placing,
Live status updates on the consumers' phone.
Understanding process flow and effective order turnover through AI
With COVID, pre-booked orders will be on the rise (rather than people waiting) – the processing of those orders can be faster with technology solutions.
Contactless will be the future of the post COVID world and what better way to go contactless than by adopting technology?
It may not be an easy transition, neither going to be a quick one, but it is all about survival and staying relevant for a better future. Since maintaining social distance is a prerequisite, it would mean more space and less occupancy. Both these factors point towards the opportunity of having a higher turnover in the delivery segment. Between Take away / QSR and Dine-in, we can look at inbound gatherings increasing the business revenue, substantially. For instance, If we compare the revenue generated by delivery of orders in 2019 during the festive season (starting in October) to the projections of the upcoming festive season of 2020, it is going to be a completely different picture and favouring the non-traditional delivery segment.
In 2019, NRAI had predicted the food sector as projected to grow at a CAGR of 9% by 2022-23, but this figure may not stand relevant post-COVID. There is 30-40% less footfall in restaurants which will give rise to inbound sales, and there will be more impact and unilateral shift in trend towards the ‘social bubble’ concept.
While it will take some time to be at par to the pre-COVID numbers, we need to understand that the business will get better if a bulk of its operations are shifted to online processes
After all, response to any crisis should be Survive, Revive and Thrive.