Surviving the Coronavirus Crisis: Restaurants
This worldwide pandemic has everyone in hysteria. Cities in the USA are suspending restaurant operations, global restaurant sales are going down, dining scenes in the biggest cities are all stopped in their tracks, restaurants are seeing major declines in patronage. All because the coronavirus has spread rapidly since its discovery in early January. The crisis could likely be an extinction event for the majority of the restaurant, cafe, and bar industry.
Why is the Novel Coronavirus Crisis worse than the SARS period?
The Chinese economy is a whole lot bigger than in 2003. Back then, China was the world’s sixth-largest economy. Fast forward to 2020, and they’re the second biggest. The country has been the main growth driver worldwide with the International Monetary Fund estimating that China alone, accounted for 39% of global economic expansion in 2019.
“When the dragon sneezes, the whole world catches a cold.”
In 2019, China led the way in terms of total outbound tourism. They spent USD257.7 billion dollars in the tourism sector in comparison to the USA that spent USD135 billion. What this insinuates is the large movement of people globally across borders. Tourism and traveling make it easy for diseases to spread with humans as its main carriers and at a very fast pace. What makes it even harder for authorities is the difficulty in tracking this disease as clusters form spontaneously.
The truth is that the media has a key role to play in wreaking havoc in the world as well. SARS happened before the huge social media boom. Back in 2003, news with regards to the epidemic could only mainly be communicated through traditional forms of media such as TV, newspapers, and radios (and of course water cooler gossip). Bring on technological advancements and the wide adoption of social media, where every individual has the ability to be both a reader and contributor, news gets spread even quicker than before. When we mean news we mean both facts and fake news about the coronavirus which causes even more panic, terror and fear across the globe.
In an attempt to keep customers and staff alike safe and well, and to keep businesses stable, the restaurant industry responded with making operational changes, event cancellations and in some areas that are badly hit, even store closures. But this wasn’t able to curb the situation and in fact, since things have grown even more critical, authorities around the world have begun ordering widespread restaurant shutdowns.
While some things are out of the control of these restaurants, waiting to respond to the coronavirus outbreak until after it begins impacting your operations can not only hurt your bottom line but your company’s reputation as well. Here are some suggestions we think could be able to ease some of the repercussions of this pandemic.
What can restaurant owners do?
For restaurants that have been forced to temporarily suspend businesses, instead of feeling beaten, you can seize this downtime to:
Revamp your current menu offerings, redesign your menu
Spruce up your interior and refurbishment work as it’s difficult to close your restaurant for weeks to do so during good times
Relook at your SOP and make improvements in areas like ordering, food preparation, payment, food cost tracking all the way to accounting. This would be the ideal time to pluck yourselves out of your daily operation routines to look at how you can optimize your Front-of-House and Back-of-House systems.
Revise marketing tactics and come up with a plan for when things get better from this pandemic. Find new niche areas for your restaurant that you can use to appeal to your targeted audience. For example, keeping in contact with your loyal customers through mobile marketing means, email marketing, etc.
For restaurants that are in operation, here are some ideas:
Consider adjusting your operations in order to serve customers who prefer not to dine out in crowds. Work with delivery partners to offer delivery if you have yet to adopt this system. Cut down on operating hours if your fixed costs like your lease permit.
Some delivery services are waiving the 20 to 30 percent commission fees that they typically charge restaurants to operate on their platforms.
Delivery businesses may use to be a secondary consideration where not much thought was given to the menu planning and pricing. Now’s the perfect time to properly plan your delivery menu and run promotions to boost your takeaway/delivery service.
Give customers the option to place orders via phone calls for self pick up. Especially for customers that are not as tech-savvy.
Remove some seating in the restaurant to provide more space between tables.
Create a limited and focused menu that encourages bulk purchasing.
Start selling gift certificates or vouchers to loyal customers, family members and friends and give them a special discount/rate - to ease your cash flow.
Demonstrate to customers that you are constantly thinking about their welfare as well as your staff’s health and safety by:
Setting-up and streamline a designated food pickup area (ideally not within the restaurant), with properly prepared, bagged and labeled orders that are accessible to customers to minimize human contact.
Ensuring that any of your staff who is symptomatic or has fever stays home.
Setting-up sanitation stations at the entrances of your door.
Increasing the frequency of cleanups of point-of-sale terminals and phones after each use. At a time like this, it is essential to take clean to a whole new level.
What are the biggest implications of this pandemic?
The most obvious and immediate impact would be the drop in footfall to restaurants
The main input of revenue for the restaurant industry will come in from deliveries and takeaways as compared to dine-in.
Increase in food costs due to the disruptions to the supply chain, since China is a major supplier for many countries.
Stay calm, be flexible, and work with your team to develop an operating plan that could survive a potential outbreak. It’s definitely a hard time for the industry, and we understand that permanent closures are inevitable. If you’ve done all you can and things still aren’t looking good, make the decision early. Find out the best way to structure your exit on the best possible terms.