Business World during Covid19 Period.
In this article, we will discuss the improvements that will be critical for restaurants — from the largest chain restaurants to small coffee houses — to make to meet the needs and demands ...
In this article, we will discuss the improvements that will be critical for restaurants — from the largest chain restaurants to small coffee houses — to make to meet the needs and demands of customers whose perceptions, tastes and behaviors are likely to be much different from before the coronavirus outbreak.
Part of what we have all learned during this "quarantine life" era is that we have come to appreciate what we had before the COVID-19/coronavirus pandemic, much of which we took for granted until March 2020 in our everyday lives. One of those "things" which we just assumed to be fairly constant was the regular availability of all styles, groups, cuisines and sizes of restaurants. Whether it was the morning stop at Starbucks for coffee to have breakfast, lunch, dinner-or maybe even the late night's "fourth meal" at Taco Bell, we got used to having a multitude of food options open to us that our ancestors could only dream of! We could drop in, drive through, order out for delivery-heck, at the nearby Sonic we could even order and eat in our own cars-even getting our food supplied by a roller-skating server! Sometimes we could feel almost overwhelmed by our choices as there were so many foods available and various ways of where, how, and when to enjoy these restaurants.
Well, that was then, and now restaurants everywhere are fighting to survive in the midst of state lockdowns, stay-at-home orders and a formidable public. From big chains to the family bistro, restaurant management teams have to make tactical decisions almost everyday-with their plans often thrown out of the window. At this time how can we better serve customers? In fact how do we work safely? What workers can / should we hold on-how many and how long? In fact, how can we extract any revenue-and is it enough to justify remaining open? How do we act in a way that strengthens our brand and our group standing? And of course the big one, will we really survive this?
There has never been an incident like this that has already entered the restaurant industry. As we addressed in this series' first article (The Post-COVID-19 Business Environment — Part 1: Overview), the COVID-19 pandemic is perhaps our lifetime's quintessential Black Swan case. Restaurants, however, seem to be especially vulnerable to the effects-both immediate and long-term-that coronavirus can have on their operations following the passage of extreme fear and risk. One idea that we will come back to time and again as we examine various sectors in this series of articles is this:
The average American consumer is likely to be changed forever because of the experience of living through this pandemic. No matter what age group, race, income level, and so on-no matter how you set your target market before March 2020, you need to attach a new dimension to the future. It is the fact that just as our Elders' experiences influenced them as consumers-i.e. going through recessions, conflicts, 9/11, social change, the etc.-this occurrence would reshape how we behave as consumers, both individually and collectively. And today, a single word will concentrate on that dimension: hygiene. And when it comes to food and foodservice, sanitation is an utterly important aspect of service.
In the first article in this series (The Post-COVID-19 Business World — Part 1: Overview), we described this proposition in the following manner: in a nutshell, we assume, updating the classic saying slightly for these rapidly changing times, "cleanliness will be next to godliness" in the post-COVID-19 world of trade-both at the macro level and particularly at the micro-level. The existing hyperfocus on germ protection and cleanliness/hygiene, as well as social distancing, does not decrease immediately once the initial threat from the coronavirus is gone. Indeed, it is highly likely that companies of all types and sizes will need to make permanent, meaningful improvements to satisfy what is going to be a much more health-focused customer, we suggest, in the midst of this pandemic, almost "germaphobic."
And so, if you look at the restaurant industry moving forward in the post-pandemic era, whether it begins in a month, three months or later this year and if it's moving to be the same period globally, regionally or even locally, we can identify five main patterns that all restaurateurs will consider when preparing how to step forward in the "new normal" after the pandemic These are: distribution, packing, distribution!
Takeout Would Represent A Substantial Share of Potential Restaurant Revenue / Volume Social Distancing Does Not Really Really Go Away Protection from Germs Will Be a Key Differentiating Factor in Customers' Mind Physical Spaces Need to be Rethought / Reconfigured / Repurposed As it is difficult for both corporate management teams and individual restaurant owners to concentrate on the long-term as And now, even in the midst of tough times, restaurant management needs to understand what they can and should do to place their businesses better in the eventual post-pandemic climate1. Delivery, Delivery, Delivery!
DoorDash, GrubHub, Uber Group, Caviar, Postmates, Waitr ... By March 2020, the trend of Americans using the food delivery firms had increased. However, as more and more people made use of these services in light of the very real restrictions on their outings and movements during the COVID-19 pandemic, food distribution during this period went from a convenient choice to a vital service for many of us. With tens of millions of Americans sheltered in place, food delivery services allowed them to enjoy food options they knew and try other restaurants that used these services as they tried both convenience and variety to help in many cases not only feed themselves and their families. So food distribution services became an absolute lifeline for many families in places like hard hit New York City. Which means one of the few-the very few-" winning "industries to emerge from the pandemic has been food distribution companies.
The pandemic circumstances definitely inspired many people to attempt and provide food for the first time after the research is finished. Therefore, when the figures come through, the pandemic would undoubtedly have caused significant rises in the overall probability of people making use of delivery services-both third parties and those provided by the restaurants themselves. And with good experiences and consumer knowledge to draw upon, distribution companies would be able to persuade more and more Americans to use their services more often-and make distribution a de facto option for an ever-increasing proportion of people. A main effect from the pandemic experience would therefore be the popularity of delivery as a service mode for all restaurants.
It will then be the responsibility of the restaurant management to build stronger relationships with the big-and minor-food distribution companies and to make it as convenient as possible for their customers to order from them from their restaurant. While a shake-up in the food supply sector is likely, it will be important in the near term for restaurant management to be "agnostic forum" in dealing with these service providers, as it will now take some time for the "winners" and "losers" in the sector to be sorted out through the mergers and acquisitions that are likely to take place. Such combinations will help to win the field nationally into a few powerful players along with the possible existence and development of regional competitors.
Finally, we agree that restaurant management should analyze their own operations and see if it might be of strategic benefit and their operations to provide their own, in-house delivery services. To be sure, we have the major pizza chains and local small operators (think of your neighborhood pizzeria or Chinese restaurant) who for years have customized their operations and menu to make delivery an integral component of their marketing mix. Today, as delivery is increasingly being used as a-if not the-preferred choice for restaurant owners, both major restaurant chains and small, single or multiple store owners should consider strongly the prospect of developing and/or substantially improving their own delivery operations. There will be tradeoffs, as with most business decisions, in terms of operating expenses, payroll and, yes, liability issues. Nevertheless, we agree that both large chains and small companies should make the consistency of their delivery services a key differentiating factor in the post-corona consumer mind, improving brand loyalty and credibility, and making consumers more regular and happy buyers.
The challenge, of course, will be to carry out this transition-and to the restaurant management's willingness to commit to delivery as a core part of their business. Nonetheless, this acceleration of the acceptance curve for restaurant delivery services would be a lasting effect of the current pandemic-moving its scope far beyond what would have been expected before this Black Swan-level occurrence.2. Takeout Will Comprise a Significant Share of Future Restaurant Revenue/Volume
In conjunction with delivery, we firmly believe restaurants-across the board-will see a lasting effect of the coronavirus pandemic on their business take-out section. Ultimately, it is very probable that for most restaurants, including those that might not have previously had any substantial take-out business or even had food offerings that might not seem conducive to take-out (i.e. think stuff like hibachi, soups, pho, etc.), their take-out sales/volume / revenue is likely to be a major success factor going forward.
With the focus on takeout and delivery, we feel that restaurants that have not already done so may need to rethink/revise their menu in order to be better oriented toward these ends. This might well be appropriate to simplify the menu offerings (i.e. maybe 20 choices instead of 60, 70, 80 or more). Family-style meals that need to be added and/or featured to serve the take-out/delivery market more effectively. Foods can need to be prepared in a way that is best suited to the containers they are being transported into. Eventually, as a number of national chains and local restaurants are beginning to do today (under local and state legislation on the subject), pickup and distribution of alcohol is now becoming a vital part of their marketing and revenue mix. So aside, there will be a renewed emphasis on-and a lot of money to be made from-producing much more advanced food containers than the regular offerings for styrofoam so cardboard today.
In summary, as more and more Americans do not equate restaurant food with the need to visit the restaurant itself, and are happy to pay the same price or maybe even more-for menu items to be eaten at home rather than in the restaurant room, restaurant managers must rethink not only their business models, but the way they design, run, and hire their company. If, as many analysts have expected, the quarantine experience will change the habits of American life, both from a social and work viewpoint, in order to promote more communication, not in person, but through home technology, restaurants will have to reconsider their delivery/takeout services in order to cater for a very changed client base.3. Social Distancing Will Not Ever Really Go Away
Many Americans had never heard of the idea of social distancing until the last few weeks, when we all became "armchair epidemiologists." But, when expert after expert appeared on our TV screens to preach the importance of social distancing to avoid the spread of coronavirus and "flatten the curve" to a more manageable degree of epidemic for our health care system, we all began to look seriously. Immediately, six feet of separation was something vitally important-and the norm that all companies should aspire to have for people, be it their customers or their employees. Physical barriers were something that was not really considered necessary in much of the restaurant industry, beyond the "sneeze guards" one could see at your local sandwich shop or buffet restaurant.
However, in the aftermath of the pandemic experience, we believe that social distancing is likely to continue for some time to come and remain a very true, active concern for many in society. We may not necessarily calculate the six feet of distance-and indeed, over time, in more crowded spaces, we can become more confident. Nevertheless, we agree that what we call 'social distancing thought' will continue to be experienced in a large portion of the population for months - and even years to come. Restaurants will be well-advised to think about eliminating the need for queues, eliminating crowding in congested areas such as bar areas and spacing tables further apart for greater distance between groups with different customers. Tables themselves will need to be reconfigured to remove circumstances such as the 6-person booth that really only comfortably seats 4 people or the standing bar in a coffee house where customers may be only 12-18 inches apart from each other face to face! And it would probably be appropriate to place real, plexiglass barriers in many new restaurant areas, such as between the fast food cashier and the customer and maybe as hard as this would be to imagine, between the bartender and the customer at the bar!
Consequently, the residual effect of all of the extreme, new focus on social distancing will be something that restaurant management will be concerned with for some time to attract and retain clients. Indeed, in the minds of a large portion of consumers, a lack of social distancing could serve as a "deal-breaker" that could remove the chance of turning into a repeat customer-or even being a restaurant customer first!4. Safety from Germs Will Be a Key Differentiating Factor in the Mind of Consumers
Perhaps the greatest problem for restaurants in the aftermath of the pandemic will be an organizational one to adapt to. Namely, the problem is that management will need to look at 98-99 percent of what they are doing to deal with the residual germaphobia that will exist in most of us-to some degree-in the aftermath of the coronavirus pandemic, both in the near and long term.
Think about how much direct food handling is involved in the restaurant experience, from a full-service sit-down restaurant to fast food anywhere it might be on the continuum. From the kitchen to the ready line to the table server-there's plenty of managing-which means plenty of hands. Your barista will hand you your cup of joe at your nearest Starbucks or independent coffee house-or plenty of fancy drink. Gloves-and maybe even masks-will now be a must in the entire food service, which will keep the duties of managing the cash register and handling food with customers separate (and yes, that will definitely add to staffing needs). In the point of view of consumer expectations on food handling, the business model that will operate "best" in this setting is that currently utilized by fast casual restaurants (think of the way Panera Bread, Five Guys, Shake Shack, etc., work today). Overall, there will be a demand for contactless service in the restaurant industry, and how management addresses this new customer requirement will be a key ingredient in their success in going forward in the competitive post-pandemic climate.
And one move that will have long-term consequences for the restaurant industry would be to stop the movement toward in-store self-service by kiosk ordering. This was a fast-moving phenomenon which could be noticed only by the most unusual of restaurant patrons. All over the board, from fast-food giants like McDonald's, Wendy's and Taco Bell to sit-down casual restaurants like Chili's and Applebee's, big restaurant chains have taken a significant role in steering customers into kiosk-based ordering. In reality, the kiosk market was rising to more than $30 billion by 2024 with recent industry estimates. However, with restaurant patrons newfound concerns over touching screens that have perhaps been touched many, many times before, we believe that no matter how much restaurant management may try to “mitigate” the germ and cleanliness issues with touchscreens by having them cleaned frequently, the growth rate for these self-service mechanisms will likely be greatly diminished, if not halted in the post-pandemic market.
Yet in the restaurant experience, we do not see the trend toward more self-service decreasing. On the contrary, we expect the overall trend in the restaurant industry would be toward even higher rates of customer self-service-including ordering-but not on kiosks. However, consumers are likely to gravitate to more online and app-based ordering, both on their own and with the smart "nudging" of restaurant management-also in-store, rather than using fixed kiosks. From an organizational viewpoint, the more consumers order and pay from their phones or other mobile devices, this would reduce the need for in-store cash handling-and indeed, reduce the need for service counter staffing. And, of course, the more consumers order online and in the app at the restaurant, the more details that can be obtained and the greater the potential to exploit customer loyalty programs. And, at the end of the day, the change away from kiosks and towards personal devices will prove to be a real strategic advantage for restaurants to better communicate with their clients.5. Physical Spaces Will Need to be Rethought/Reconfigured/Repurposed
This power is actually an outgrowth of all four factors prior to it. The look and feel of restaurants is expected to change significantly in the coming years as both major chains and independent operators are dealing with rising consumer expectations and preferences. Some of these improvements will take time, because the required ingredient-money-will be in short supply during the immediate months following the return to "normal." Both restaurants, whether they have thousands of locations or one, would have experienced significant financial loss as a result of the COVID-19 outbreak and the subsequent steps that had to be taken that prevented people from venturing out! Nonetheless, between now and the time period of 2022, 2023, we suggest that all restaurant owners and management teams need to analyze seriously not only their operations but the physical nature of their locations. It requires the following things for consideration: The physical room devoted to servicing customers eating outside the restaurant and the nature of the order flow would need to be seriously examined with the current focus on delivery and takeovers.
With concern about social distance, it will be important to reconsider the dining and/or bar layouts. New developments will definitely be coming from companies producing restaurant furnishings to allow better use of restaurant spaces and meet changing consumer tastes in this regard.
More and more restaurants will need the look and feel of quick casual dining, as the full-service model-and the physical layout of dining and kitchen spaces along with any waiting areas will need to be updated to meet the needs of post-pandemic patrons with regard to food handling and social distancing.
Sure, we're living through extraordinary times-in all of our lives at least. And the primary challenge for all of us today is to keep ourselves and one another secure during this pandemic by sheltering in place and preventing unwanted social interactions.
On a scientific front the coronavirus appears to be unrelentingly lethal. This will also wreak havoc in coming through the entire economy for several months-and even years-though. For an industry with an extraordinarily high rate of failure to begin with, restaurants are currently working for no less than crisis mode today, with predictions of unprecedented rates of failures for both national chains-and their franchisees-and independent restaurants around the country. The New York Times recently headlined an article with an estimate from restaurant industry experts that 75% of independent operators who had to close due to coronavirus could not survive the current pandemic-with an estimated loss of about a quarter of a trillion dollars in the next three months for the restaurant industry as a whole! And so from McDonald's to main street, across America, the primary focus of restaurant management today is clearly, as Emma Liem Beckett, Restaurant Dive's editor put it plainly, just to "keep the lights on." One residual effect of this pandemic is that customers will undoubtedly continue to discriminate between local restaurants and national chains, and many will try to help and frequent t As such, it will be important for national chain franchisees to make it clear-via signage, social media and email communications-that they, too, are small businesses rooted in the communities they represent and deserve community-based support as such.
In the end, there will be a phase of post-pandemic recovery, and if that will start in June, July ... October. As such, restaurant management will be responsible for recognizing the many improvements they will need to make in the future to attract, accommodate and maintain a very different customer from the usual pre-COVID-19 that existed before March 2020. We assume that while there will definitely be a multitude of financial and operational problems for all restaurants — from the largest chains to the family-owned establishment — and their management to tackle initially when the economy is "started" later this year, these companies' leadership will be strongly advised to recognize the many more strategic and tactical changes. Much of what restaurants do today, in terms of menu, organizational and structural adjustments, is done purely to survive. However, these strategies will prove to be valuable "learned lessons" for longer-term, permanent changes which restaurants will need to make in the post-pandemic climate.
We urge restaurant management teams and individual restaurant owners alike to consider strongly the recommendations set out in this article, both internally and in communication with their counterparts in other organizations, as the starting point for making the necessary changes in the post-pandemic restaurant marketplace to survive-and yes, maybe even thrive.
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Veronika Fox-Masters in international journalism I am creative and highly self motivated. Competent covering all industries and topics for a wide range of media platforms.