There’s no denying that COVID-19 has already left a lasting impact on the food and hospitality industry. After being forced to shut down for the health and safety of their workers and customers, many restaurant owners around the world are left wondering how their business will come back from the pandemic.
Industry leaders and business owners have many challenges facing them in the short term, like paying their employees and finding new ways to keep money flowing into their business. When business owners are struggling to stay open in the short-term, the medium- to long-term challenges seem like a problem to deal with in a distant future. These long-term challenges will bring different hurdles, and the planning will be a work in progress for most businesses as the whole world continues to navigate this new era.
How Key Decision-Makers Should Approach COVID-19
Right now, business owners, managers, and consultants in this dynamic and uncertain business world need to focus on learning how to adapt and make quick, calculated decisions suitable for the business’s needs.
Amidst all the uncertainty, we can count on one thing for sure—the pandemic’s financial, behavioural, sociological, psychological, and business impacts will have long-lasting consequences, even when things return to “normal.”
Businesses’ key decision-makers must take a more thorough look at our current situation and find opportunities where possible within their industry and expertise. Instead of focusing on single-minded solutions, decision-makers should analyse the impacts of their current situation as multi-layered issues and attempt to uncover opportunities at each level. They may seek to find opportunities within their businesses, or they may look into favourable opportunities that arise in other industries.
Whether horizontal or vertical, key decision-makers should aim to focus on finding short-term solutions as they intelligently analyse internal business growth and external market opportunities.
10 Business Opportunities for Food and Hospitality
Here are 10 opportunities for the food and hospitality industry that key decision-makers should consider as they work on developing a strategy for their businesses after COVID-19.
It’s a Buyers Market
One upside to the pandemic is that businesses looking to enter the market will have much stronger negotiating power with landlords for their lease/rent negotiations.
There has been a very long economic upturn in the market, which enabled private and institutional landlords to demand extortionate rents and rent increases. The COVID-19 pandemic could show a change in landlord behaviour as landlords struggle to find business owners who are willing to take a risk on opening a new business.
Relaxed Planning Permission
New and existing businesses could be granted planning permission or eased licensing laws as a result of COVID-19. Local governments want to enable and encourage businesses to invest and operate, and so they are loosening restrictions to make it easier for businesses to adapt.
For example, changing a shop unit from A1 Retail to A3 Food or A5 Food Takeaway will be much easier now. We may also see councils easing alcohol licensing and allowing longer operating hours where appropriate to encourage businesses to stay open and increase consumer spending
Low-Spend Eateries Will Prevail
New emerging markets will prevail amongst the pandemic, especially low-spend cafés and eateries. It seems like common sense to assume that higher spend restaurants and eateries may see a fall in customer numbers and demand due to low consumer spending and low consumer confidence.
As well as I can foresee, consumers’ reluctance to dine at higher spend restaurants may very well lead to an increase in demand for low-spend cafés and eateries, especially those that require minimal contact.
Street food concepts, along with authentic and traditional smaller menus with a few regionally-specific options, may come on the rise. In addition to offering a speedy way for diners to get delicious food with minimal human contact, these types of menus and eateries are also easier to manage and need less staff. They can operate in smaller units with much less initial investment, which makes it more likely that they can be profitable, even during a pandemic.
Takeaway Focus
Another emerging market for the short- or the medium-term is the takeaway focus business with a delivery option. While takeaway has always been an option for most restaurants, COVID-19 has forced restaurants to only offer takeaway or delivery service. By mid-March 2020, food delivery usage in the U.K was already up 11.5 percent from the previous year and shows no signs of slowing down.
If your business does not offer a takeaway menu or is not working with takeaway delivery systems such as Delivroo, Just Eat, or Uber Eats, this is an excellent opportunity for you. You may need to focus on implementing and improving your take away offerings for your clientele. Even when restrictions lift and restaurants can open, many individuals will still not want to risk eating out. They also will be more familiar and comfortable with ordering takeaway from a delivery app and may order takeaway for the convenience.
Reduced Premiums on Businesses for Sale
We may see many businesses that struggle and decide they are unable to survive. These businesses will end up in the market for sale or will be put up for sale by the landlord who has forfeited the tenant’s lease.
These situations may lead to two benefits. The first is a much lower premium for the business, payable to the tenant. The second is, if purchasing from the landlord, there may be scope for no premium, and business owners may be able to demand a reduced and below market rent/lease contract.
Distressed Units are Becoming Available
Food businesses that are not able to survive the COVID-19 pandemic will be up for sale, and the ready-built restaurants will very like be sold for free by the landlord with all utilities intact. New tenants may be able to move into restaurants with air conditioners, toilets, kitchen units, flooring, electricity cabling, gas work, extractor fans, ceilings, and lighting equipment already built-in.
These utilities will generally cost tens of thousands of pounds, but new business owners may be able to get them included with the property.
Suppliers May Be Willing to Negotiate
Many suppliers are struggling to stay in business as restaurants and eateries reduce their orders or shut down. During these times, suppliers may be more inclined to offer better terms and rates on their products.
One thing to note is that small suppliers may not be able to afford to offer reduced rates. Therefore, I would not suggest requesting discount and payment terms from small-sized local suppliers. Instead, COVID-19 may be an opportunity to request discounts and better payment terms from larger corporate suppliers.
Time to Reflect and Get Better
As frustrating as it is to be forced to reduce or halt operations as a business owner, the lockdown should hopefully have given you time to reflect and work on developing your business. This may have been through self-development by learning new skills or by focusing on improving your operational systems. Whether you concentrate on crafting new menus, implementing new marketing strategies, connecting with your network, or enhancing your brand, use this time to consider ways to come back stronger and better.
The best way to start sometimes is by reading customer reviews and seeing where the most complaints are stemming from. Once you know what customers don’t like, you can work on making improvements so that, when the time comes to reopen, you can be ready to exceed your customers’ expectations.
Talented Recruitment Pool
With so many restaurants and eateries closing or limiting operations, there have been a lot of talented workers laid off or let go. That means there is an extra-large recruitment pool full of skilled workers who can help you launch a new business or provide even better customer service through your existing business.
If your business is able to, use this time to hire and train new employees. If you aren’t quite ready to hire yet, then spend some time writing out a hiring plan and creating job postings so you can post them as soon as you’re ready.
Time to Adopt New Technology
One thing COVID-19 has demonstrated is that the technology to run a contactless business has been here all along—we just haven’t been using it. From mobile wallets, which let customers pay without touching a credit card reader, to delivery apps that allow customers to order, pay for, and receive their meal without ever leaving their home, technology is quickly changing the way customers interact with restaurants.
In the U.K., the contactless payment limit has tripled as a result of COVID-19 as customers have started using this method of payment at a much higher rate. I believe that restaurants, cafés, and eateries that adopt and embrace new technology to provide safer options for their customers will succeed in the short- and long-term.
Bottom Line
The COVID-19 pandemic has dramatically changed how restaurants and eateries operate as well as how customers experience dining out. However, that doesn’t mean that every hospitality business is doomed to fail. There are plenty of opportunities that can help business owners come back stronger than ever before.
