Published on 15th June, 2020

The image of busy streets lined with coffee shops, food stores, and restaurants filled with customers may now seem to be a distant reality. For most countries where lockdowns were declared as a response to mitigate the spread of COVID19, among the worst-hit businesses, are those in the restaurant industry. 

According to the National Restaurant Association in the US, the restaurant industry reached its lowest sales after 35 years.   The negative impact is similarly felt across the regions of Europe and Asia where the highest cases of infections are recorded, next to the US.[i]

With successful testing, treatment, and quarantine measures in place, countries that have flattened the curve are slowly opening cafes and restaurants. Hard hit nations such as Spain and Italy, have already lifted lockdowns and are slowly opening cafes and restaurants to help their boost economy.  Spain announced that takeaway facilities will be allowed as part of their Phase 0 strategy while Italy will allow their regional governments to also open bars and restaurants. Australia will also re-open their restaurants, cafes, and bars after a 2-month shutdown, based on a report by CGTN.[ii] Countries already in the new normal phase are previously SARS-hit countries such as China, Hong Kong, and Vietnam. Learning from the previous pandemic, their governments implemented travel bans and lockdowns as early as January 2020 and now with low COVID19 cases, they have opened public places, schools, and businesses.

Customer (Safety) is King

As countries prepare to return to the new normal, how would the restaurant industry regain its customers after a pandemic? We ask Andy Skowronski, owner of A&C Associates who was involved in reviving restaurant industries in 2003 during the SARS outbreak in Asia. Similar to COVID19, spread across Asia and to 29 countries including the US and Canada. With symptoms similar to Pneumonia, flu-like person-to-person spread, and recorded hundreds of deaths, SARS caused fear that led to panic buying of face masks, school shutdowns, fewer people in the streets, heightened health screenings in airports and near-empty planes. At the end of 7 months, WHO declared that SARS was contained with more than 8,000 infected and with almost 800 fatalities.[iii]

At this time Skowronski was Director of Supply Chain at Yum! Brands that franchised KFC, Pizza Hut, and Taco Bell for Asia and the Middle East with a total of 3,500 branches.  “Looking back, it was the people’s fear that predominantly affected the dine-in business,” as Skowronski shares.  “People simply did not go out in public places for fear of getting infected.”   For him, it was important to communicate that the products and stores were safe as extensive hygiene measures were put in place. 

Similarly, now with COVID-19, it is important to create a safe place for customers to return to whether for take-out or dine-in, as well as ensuring the safety of employees who are in service.  Restaurant owners must at all times adhere to new Government rules and create a safe working environment for the staff providing them with the appropriate Personal Protective Equipment. In turn, give customers confidence that the Brand has their well-being at heart.

With SARS, a replacement to going out to dine at their favourite restaurants, people resorted to delivery, the then limited number of drive-thru stores, or the more adventurous through take away to satisfy their cravings. 

Skowronski adds that a “Brands Channel Management Strategy is going to be key to how well it attracts customers to return back to it”. Those fortunate to have a drive-thru and easy pick-up locations should fare best as it provides less exposure to others, offering a provision of safety to customers. Kerbside will also be a new channel to explore. One of the brands that weathered SARS was Pizza Hut because of its channel management strategy and products suitable for takeout or delivery. In fact, Pizza Hut grew its sales during SARS.

What is on the Menu

When restrictions are gradually lifted, given proper health protocols are in place, customers will slowly return to restaurants with dine-in areas. Keeping a full menu immediately upon opening may not be possible due to a lack of raw materials or other challenges in the supply chain. However, leaving out the best-sellers will lead to fewer orders and worse, disgruntled customers. 

Prior to reopening, resource planning is crucial. By categorising core and key products and determine how these can be sourced and ensuring continuity of supply during regular and non-regular business scenarios. Finding alternatives or even re-inventing existing menu items can be done.

The impact of SARS in Asia was significant on the supply chain, given the amount of food that is moved either truck, sea, or air. Air traffic in Asia was down by around 45%. Whilst moving base commodities around the globe due to its high level of automation remained robust the challenges of maintaining the supply chain drove businesses to consider more local sourcing in particular for value-added items. The result for a number of the Yum! Franchisees were to build their own commissaries and do some of the added value activities in-house, which was an effective strategy implemented by Skowronski and his team at the time.

The by-product was the ability to develop options for sustainable offerings and possibilities for new menu mixes that meet cost requirements. 

Leverage on Current Innovations

Digital communication and e-commerce today are much more prevalent today compared to 2003 during the SARS outbreak.  Skowronski compares the purchasing landscape then and now citing that “aggregators emerged in 2005, cashless payments rose in 2007 and various applications through mobile devices were developed as iPhone was launched.” All these were not present during the SARS pandemic. Now any item can be ordered and paid online even through social media platforms such as Facebook or Instagram, which did not initially begin as business spaces. Advertising online also presents a more cost-effective means of advertising versus traditional means. Brands must be creative in capturing the right market online and in leveraging on current technology to provide continuity of services with safety and ease for customers. As a means of communications and business transactions move faster online, brands should be able to shift to a more engaging online presence. Technology is going to be key in attracting consumers back to the brand.

Another alternative solution that is present now compared to the time of SARS was the use of Dark Kitchens, Skowronski shares. The Dark Kitchen is a complete ecosystem and growth has been made possible by the growing demand for delivery, even before Covid-19. There are many different models of Dark Kitchens and one, which is proving popular and cost-effective, is to provide the ability for one operator to use a space for only part of the day while another operator uses it for other dayparts. Hence the capability to provide different offerings at various times of the day, which may provide opportunities for startups or small-scale operators. Should strict physical distancing be observed post COVID19, food deliveries will rise and use of Dark Kitchens offer financial advantages for restaurant owners. Crucial to the use of these kitchens are compliance to strict health and safety and accountability measures.

Communicating in the New Normal

Communication must not only be limited to products, but it is also a way to show transparency especially during trying times, to be able to earn the trust of customers. Now is the time to over-communicate – show customers the employees’ hygiene practices and safety precautions in the store; advise what products are available; announce new ways of reaching customers through new digital platforms, and even acknowledging customer concerns may help regain their trust and increase customer loyalty. 

Brands and businesses have come a long way from advertising products to communicating their vision, purpose, and role in society. 

Skowronski is witness to big and small brands alike being able to overcome a pandemic and these elements are key to recovery. Keeping customers and employees safe, offering key products, and ensuring its availability are the initial steps to win back customers. Sustaining customers amidst the pandemic and through the new normal, will require creative solutions such as production and access through alternative channels, constant communication, continued product innovations, and digital or technological solutions that address evolving market needs.