Looking at foodservice and retail from the pre and post COVID-19 lens

Food and beverage retail – be it a full service high-end restaurant, quick service restaurant, cafes/bars/delivery only or even the neighborhood darshini/ outlets – are among the most complicated business to operate. Research shows the struggle rate of restaurant upkeep often gradually increases during the course of its operation. At macro level, there are many reasons such as changing consumer preferences, attrition rate, policy changes or the present pandemic. At micro level the daily rigor of getting every dish right in itself is highly complicated process, as chefs across the world believe ‘am as good as my last meal’.
The industry is disrupted and we are not going back to how things were but on the discovery of how things will be with each facet of business going back to drawing boards. Across any industry, which has direct customer touch points and gradually gets more and more critical of this change management as just the touch reaches the self-actualization of food consumption, well the only thing above food service that is medical care.
Time heals everything and we have time; however do we have the right direction to leverage the opportunity for post COVID. Quoting the richest man in planet, Jeff Bezos recently from his shareholders meeting, ‘if you are an Amazon shareholder, it’s time to take a seat’. The tone and tenor is the window of what’s going to come up next; not all business have the Amazon’s eco system to take on the post COVID world, but the very thought leadership is the perfect starting point.
The question in every retailer’s mind is: how do I strategize to revive my business back, how and when can I expect that revival. Even if we are able to flatten the curve, there will still be hesitation amongst people to step outside for a fine dine meal, comfort food or to their favorite retail destination; this situation will not be solved by a vaccine but by bringing credibility that every retailer can have for customer emotions.
Pre Covid-19
The Indian Retail and food service sector has been on a strong growth path over the last few years and has continued to expand rapidly during the forecast period. A notable higher percentage of young and working population were driving the industry. The market space was even attracting the interest of domestic as well international capital funds and private equity. Growing brand consciousness, high service orientation, experimenting and a rise in the frequency of shopping/ eating out drove the market to new highs year on year.
New food service destinations were emerging in the market due to the spike in the demand of restaurants, which created further more opportunity for experimentation and led establishments to create some phenomenal and promising concepts. The marketplace was offering in-house brands, which were the fastest growing brands backed by dark kitchens that were being built like brand retail stores in cities to ensure every pin code was catered to, and in a city like Bangalore this development around dark kitchens has built complete new ecosystems of business.
Industry during Covid-19
New Year’s cheers were still ringing well along with cash boxes when the news of the pandemic outbreak in faraway Wuhan first drifted across the world. It was just like any negative news but the impact was still far from impacting us. But within weeks and faster than any time in our living history, a complete lockdown was announced in countries across the world. Hotels that had full occupancy slipped to zero, and business leaders’ worst nightmares started turning into a grim reality within days.
This disruption has now become part of business case studies across the world and will remain the management books for a long time to come. Interestingly, words and terms like BC, connoting ‘before COVID’, have become part of the standard lexicon now and will become entrenched in our business vocabulary as well.
Also, for businesses, doing things differently or doing different things is not a choice but a survival instinct now. The spirits are definitely downcast if not broken and as we enter the third month of the Covid pandemic, the time has come to separate the men from the boys in the food service business.
Industry Post Covid-19
By the time the vaccine reaches the masses, the industry would have seen its worst. It is therefore the time for the industry bodies to unify, build a credible base and come up with the right direction to support the business, as well as consolidate the learning from across the globe.
Like most other retail business, the foodservice business is focused on taking actions that will help it to conserve cash, rework any fixed costs, squeeze out any leverage available from finance partners, get down to light and lean working model and finally look at rationalizing and optimizing the manpower cost.
Already, the operating business across many outlets now revolves primarily around delivery, online and e-commerce. These models are showing the way of the new normal along with the new norms of social distance operations, manpower management, resource utilization with what’s available, and technology adoption (did we know zoom before March?). Today, the industry is at a crossroads of massive business overhaul, probably in every facet of operations. The food service business has to start reworking along new themes, which can help them to find their feet again and break into the stride faster and with confidence. Some of the winning strategies for the food service business could be:
Contactless Customer Service (CCS): A dining experience allowing guests to view and order the dishes on the menu through their phone. Since menus are the most retouched in restaurants, hence doing a menu via mobile applications is the safest option. This, apart from other credible CCS solutions – booking apps, restaurant management software, robotics in services, conveyer belt operations, digital payments, etc – will become the hallmarks for every brand looking at comprehensive seamless flow of CCS solutions.
Operating with Social Distancing (OSD): It is now considered a social vaccine and will be the most followed trend across restaurants and retail outlets. OSD will be implemented by all operating retailers with a view to limit footfalls as well as to keep a limit on the number of staff in a building. The new dining space should accommodate a restrictive number of diners in the hall; this could be the new regulatory guideline from government agencies, and will be the new normal. Business will have to think about getting more from less, capture a greater share of wallet than the number of customers, offer more solutions than specialization, and use technology to deliver more. Restaurants will look at changing the store design to ensure the maintaining of the right distance between customers.
Technology Led Customer Management (TLCM): Customer will believe only when there are data points available; retailers, especially food and all types of food service operators, will need live camera feeds. It is not just about going online or e-commerce, technology will drive customer engagements for every business. Customer will no more be comfortable with opaqueness of a brand going just by the fancy statement by a movie star. Brand will have to pivot to focusing on customer trust. This is what Rajiv Bakshi, former MD of Pepsi India did to reinforce the quality standards of Pepsi and debunk any quality risk perceptions of its products.
Leaders will be the face of brands and food safety will no more be just a support department but become integral to the core business, with marketers touting the unique selling proposition customer backwards. The journey will start from the raw material itself; a restaurant, apart from signing up for sourcing their fresh food, will have to own which field or the factory it comes from. It will the new trend to share in the customer-facing menu all its ingredients, and how and where it is coming from. Chef Regi Mathew in Bangalore has uniquely started the trend of sharing where exactly the main ingredients are coming from for his very popular Kerala themed restaurant ‘Kappa Chakka Kandhari’, which could be the new normal for any food service outlet.
Sustainability: Though it has been fashionable for some time now, the impact of the lockdown restriction has already brought to the forefront the importance of climate and this awareness will further intensify the fight against climate change. Business will not have the option of not taking a side, it will be known as being either pro-climate or anti-climate. Brands will have to build a climate-caring image and that will help to drive customer loyalty. Millennials are already old school, Generation Z are known already, it is the time of Generation Alpha, which is going to drive the success of any business in the future. Now think of Greta Thunberg as your customer; she is not coming to your store anytime soon, especially with your present working model and customer perception. The food service business will, therefore, need to move fast on the 3Es (Environmental, Economical and Ethical) of sustainability and it should be the core of their strategy in the future.
Traceability: The engagement with farmers, which no food services operator calls out today, could be a new normal tomorrow. Even the face of farmer, with his sustainable organic farming method, will be shared by specialty restaurants to inspire trust and confidence in their customers for the fruits and vegetables that they are eating in their restaurant meal. Take the case of Madhu Chandan, farmer and founder of ‘Organic Mandya’, who has started free organic farming training for Ola/ Uber drivers, and suppliers & cleaners for restaurants and bars, delivery boys for Amazon, Flipkart and Dominos as many of them come from villages in and around Bangalore and they also own some agriculture land. The endeavor is to train the youngsters in organic farming practices, in the value addition of agri produce, processing, packaging, branding and direct marketing to customers.
Zero Wastage: Practising it can ensure that the produce is sufficient for everyone. Zero wastage practice has been sincerely followed by many establishments and countries even during the BC phase but the ongoing pandemic has managed to raise a lot of awareness about it amongst the masses.
Foraging: It is a unique method of gathering food which if done correctly actually increases biodiversity and creates the right habitat for countless species. It is especially relevant for our times when the current food system is alarmingly homogenous. About 95 percent of the food that humans eat comes from 30 plant species out of the 80,000 edible plant species in the world. This means that over 99 percent of edible plant species are drastically under-utilized. More than half of our food derives from four plant species: rice, maize, wheat, and potato. A deeper study and research for the same can also be useful in expanding our understanding of new food sources.
Cleanliness and Hygiene: This back-of-the-house activity was always treated as a cost center. Ask any business operator or hotel housekeeper and the only measure of cleanliness and hygiene they were asked about was how much less spending and expense shrinking could be achieved on this front. But, in the past few weeks, cleanliness and hygiene as part of the operations has been catapulted to the forefront and the department has undergone a massive change. Marriott International, the largest chain of hotels in the world, has launched a new internal platform ‘Global Cleanliness Council’ to promote hotel cleanliness. Ray Bennett, Chief Global Officer, Global Operations, chairs the council with the mandate to benefit from the knowledge and inputs from both internal and external experts.
Arne Sorenson, President & Chief Executive officer, Marriott International, said: “We want our guest to understand what we are doing today and planning for near future in the areas of cleanliness, hygiene and social distancing so that when they walk through the doors of one of our hotels, they know our commitment to their health and safety is our priority”.
For cleanliness and hygiene to be front and centre of your operations, certain protocols and procedure have to be acted on:
a. Establishments have to provide hand sanitizer for guests to use, including contactless hand sanitizing stations, and post signs reminding guests about social distancing.
b. Establishments should not allow guests to congregate in the waiting areas or bar areas or trail rooms. A new design has to be in place to make sure that it provides guests and customers the space to maintain social distance whilst waiting. The process can include floor markings, outdoor distancing and waiting in cars.
c. Establishments should consider an exit from the facility separate from the entrance. They should determine ingress/egress to and from restrooms to establish paths that mitigate proximity for guests and staff.
d. The establishments should provide dedicated stations for different type and volumes of work, so that employees do not have to group together to do their jobs. Where six feet of separation is not possible, one should consider options like using face-covering gears and increase the frequency of surface cleaning and sanitizing.
The butterfly effect of COVID-19 is visible across the food retail industry, from Facebook and Reliance tying up for world’s largest e-commerce platform in the world to the social transformation of cleanliness and hygiene becoming the core of largest hotel chain. Borrowing from the famous Bollywood dialogue, “picture abhi baaki hai mere dost”, the answer each business leader need today is: Should it be the “Jeff Bezos for its Amazon” or wait for “apna time ayega”.