How Will Restaurants Survive In The Covid-19 Climate?

As the fear of the pandemic and social distancing norms continue to cripple businesses across industries, hospitality, restaurants, food courts, food trucks are among the worst hit. To survive in this harsh reality, restaurants and foodtech players need to look beyond customer loyalty, trust, employee retention and deep discounting.

In the recent episode of The Inc42 Show, ‘Rethinking The Business Of ‘Food’ In India Post Lockdown,’ Vaibhav Vardhan, cofounder and CEO of Inc42 Media, along with industry stakeholders like Ankit Mehrotra, cofounder and CEO, Dineout; Arjun Sagar Gupta, founder at The Piano Man Jazz Club; Rahul Singh, founder and CEO at The Beer Cafe; Nitin Saluja, founder at Chaayos and Ashish Tulsian, cofounder and CEO at POSist Technologies, discussed the ambiguity existing in the industry and how businesses need to get ready for the post-Covid-19 reality.

“Anyone who is thinking that dine-in has gone for a toss, let that thought be temporary because it is going to bounce back and it’s only a matter of time,” said Chaayos’s Nitin.

For instance, McDonald’s Beijing outlet started operation in April as China begins to ease the lockdown.

Nitin said that it is all about fear and people don’t really know what will happen when they go out. It is just the fear of the unknown. “Dine-in is going to come back, but keep it as omnichannel as possible,” he added, answering one of the questions related to the QSR model.

He added that this wasn’t the best time to start a new brand as it would require a lot of time, capital and most importantly garner trust and hygiene mindset of the customer.

Post-Covid-19 World, Trusted Brands Will Thrive  

Throwing light on trends, POSist’s Ashish said that ever since lockdown, he has seen brands that were trusted by customers over the years, have doubled their delivery business. “Of course, they are not earning any revenue from the dine-in business,” he clarified.

In other words, restaurants which were earning 30% from delivery business and 70% from dine-ins before the lockdown. These brands are now witnessing a higher ticket size of anywhere between 50% to 65% through online deliveries. Clearly, brands that were built on a lot of trust are actually thriving. “People in this business need to either cash out on customer’s trust or continuously invest in trust which they can build the brand upon,” said Ashish.

Adding to this, Dineout’s Ankit said that customers are trusting five-star brands instead of dark kitchen or cloud kitchen as there is no history or background in terms of who is running them, or whether they are following good hygiene practices.

“Surprisingly, for the first time ever, there is a premium on safety rather than cost, as customers are not caring about the cost or discount anymore and want everything to be safe and a lot of the established brands that are getting into the delivery business will do better,” he said.

Eventually, once restaurants are back in business, people will want to go to an environment where they feel safe and can see what is happening rather than ordering food online, he added.

Loyalty Vs Deep Discounting 

“Loyalty depends on whether your brand is trustworthy or not,” said The Beer Cafe’s Rahul. Citing NRAI’s ‘Rise For Restaurants’ programme, Rahul said that this allows customers to buy vouchers at discounted prices from the list of restaurants across India and redeem it in the future against dining bills.

This initiative was launched to support its members and their employees amid the pandemic. Some of the members include Barbeque Nation, Cafe Delhi Heights, Farzi Cafe, Monkey Bar, Olive Bar & Kitchen, Punjab Grill, The Beer Cafe and Zen among others.

“This is the time to pay wages. It is our only concern at this point in time for us,” said The Piano Man Jazz Club’s Arjun. He added that , a lot of people misconstrued the relationship between deep discounting and loyalty. “Deep discounting, very rarely leads to loyalty. It is the quality of the product which you build that will create loyalty.” he said.

Innovation In the Restaurant Business, Post-Covid-19 

“Innovation is the key. Today, a lot of people are talking about ‘contactless dining,’” said Ankit.

He said that this will not replace or eliminate human touch, but will actually reduce it. For instance, a physical menu can be made digital, where every customer can order food through phones. This, in a way, also saves a lot of time and cost in the restaurant supply chain. Similarly, cleanliness is very important and restaurants need to figure out a way to give confidence to the consumers by providing them the streaming option inside the kitchen, Ankit added.

“There is a whole slew of technology that is being worked upon and a lot of tech players are figuring out how to go forward and create an experience around it. There is a silver lining about the current situation, where something good is going to come out of it,” said Ankit.

Retaining Employees, Hygiene Standards Is Crucial

Speaking from a restaurant perspective, Arjun said that their primary concern has always been around how they can take care of their team’s health, hygiene and wages, along with customer’s safety. “One can not exist without the other, everyone in the premise has to be taken care of,” he said.

Commenting on tech and innovation, he said that there is a down side to these tech solutions — as we are reducing the requirement for manpower, we are also looking at reducing the number of people we are giving employment to. Also, we are thinking from a perspective that we are not going to fire a single person and are trying our best to retain 100% employees as they are not going to get jobs in the near future. “It is a fact, as everyone is going down size,” he said.

He believes that the more unemployment is created in the market, it will create more issues for the industry and economy. As a matter of fact, the hospitality and restaurant industry is one of the highest manpower industries and this could create an imbalance in the ecosystem. In 2017, the hospitality industry accounted for 313 Mn jobs worldwide, which translates to 9.9% of total employment and 20% of all global net jobs created in the past decade.

POSist’s Ashish, commenting on tech and innovation said that consumers are not going to look at live videos. However, they will be interested in the strandisation, which talks about hygiene and best practices followed by restaurants. “Similar to how they look at five start restaurants, today, this is going to happen sooner than we expected,” he said.

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Written by Amit Raja Naik


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