If you’re in the restaurant business, you’re probably in a panic. The outbreak of COVID-19 is completely unprecedented and most of us are not prepared for how it will affect us, our families and our businesses. This is a true “black swan” event. As a result, there is no guidebook on how to deal with it, so be prepared for a lot of humility and trial and error…
Even though the outbreak has affected economies and industries on a global level, certain sectors, especially those that deal with the public, will be particularly hard hit, for example:
- Travel and tourism
Let’s look at restaurants in a little more detail – a sector that already has high overheads and low margins. Which means it’s highly susceptible to even small changes in market dynamics. How can restaurants look for new ways to trade when there is little to no demand for customers going out to eat? If you own a restaurant, you’ll need to think out of the box, pronto. Here are a few ideas you might want to take on board.
- Cooked food – your restaurant functions as is, albeit with fewer customers (because of social distancing) and via new delivery methods, such as pavement pick-up, third-party deliveries, or insourced delivery, whereby your staff deliver orders (and leave them at the gate).
- Frozen meals – most of your customers who were previously eating out will still have the same drive to do so, but not be able to. Providing frozen meals takes care of that need, but also allows order flexibility. These can be offered in different portion sizes, providing economies of scale in terms of production.
- Meal kits – cooking at home is daunting for the average person as there are too many decisions to be made. What to have, where to get ingredients, how to make it, what if it turns out bad, etc. Meal kits take care of all of that, and also provide the benefit of something for customers to do at home (when people are going to be spending large periods bored out of their minds).
- Create your own line of products for retail – if the word “Signature” or “Famous” is mentioned anywhere on your menu, listen up. Bottling a house sauce or offering your legendary banana bread for resale are ways that your customers can support your business, and enjoy a quality product that they love.
- Retail pantry staples – if you have a quality supply chain available to you, make use of it. For example, breakfast spots that go through dozens of eggs can switch to retailing free-range eggs to customers who are going to be doing more cooking at home than usual. This can be extended to include home-made pasta, sourdough loaves, coffee beans, or even wine (essential, of course).
- Private chef/catered dinner – there are going to be some depressing times ahead, and when times are dark, many look to food for comfort. Offer catered dinners or private chef services for households looking for a taste of your menu, celebrating a birthday, or just looking for a break from the ordinary.
- Create content – become more than just a supplier of food and utilise your culinary expertise. If you’re selling meal kits, create online cooking videos that take customers through the recipe that they’ve ordered. If you’re a coffee shop that’s switched to online supply, provide customers with a code they can use to access home barista lessons. These are super effective ways to widen your reach, build your community, and encourage customer engagement.
- Become a ‘cloud’ kitchen – perhaps your current menu doesn’t travel well, but you still have the facilities and expertise to conjure up something that does. This option can range from simple menu tweaks of your existing menu to make it more delivery friendly, to setting up a completely new virtual restaurant with its own menu. Think of it as being able to reach a previously untapped market using the same assets at your disposal.
- Offer quarantine care packages – these can be in the form of frozen meat/poultry/fish/wine (it’s a necessity, like we said) to last a household through 14 days, or even two meals per day for a guaranteed period of two weeks. Billing can be done upfront, or via vouchers or subscription payment models.
The other key element to manage during this time is customer communication – global airlines and hotel companies have been particularly good at this, by broadcasting the current status of operations, improvements in their health and safety protocol, and when to expect more news or updates. Customers appreciate the information and want to feel at ease knowing what’s being done and what precautionary measures are in place.
Lastly, treat this as a time when you can finally do those important things that you’ve put aside to do “one day”. Get your accounts up to date, make sure your financials are in order (critical to raise new capital), re-look at your internal systems and processes, or catch up on staff training. Treat this as the “slow season” and sharpen your knife so that you’re best positioned to recover strongly when the tide turns – and it will.
At YourCFO we are offering free consultations with hospitality and restaurant businesses to evaluate your current financial health. We’ll also help you explore new ideas with financial models to help strengthen your business during this tough time. Please reach out to Mo at Mo@yourcfo.co.za to set up an appointment today.