The unexpected COVID-19 call and how F&B responded

They say change is inevitable, and the whirlwind arrival of COVID-19 proved once again that humans can’t are no exception to this universal decree.

Before the coronavirus, some of the key factors that were driving the F&B industry included higher disposable income, the buzz of experience economy among Millennials and Gen Z, and the increased use of technology in all areas of hospitality.

As the effects of COVID-19 are felt around the globe, consumer products food & beverage companies have taken asignificant hit in terms of consumption as well as disrupted supply chains.

Cooking at home has increased, but out-of-home consumption – which historically generates the highest margin – has come to nearly a standstill.

According to a survey report from Hunter, a food and beverage marketing agency, 54% of Americans now do more cooking than they did previously, while 35% say they enjoy it more.This has led to 32% of organizations are replacing full-time employees with contingent workers as a cost-saving measure (as per a study done by Gartner). While the short-term effects of this public health crisis on the restaurant industry are clear — with unemployment soaring and restaurants being forced to shut down — the long-term effects are less so.

As they also say necessity is the mother of invention,restaurants globally have spun to embrace new ways of providing services. These include contactless methods of reservations and payment, ordering meals ahead of arrival, outdoor dining spaces, and others.

Here’s how many of them have responded –
A surge in contactless delivery options

Since most authorities are prohibiting food and beverage outlets from opening fully to serve incoming guests, contactless food delivery options have gained momentum.42% of restaurants in the US opted delivery options and 31% said they planned to continue to invest in the service, according to research by Rewards Network.

Not only does this type of service enables customers to avoid in-person contact, but it also offers greater convenience, i.e. one doesn’t have to move a muscle, and still be able to support the local economy. This is effectively resulting in conversion from “dining in” to “dining out,” and causing restaurants and other F&B outlets to rethink their approach.

Some of the examples where delivery companies saw a surge in operations and revenue are –

DoorDash sales were up 110% since the beginning of the year, and it increased its market share to 47% from 42%. Furthermore, 70% plus returned to the platform for a second purchase

Grubhub welcomed more than25,000 restaurants partnering up with them since between May to August putting their total number of restaurant partners up to 225,000

Repurposing Premises

High-class kitchens and dining areas have seen some venues being repurposed innovatively to offer new ways of sitting (outdoors and indoors). Fine-dining restaurants that were previously focused on a remarkable dine-in experience for their guests, their goal now has changed to deliver a similar experience at their homes’ in the form of a take-out. Of course, paying critical attention to hygiene and safety from cooking, to packaging and delivering.

Reopened restaurants around the world with their respective social distancing measures in place and those with venues with outdoor facilities had to be adept and implement different levels of “safe” service for their customers. Servers are required to wear masks and/or face shields. Not to mention, always maintain a safe distance between themselves and their customers.

Some of the examples of the successful repurposing premises –

Texas Roadhouse in the USA is open for pickup and has temporarily repurposed its parking lot to function like a drive-thru/pickup area

Theodore’s, a family-run snack bar in Melbourne, Australia, become Ted’s Grocer, selling bread, coffee, deli goods and take-home meals

Dulcie’s bar in Sydney has taken full advantage of the loosened alcohol licensing restrictions by offering hand-made home-delivery cocktails and platters, an arsenal of “survival kits” and even to hire glassware and access the bar’s usual playlist!

Re-engineering menus and incorporating self-service

Online ordering through web-based menus has put some chains ahead of others in the race of adaptability. The reduced contact between servers and diners, not only does it put social distancing measures to practice but also streamlines the ordering process as well.

Payments are often contactless, and the cashiers are protected from any contact by plexiglass shields. Salad outlets have been seeing maximizing the ‘self-service’ aspect through implementing robotics and technology such as automated weighing and salad making inventions that can make 1,000 different types of salad in 60 seconds.

Some of successful AI implementations are –

Eatsa, a Silicon Valley-based chain of quinoa-only restaurants, uses iPads in place of cashiers and servers and pops out food orders from a wall of high-tech cubbies

McDonalds, which plans to spend more than $50,000 to install self-ordering kiosks and launch improved mobile app ordering and payment options at 20,000 restaurants

Fanuc in Japan uses robots to cook and serve four types of noodle bowls in 90 seconds, which sell for the high price of $10 each

The Wall-E restaurant in China’s Hefei Anhui province has a robotic workforce of 30 4-foot high units that take orders, cook, bake and serve by moving along tracks in the restaurant

So, how does the future look as F&B evolves into the new normal? What will guests and locals want from restaurants, bars, and events?

Though restaurants seem to struggle to predict future customer-flow, staffing requirements, and the cost of newly-minted sanitization protocols, they are ensuring the safety of both staff and customers. Restaurants are responding positively by retraining of staff will include how to avoid physical contact, maintaining the required levels of supplies of sanitizers and other hygiene-related products within the premises, and how to respond to a positive COVID-19 result on the premises.

Furthermore, many restaurants are redesigning their menu with pre-packaged, grab-and-go meals, and home deliveries as their main forms of foodservice.

Restaurants, bars, and lounges are likely to reopen with limited capacity to ensure social distancing. There’s no question that COVID-19 has changed our world forever. The F&B industry is responding rather innovatively by rethinking every aspect of F&B operations, from floor layouts to menu offerings, while also taking environmental impact and corporate culture into account. One thing’s for certain-we’re in for a challenging ride.

Albert Finch

Head of Research
Rodschinson Investment Strategic Research Center