This is the concluding part on the restaurant business in Bhubaneswar. Having highlighted the reasons behind failures in restaurant business in the city in the first part, we will now look into the strategy restaurants can adopt in the next normal.
COVID-19 has not only been a devastating public health crisis, it has also been the restaurant industry’s greatest challenge till date. Many restaurants have been forced to cease operations, some of which will never see the light of day again.
However, restaurants that plan ahead to adapt and refine their model for the next normal can be in a better position to jump back. COVID-19’s economic toll on the restaurant industry hasn’t been evenly distributed. Whereas QSR (quick service restaurants) chains have maintained or increased sales during the pandemic, casual-dining and fine-dining restaurants have seen their revenues decline by as much as 85%. For some fine-dining establishments, revenues fell to zero.
Restaurants with high off-premise sales prior to the crisis are faring better than those that relied more on dine-in sales. As many people are working from home, restaurants that generated much of their business from daytime eating have been disproportionately affected.
Strong online-ordering presence, digital loyalty programmes and robust customer-relationship-management (CRM) systems have been the lifelines for restaurants during this crisis, as digital engagement among consumers has soared.
Consumer perception of value and prevalence of deals have buoyed some restaurants’ sales during the crisis. Those customers who suffered financial losses and fearing continuing financial insecurity are looking for ways to save money.
Although much remains uncertain about the pandemic’s effects, hopes of a quick economic recovery are fading. But still there is always light at the end of the tunnel.
The first move for all restaurateurs should be to stabilise the business.
In the recovery period, top priorities should include updating operational procedures, reactivating customers to bring them back into restaurant dining rooms, adjusting menus to address shifts in customer habits and preferences and enhancing the delivery capabilities.
Update operating procedures
As the state is easing restrictions on food businesses, proactively create a safe environment in the outlet. In other words, simultaneously ‘go safe’ and ‘show safe’. Ensure that new hygiene and safety protocols are highly visible throughout the restaurant, especially to the customers. In addition, adjust processes to improve labour efficiency to align with customer expectations. An important part of restarting dine-in service will be bringing back furloughed staff in a way that matches the restaurant’s new needs with employees’ skills.
Reactivate yourself and customers
Over the past several weeks, customers have become accustomed to cooking at home and ordering online — behaviours that are likely to have some ‘stickiness’, post the pandemic.
Encourage customers to return to on-premise dining by sending them personalized messages with critical information — when your restaurants will be open and why they can be confident that it’s safe to come in.
Some loyal customers may have shifted their spending entirely to your competitors during the pandemic, or made all their meals at home. Effective marketing levers for this segment could include loyalty-driven price promotions and just-in-time offers featuring the most popular items and personalized favourites.
Make sure your digital presence is consistent across platforms. For example, the menu should match the menu on any food-delivery aggregators that these customers may have used during the shelter-in-place period, and should highlight the same family meals they ordered during that time.
This is an ideal time to re-evaluate your spending mix with a marketing-return-on-investment (MROI) simulator, which helps determine how to invest marketing budget across email, social media, search, apps, local mass media and other channels.
Strategising the business for next normal
Instead of simply reverting to business as usual, seize the opportunity to innovate in the next normal. Priorities should include rethinking restaurant design, reinventing the menu, assessing the store footprint, and digitizing the customer experience.
Reinvent
To achieve post-COVID growth, most restaurants will need a redesign. Think about whether to change your restaurants’ physical layout to benefit from the shift to off-premise dining – food pickup and QSR.
Consider investing in advanced analytics and automation, both to drive efficiencies and enable contactless services. Advanced analytics can improve the ability to accurately forecast daily consumer demand and changes in consumers’ eating habits. Labour automation can increase productivity of restaurant processes as well as provide contactless solutions that address consumers’ health concerns.
Re-engineer the menu
Menu reinvention can be one of the most powerful tools to change a restaurant’s long-term performance trajectory. As consumer behaviour and sentiment continue to evolve, adapt your menu accordingly. Closely monitor emerging food trends, such as “clean” food, paleo diets, plant-based protein, and others. Introduce menu items to capitalize on these trends, price those items competitively, and market them to consumers.
Self analyse
Evaluate the store footprint and make tough decisions about entering or exiting certain geographies or shifting your strategies at a local level (for example, converting a restaurant to delivery/pickup or cloud only). Do real-time internal and external data assessment and field observations to assess the health of specific locations, then decide whether to enter, expand in, or exit the market?
Customer engagement
As mentioned, a shift toward off-premise dining options and physical-distancing behaviours will fade. The digital customer experience will be critical to retaining current customers and capturing next-generation loyalty, and the best way to enhance the digital experience is through deep personalization. Engage customers with personalized offers across multiple digital channels; use customer data to make decisions about merchandising, pricing, and promotions.
The restaurant industry has faced severe challenges during the pandemic, including sharp decline in revenue, tremendous labour losses as well as some permanent closures. However, at some point, dining in restaurants will once again be a pleasure that people will enjoy. The actions that restaurant operators take now will go a long way towards preserving their business through the crisis and equipping their restaurants to serve customers, not just during but also after the recovery.
