Good Luck Hot Pot Restaurant Empty due to the effects of the Coronaviris. (Image via Good Food)

Improving the sustainability of your restaurant during challenging times

– a lesson for everyday trading.

The sustainability of any restaurant or F&B business is always dependant on meeting the needs of the intended target market and remaining relevant to those customer segments with authentic food and a range of promotions, offers and experiences that encourage repeat patronage. Although COVID-19 virus is extreme business interruption and thankfully not an everyday event, it does demonstrate how an external event can devastate a business or sector of hospitality reliant on a narrow target market focus. The everyday trading lesson is for restauranteurs and F&B operators to boost the sustainability of the business with active, customised and well communicated promotions, offers and experiences, expanding the target market base to create a more sustainable revenue base.

With the effects of the Coronavirus (COVID-19) still being felt around the world and no immediate signs of easing within coming weeks, the hospitality industry in Australia has not been immune to the debilitating effect of a major worldwide disruption to business as usual (BAU), none more so evident than restaurants and F&B operators catering to the international Chinese tourist, with tourism spending worldwide of $277 billion in 2018 (https://www.statista.com/).

Recent evidence on the effects of COVID-19 has been seen in venues old and new. Melbourne institution Shark Fin House closed after customer numbers fell by 80%. The newly opened and very popular Panda Hot Pot in Melbourne has dropped its lunch service and laid off workers because covers have fallen from 400 per day to 120. In London on a recent Saturday night, Chinatown was a ghost town by 9pm.

Restaurants reaction due to Coronavirus.(Image via News.qq) — Restaurants reaction due to Coronavirus.
(Image via News.qq)

This significant downturn in trade is only the start of the equation with, as mentioned above, the further knock on effect of scaling back operating hours, laying off employees, significant reduction in purchasing food and beverages from local suppliers and temporary and permanent restaurant closures painting a bleak outlook in the short term. While this severe interruption to BAU is at the extreme range of what can happen to a restaurant business it is not unprecedented and only an example of external market forces that are constantly at play in the F&B retail trading environment.

Everyday examples of market forces that may not receive much public fanfare but directly impact the trading environment are: new mixed use developments with F&B precincts; shopping centre revitalisations adding multi-level F&B clusters; marquee restaurant openings; local community/council developments revitalising public spaces; changes in consumer speeding due to economic downturns (ie GFC); and of course direct competitors opening in the immediate trade area.

The question for every restaurateur and food operator in Australia is: What am I doing every day to make my business more sustainable and immune (or partially immune) to market forces? Some hospitality business are founded on taking advantage of a niche opportunity or a specific target market and are therefore more exposed to changes in the trading environment. Others are founded on a wide market appeal that potentially buffers their business against short term fluctuations in the marketplace.

The reality for any F&B operator is that complacency in how you attract and communicate to your target market, and segments within, cannot be taken for granted. Most often it is a slow decline in turnover, not an obvious extreme event like COVID-19, that highlights the lack of compelling promotions/offers and minimal communication channels. With a crowded and competitive retail F&B landscape (and always more coming on-line) the core food offer has to be of good quality for the price point - value for money for the target market.

Communicating value and creating a range of customised, compelling offers that drive uptake, create awareness and greater repeat patronage are key messages that form the basis for meaningful marketing. Too often these core activities are not a source of continual investment of time and effort with many venues relying too much, or exclusively, on past reputation or achievements. However, standing still in a marketplace that is continuously moving on to the next is not a recipe for a sustainable operation.

While the resources required to continuously promote and differentiate the food offer in the marketplace may depend on the relative size of the business, getting the basics right can be achieved by most operators with minimal effort. A short list of activities that every F&B outlet should be undertaking include:

1. A range of compelling offers/promotions or experiences customised to segments of the target market

Meal deals
Bundle
New to market offers
Special theme nights
Collaborations with suppliers (i.e. food matching with gin/wine/beer)

2. Utilising a variety of communication channels to push the message to the target market

The key takeaway for F&B operators is to grow their knowledge into this space and upskill where required to imbed best practice behaviour within their business and create more avenues for growing turnover.

It is not necessary to do everything. It is necessary to do something. In the first instance, defining a clear and sustainable target market and breaking that down into specific segments or customer profiles will help identify the specific needs to be ‘fulfilled’ and is the starting point for crafting a tailored food offer, promotion or new experience.

In terms of communication of the customised offer, most food business cannot afford to “advertise” using mass market communication channels like TV, radio and print media (newspapers, magazines etc) to push their message far and wide. However, neither does the target market require this level of communication. A more practical approach to communication is to understand the modern customer journey, which typically begins online before moving into the instore bricks and mortar experience:

The first basic step is conveying the F&B offer via a compelling online presence – having the right information at the customers fingertips is critical.
Then make sure that your well thought out website has been optimised for mobile devices for easy and quick navigation to menus and online booking APPs
Engaging in social media and building a cohesive presence (Facebook, Twitter, Instagram etc).
Create a digital set of promotions that can be pushed out via the communication channels and social media
Ensure that you have optimisation of search engines so that people can always find you on third party websites (Zomato, Trip Advisor etc), delivery platforms (if desired) and booking services so that the messaging is consistent and supportive of the food and beverage offer.

We recognise that none of these activities are ‘guaranteed’ to provide a sustainable and healthy business but by taking the time to review your business – a health check – the gaps and opportunities can be highlighted, and reasonable actions can be taken to expand the target market. What we can say with certainly is that without focusing externally on expanding the customer base, you won’t have a sustainable number of customers inside the restaurant to weather any storm.

Cover Image: Target Market Selection (Image via Pretty Links)

Improving the Sustainability of Your Restaurant During Challenging Times

Improving the sustainability of your restaurant during challenging times

– a lesson for everyday trading.

Trends in food and hospitality covers many disciples, above are a few that we’re delighted to share with you. Please follow The Feed, our bi-weekly blog along with many other on-Trend communications shared by the team at Future Food.

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