Hospitality in Australia Emerging from under the Pandemic Restrictions

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Hospitality in Australia Emerging from under the Pandemic Restrictions

Staying positive, finding the silver lining & planning for the ‘next normal’.

The ‘new normal’ is the recent catch phrase widely used for our emergence from the Pandemic restrictions, but we have taken the view that this is inadequate, as it will be quickly be replaced by another ‘new normal’ as conditions change. A more apt description for rapidly changing near future is the ‘next normal’ and the next and the next.   

What is abundantly clear now, in the coming months and, yes, years, is that the words we use and actions we take need to focus our attention on what is possible and not what was. Very few hospitality businesses will be able to genuinely pick up where they left off and many will not return but for those that remain, now is the time to stay positive and maximise planning to reengage with employees, suppliers and customers searching for the silver lining to the challenges that we face. For hospitality, it is rare time – minimal to no operational distraction – only clear air to strengthen the business of food and use this time to build a new future heading into the ‘next normal’.

Charlie Carrington pivoted to delivery home meal box but tied in video master class

From a business interruption standpoint, there are many elements to consider as each individual F&B business seeks to fire back up from ground zero or from their current pivot point as national and state restrictions are eased in stages over an unknown period of time with as yet an unknown set of operating restrictions. The challenges that will need to be considered as planning continues include:

• Continued restrictions on social distancing (for an undetermined period of time), which translates to less seating for those that have it

• A significantly higher unemployment rate, fewer potential customers

• Changed consumer spending patterns, with potentially less disposable income

• Marketing/communications reaching existing and new potential customers with messaging and/or offers that cut through and turn into sales, in what will be a crowded re-launch 

• No international in-bound travel therefore no spending from international travellers

• Reduced international casual labour workforce

• Decreased food and equipment imports from other countries, which are typically less expensive goods to purchase

• Tightened financial lending practices, reducing availability of investment funds

• Potential tighter trading terms from suppliers who are also cash poor 

• Minimal to no reduction in fixed costs on the horizon – rent, utilities, etc 

With that said, there is a strong case for a calculated rebound for hospitality in general, where every restaurant, café, QSR, bar/pub, hotel and club will have a unique target market pre-COVID-19 that will need to be assessed in light of the above to reinvent and reimage their food, beverage and service offer to meet the post-COVID-19 ‘next normal’ target market.

Within an Australia context, before the pandemic there was a reasonably high failure rate in hospitality with an equally quiet, if unsaid, acknowledgement many businesses already ran on thin margins. But there was always a new F&B operator waiting in the wings to pick up where one business left off and for a good concept, with authentic food and service there were customers waiting to queue up for the next new thing. While times have now changed, here is where the ‘silver lining’ for the hospitality industry is most likely to come from.

The Competition

Under a good news/bad news scenario, there will be less competition in hospitality when restrictions are eased with many businesses not able to reopen under the strain on financial losses. Some of the F&B businesses that do reopen will quickly find themselves not able to recapture there previous trade, having not adjusted their business model to meet new conditions. For those F&B operators remaining, the silver lining is capturing a greater market share of what is now available from the new market potential.

Customer Communications

For a very rare time, there is ‘clear air’ from a marketing communications perspective for hospitality operators to reach their customers, the ‘next normal’ target market with messaging on their revised food, beverage and service offer. Messaging will need to be concise, clear and have a hook or provide a call to action that will translate directly into sales – no time for convoluted or mixed messages. Start the marketing communications early – begin the teaser trailers – but don’t forget to deliver on quality! With customers harder to find and harder to keep, a customer loyalty program will be important for driving repeat business and can provide a genuine point of difference with the right offer(s).

Self Service Kiosks Reducing face to face interactions and creating a safe ordering environment.

(Image via Andrew Boskovich)

The customer – ‘next normal’ target market

There will be an opportunity to attract new customers or customer segments and there is no doubt there will be pent up customer demand for those that can harness their operational capability to meet the initial surge and then develop a plan to keep those customers coming back. The only caveat is that each customer segment will have changed priorities and be less willing to part with their disposable income and therefore may not return in the same volume or with the same spend pattern. During this time, prior to resuming the next normal each F&B business will need to identify the likely changes to their existing customer segments and look to attract new ones, adjusting the F&B offer accordingly.

Ben Shewry's (Attica Restaurant, Melbourne) takeaway lasagne, salad and pull-apart garlic bread.

Stick to the knitting – less options, authentic quality food

While ultimately each F&B operator has always had the right to modify their F&B offer at any time, competition, consumer expectations, franchisor and tenancy restrictions have often necessitated a wider less authentic menu mix. With the current economic conditions, there is acceptance that a wider latitude to review and consolidate the menu options is essential for survival in the long term, which will assist in creating an efficient and profitable menu mix. However, consumer sentiment is also likely to be unforgiving if authenticity and quality of food are lacking along with a perception of value for money at any price point.

Buying Local is the ‘next normal’

Restrictions have meant that customers have dived deeper into their local neighbourhood with F&B operators that have pivoted and in so doing have reconnected with local operators, bonding in unprecedented times creating a level of trust and familiarity. Showcasing local goods as a point of difference has led to a greater appreciation and respect for food with a focus on quality product, provenance and supporting local not only over other suburbs but also taking advantage of an increased supply of export quality Australian produce that can’t be sold through normal channels. The opportunity now is to weave this compelling story into the fabric of the operation, celebrate local, promote local and continue to buy local.

Building a loyal workforce

With the reduction in competition, will come a wider and deeper labour pool with greater flexibility and availability, as even highly regarded F&B operations will not be able to retain all of their staff based on reduced seating capacity, reduced hours of operation and potentially reduced operational days, in addition to the uncertainty around average spend potential. The opportunity is to not only reemploy and find new high performers but also build genuine relationships with staff before reopening to drive and instil a genuine sense of hospitality that will translate into the F&B service and customer experience. This will drive a renewed sense of loyalty from the staff to the operator, creating a more consistent and enviable service culture.   

Creative Covid-19 Restaurant Dining Solution in the Netherlands
(Image via Twitter)

Emphasise the creative and genuine hospitality experience

With a prohibition on genuine ‘inhouse’ hospitality experiences, F&B operators that can craft and deliver a creative, genuine and seamless experience for their customers from the start through an in-depth dig into the characteristics of their customers’ needs will return with a stronger revenue base and build a loyal following that will want to engage more often because they recognise, appreciate and will reward that customer focus with their ‘next normal’ disposable income.

The Business of Food

Ultimately, the opportunity to re-evaluate the F&B business structure from the ground up is the greatest silver lining for those that want to remain successful or strive for greater success. Starting up with a clear and highly adaptable strategy, reshaping the F&B business with the new revenue streams garnered from pivoting, while staying focused on the original core revenue driven through the food – authenticity of flavours, freshness, texture and presentation – will create the ‘next normal’ sustainable business model. Increased online ordering, delivery and takeaway are here to stay. Accelerating and further developing online sales and promotional channels will allow for continued diversification of F&B services and focus on the customer segments that will continue to avoid in person experiences and future proof the business against further ‘bricks and mortar’ business interruptions.

Future Food is working with small and large food and hospitality businesses across Australia during these challenging times and is dedicated to finding the silver lining for all our clients, remaining positive and adapting best practice solutions to each F&B business to prepare for the ‘next normal’ hospitality trading environment.

Henry Sugar wine bar and restaurant Carlton – cook your own

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Cover Image: Social distancing seating rules (Image via Building.co.uk)