How food and hospitality can flourish in the next normal

How food and hospitality can flourish in the next normal

Retail Relationships Rewarding Foodies

As we witness the gradual relaxing of restrictions placed on food operators state by state and an uncertain return to trading, one thing is certain – the Food & Hospitality will inevitably recover. In fact, the latest credit card data from both the ANZ and CBA shows that spending on F&B is coming up from its lows.

People are social creatures by nature, with hospitality ingrained in our way of life - albeit it to differing degrees from person to person granted!  Moreover, there is still a considerable amount of latent demand: Pre-COVID levels of demand for F&B were not a fad as consumers’ interaction with Hospitality is a practice that has been building over the last two decades.

This is seen in several recent surveys.  One of the more detailed ones was commissioned by the British hospitality chain Brasserie Bar Co.  The key results are shown below.

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The survey results show unambiguously that the vast majority of people want to go back to F&B outlets.  It also reports that many people are ready and willing to go back when the restrictions are lifted.  However, the survey also highlights that many people are cautious about returning to cafés, restaurants and food courts.  Winning back these customers will take time and will be dependent, to a large degree, on how well food operators have looked after the customers during lockdown.

How customers want to connect with friends in an F&B environment will dictate how food operators will need to connect with customers. The Botanical Hotel in South Yarra, Melbourne (pictured here) is an example of great hospitality married with good hygiene practice.

The venue shows that the best way forward is to adhere to the philosophy of “Go Safe, Go Slow, Go Smart”.  This is especially true for shopping centre food courts as they have a significant challenge in front of them.  This is illustrated in the tables and graphics below.

The first one is from Roy Morgan who have partnered with UberMedia to track mobile devices and estimate the change in footfall at various shopping centres and destinations in Sydney and Melbourne.  The data compares the footfall for the week of May 27 to the average for January/February 2020.

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In Melbourne, the key shopping centres have seen approximately a -40% decline in footfall while the CBD has witnessed a fall of almost two-thirds of the normal number of people.

In Sydney, the results are much the same as with Melbourne.  CBD and iconic tourist areas have suffered significant loss of footfall, while malls are down only 30 - 40%

Standalone supermarkets such as Costco Lidcombe and Coles Williamstown have seen little or no declines in footfall.

The second table highlights the latest data for the month of April from the ABS on the trading of Takeaway outlets and Café/Restaurants.  Overall these businesses have seen significant falls in revenue from March.  Future Food has then estimated how the shopping centre tenants in each category have fared. 

Due to the closure of the food courts and the difficulty for many food operators to work with pick-ups and delivery, shopping centre outlets overall have not held up as well as their High Street counterparts.

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What do we do not in this next normal?

Hospitality is both a science and an art that has customer service and experience at its core. Adaptation to and agility of hospitality business within a Next Normal the post COVID-19 era, will be a customer focused imperative for both the food operator and the landlord.  

Research has shown that the degree of negative impact to revenue has been dependent upon a variety of factors. A food operator’s mix of the following prior to the onset of COVID-19 restrictions has contributed viability and potentially the business’s ability to recover:

• Mix of Off-Premise v On-Premise sales

• Reliance on Day Part/occasional business

• Proximity to densely populated regions

• Level of digital sophistication

• Role of value in product mix

Chris Lucas, the proprietor of such outstanding venues such as Chin Chin, Hawker Hall and Kisume, is an entrepreneur who is at the forefront of making the Next Normal a reality.  In a recent article in the AFR he said, "We've been pushed to the edge of the cliff, we've seen our business life flash before us and I think that experience is going to reset the bar."  He goes on to say that, "The era of the self-obsessed, insular, Instagram- and influencer-focused business is dead. It's all over.  It won't be about the chef's ego or the sommelier's ego anymore; we won't hear so much about the chef's 'philosophy' or the 'narrative'. We're getting rid of all that bullshit. Our venues are going to be totally focused on hospitality."

Another leading F&B voice is chef Adam Liaw.  He has recently written that, “[Restaurants] spent so many years cultivating relationships with producers, making delicious stocks and sauces, building brands and expertise only to have their ability to monetise it bottlenecked at the number of seats they can fit in a dining room. That seems like such an old-fashioned business model now.”  He foresees that outlets will evolve into a multi-channel format so that customers can engage with restaurants for meals and produce online, through delivery and through takeaway.

Showing the way

The Botanical Hotel in South Yarra, Melbourne has worked tirelessly and effectively to keep and strengthen its relationship with their customers.

Joe Vargetto, the chef and owner of Melbourne’s Mister Bianco and Massi, has worked hard during the shutdown to survive, so that he could then thrive.  This is now paying off.  During the lockdown he was selling produce from the back of a truck and delivering lasagnes from a Mini. Gemima Cody, the reviewer for The Age, reports that “as soon as reopening was announced the phones were unmanageable, and they had to shut off online reservations to cope.” Vargetto says "we could have served people a thousand times over."

Fine dining outlets have also been hard at work laying the ground work for their return.  Ben Shewry has turned Attica into a take-home emporium with dining kits and merchandise sales. The three-hat restaurant Brae, also started up produce and baking operations that kept its connections with suppliers and consumers going so that it can reopen on June 25.  Rene Redzepi has turned his ground breaking Copenhagen restaurant Noma into an outdoor burger joint, with a return to more normal service to follow at a suitable time.

The Way Forward 

Go Safe, Go Slow, Go Smart 

Make sure you welcome your customer back!  Give them the best experience you can. Invest in updated and agile marketing and communication campaigns, promoting customer confidence in the food & hospitality safety and capability of your venue or precinct. Wherever possible make the customer transaction easy and risk reduced. Go Safe and ensure you Show Safe.

Loyalty to Locals Leads to Longevity

Double-down on delivery and pick up in store capability. While we can expect attrition from the current peak of click and collect, the growth of this channel to customer should remain part of a customer focussed service offer.  Concentrate on the locals as international and some domestic travel will be restricted for the foreseeable future.

Capture Common Spaces for Capacity

Capability of operators and precincts needs to be maximised. Work together to utilise common use spaces for additional seating – consider making seating pockets in food courts – or open up new zones (eg rooftop), to improve dining capacity.

Analyse All Areas

Strategy analysis is essential to ensure your business is aligned to a changed set of customer wants and demands. Identify critical risk and customer service friction points.

Prior Preparation Prevents Poor Performance

Do not underestimate the task of getting a venue up and running again.  Justin Hemmes of the Merivale Group has said that it is not a re-opening, but rather an opening.  Everything must be learned from grass roots:  Staff, training and systems will not be able to just pick up where they left off over two months ago.  Justin emphasises that venues need to plan their opening and their next phases now.

Less is More, More or Less

Invest in improved operational efficiencies like streamlining your menu or food service plan, placing the focus on protecting profit while satisfying customers. New design of your venue or precinct needs to be considered. Maximise operational efficiencies and safety for staff and customers through design and layout rethinking that isn’t necessarily expensive.

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Cover Image via Good Food