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The future of the restaurant industry in the post-Covid-19 world - Outlook
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Tuesday, 25 August, 2020, 14 : 00 PM [IST]
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Chef Amit Puri
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The onset of the new year 2020 marked the beginning of a new decade with businesses and individuals across the world yearning to overcome their past dissipations and to start the new year and decade afresh! The fate did not come well, however, as Covid-19 strong-armed the global economy by claiming unimagined scores of lives in the world-over within the first quarter of the year.
Limping almost all the sectors to plummet dramatically in their annual performance, one of the hardest-hit sectors in India is the restaurant industry. As the National Restaurant Association of India (NRAI) rightly stated, the restaurant industry with an annual turnover of approximately Rs 4 lakh crore and providing direct employment to over 7 million Indians is in a very precarious situation currently, fighting a grim battle for its basic survival.
The challenges are manifold given that the industry’s business model is such that the proportion of fixed operating expenses is very high hence translating to a very high-risk model. Understanding the challenges in a systemic manner is crucial to learn in a bid to come back with fool-proof plans to ride out the current crisis.
• Immediate Revenue Loss: NRAI in a study pegged the estimated loss that the Indian restaurant industry could bear at a staggering US$9 billion for the year. Disseminating this hints at a possible forced shut down of the whole nation’s restaurants for a quarter. The revenue loss ravaged over the last few months into the nationwide lockdown followed by varied state-wide lockdowns that are continuing even till date.
• Massive Loss of Jobs: As the pandemic and the pandemic-induced nationwide lockdown insinuated citizens to only hoard essentials, demand for recreational and non-essential goods & services, in turn, saw a downfall. The people’s industry – hospitality, with minimum to no guests to welcome had no option but to be left battered in the midst of this pandemic. As a result of which, a lot of restaurants had to take the staff-reduction path.
• Pay cuts: With drying cash reserves and no hope of revenues climbing anytime soon, restaurants also had to initiate pay cuts for its employees.
• Manpower shortage: As a majority of the restaurant segment in India employed migrant workers, the outbreak of Covid-19 sparked an exodus of these workers to their home states. The pandemic stirred uncertainty hence compelling migrants to move back to their families, especially outstations. This led to the manpower shortage in restaurants, causing further havoc in the cash-strapped industry.
Future of the Restaurant Industry
The world we are living in is constantly changing. People have been talking about instances and occurrences while inadvertently distinguishing them in pre-Covid and post-Covid times. The Covid-19 pandemic has certainly whipped up new norms for the world to get back on track. Like other industries, although the changes demanded in the new normal seem to be difficult to fathom, the restaurant industry too will have to bring in calculated changes to mitigate the ongoing crisis.
• Hygiene and Sanitisation: The pandemic has instilled fear amongst people. The fear of getting infected and spreading it further to their loved ones has disregarded many from dining out. Restaurants will have to reassure that they are maintaining high standards of hygiene and sanitisation. Demonstrating and mandating hygiene protocols for the staff must be within the rulebook of operations. Sanitising high-touch surfaces within the restaurant at frequent intervals with state-of-the-art cleaning equipment and hospital-grade disinfectants and strictly following social distancing norms must also be a daily norm.
• Implementation of Technology: Technology and its diverse application possibilities are sacrosanct for the restaurant industry as well to mitigate the fear in the patron’s mind from dining out. Restaurants must introduce a digital/ disposable menu and app-based ordering system to decrease human intervention wherever possible. An in-app live streaming feature could also allow the patron to watch their food being cooked in real-time while the chefs adhere to high safety and hygiene standards. Digital payments should be further promoted to drive out human touch during exchanging money.
• Change in Workforce: In the post-Covid-19 world as well, the employment scenario will remain uncertain. The workforce is expected to get smaller as the dependence on human resources is likely to reduce with the introduction of self-service formats. With the changing times, the workforce will be expected to hone multiple skills hence adding value to the smooth functioning of the eatery. There will be more pressure on the employees to become smarter, efficient and to exhibit their talent.
• Reducing Costs: While buffets would be missing in action for quite some time, relying on pre-plated dishes and using ingredients mindfully hence reducing wastage will further allow the chefs to decrease the costs effectively.
• Revisiting Menu and Pricing: Menu will be re-launched. The new ones will be shorter, digitised and would emphasise on immunity-boosting, local and seasonal dishes. It is also expected to become dynamic in terms of pricing, basis the demand for the dishes on offer.
• New Streams of Revenue: It is expected that with the changes in the industry, the streams of revenue are also predicted to undergo alterations. This will come in the form of new combos, DIY meal kits, and caterings services to homes and offices. Restaurants will also introduce more of signature sauces, spices and dips as their retail proprietary products. A collaborative culture might also be witnessed where restaurants, industry chefs, bartenders and vendors will collaborate for a better community.
• Better Financial Management: The industry will pay due attention to streamlining invariable costs. Renegotiation on spending on real estate and rentals would be quite evident. Ways to efficiently increase restaurant table turnover to serve more people in the given operational hours and limited seating capacity will be looked at diligently.
As the pandemic still exudes its grip over the global canvas, adapting to the new norms will only help the restaurant industry pave its way to rise again to fame.
(The author is a consultant for restaurant business)
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