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COVID-19 impact and coping trends for restaurants in Australia 2020

COVID-19 impact and coping trends for restaurants in Australia 2020

Published

May 4, 2020
by Bob Day

Business not as usual – how are restaurants coping?

COVID-19 and social distancing changed the restaurant world almost instantly. For dine-in restaurants the impact has been massive – shutting down or pivoting to pick-up or delivery only is far more disruptive if you have never expected to need to consider these options. While quick service and takeaway restaurants & cafes had more experience in delivery & take-aways, the speed of change and need for adaptation has been painful.

The trend to customer convenience was always there in a pre COVID-19 world but this was something new altogether. What now? How long will it last? Will we be able to return to pre-COVID-19 options or is the world forever moved on its axis?

Instant change in the nature of supply and demand

Overnight the nature of demand and supply changed. Restaurants and cafes that serviced business environments lost their clientele as businesses went home. All food outlets as gathering places were compromised, shutting any dine-in areas.

Those who already had online ordering and smartphone apps were able to adapt faster. Those with a strong customer database or list were able to get in touch with customers and inform them of ordering and menu options/changes. Those with 3rd party order providers continued to have exposure to a broad customer base but still no direct control of their customer list, and arguably suddenly way more competition as many restaurants scrambled to sign-up to the likes of Uber Eats, Deliveroo, Menulog.

While 3rd party apps anticipated high growth, this has not been as big in Australia as it has been in the US (reportedly a 22% uptake in 3 weeks in the US) – mostly due to the harsh impact of high commissions on already plummeting profits.

Restaurants & cafes shifted to off-site delivery services, re-deploying wait and kitchen staff to keep everyone employed. They reached out using social media and word-of-mouth to get the word out that they are still open for business and would value local support. They streamlined their offer

  • to include the most popular items
  • to include family size ‘meal packs’ items
  • to include meal-kits (for those challenged in the kitchen)
  • to include pre-prepared meals
  • to include comfort food
  • some cafes have also provided some limited access to grocery items – be it fresh produce, basic protection (eg. hand sanitisers), basic pantry items and wholesale ingredients (sugar and flour), becoming a local hub or minimart when you pick-up your coffee order
  • and many have had to source ingredients more locally, and as is the case in Australia, they suddenly have access to high export quality ingredients at lower prices as exports are halted

Customers have supported and been grateful for helpful pivots to still service them – their need for convenience has never gone away and customers really do want to support local industry to survive. They are paying it forward (prepaying coffees and meals for essential workers) and actively helping meal donation efforts.

Accelerated and continuing trends

The COVID-19 crisis has exposed the vulnerabilities of businesses that rely on 3rd party services to fulfil the customer experience and distance them from their own customer database. We believe that those restaurant businesses that survive the pandemic conditions will fundamentally re-evaluate every aspect of their business to ensure they stay close to their customers.

We predict that the following trends were always in evidence but have now been accelerated by the COVID-19 crisis and will continue:

1. Community and supporting local

  • Customers will look to support their local restaurants as they still stay closer to home than ever before. They will also be looking to support restaurants who support local growers, farmers, produce (local community as well as local Australia)
  • Restaurants will want to gain local supply chain security as they also want to support and simplify local support

2. Word-of-mouth promotion/social media impact

  • The power of word of mouth has grown with social media and restaurants that stay close to their customers actively monitor and engage with reviews (good and bad).
  • COVID-19 has accelerated the growth of local community support groups online and amplify the WOM about local businesses (positive and negative). Community involvement is intertwining with social media communication

3. Convenience – delivery options and bundles

  • Local businesses have got together to support & cross-promote each other to meet the needs of the local community, centralising delivery and even pick-up.
  • An example of this on the Northern Beaches of Sydney is Bundlfresh, a co-operative of small, local and family owned businesses, bringing together community and fresh food.
  • Restaurants are doing their own deliveries or using local delivery options where possible, staying away from the large commissions and indifferent service from the multinationals.
  • Customers are starting to become aware that convenience does come at a price …to their favourite restaurants.
  • Growers market closures have forced market suppliers to do direct sales and organise pick-up/delivery.

4. Convenience – online ordering & smartphone order apps that promote the local restaurant

  • The trend towards online ordering and in particular smartphone app ordering has been growing fast anyway. That need has not gone away for either customers (ordering at their fingertips) or businesses (clear printed orders, managing resourcing and planning).
  • But it has exposed cracks in the current 3rd party directory options that keep restaurants and customers apart. Restaurants were also painfully aware of being between a rock and a hard place with high commissions versus higher traffic exposure. Now customers are aware of the cost to restaurants and cafes, and the unfairness of employee practices for the drivers.
  • We anticipate that 3rd party apps will decline while branded business apps will grow. While in the short term, deploying staff to take phone orders is okay, smart businesses are looking to reclaim their customer relationship & information and use a cost-effective branded app. Local homegrown Australian online order apps will see a growth in uptake as restaurant businesses become aware of their presence and move to secure their future. There are a number of options already available on the Australian market (Mobi2Go; YQme)

Emerging and continuing trends

 5. Safety – clean and green

  • Freshness has always been a need for some customers segments but now it is more than simple freshness but safety of produce to the table.
  • Green is about preservatives, free range as well as travel miles and now will include country of origin
  • Healthy cooking and wholefoods, cooked from scratch will continue to flourish
  • Deep and regular cleaning standards will be heightened. This includes excessive product handling to get it into customers hands, low contact preparation, no-contact delivery, even temperature checks on preparation staff.

6. Safety – social distancing

  • As restrictions are lifted, the need for pragmatic social distancing will continue and customers will favour those who offer safe spacing and assure them of cleaning standards.
  • Even protection for staff measures will reflect on the end product to customers
  • Will drive-through pick-up become a feature?

 7. Food and menu options

  • Delivery and pick-up needs will likely be embraced by all restaurants, possibly even fine dining restuarants
  • Will family pack fine dining options prevail?
  • What about meal kits for the busy and cooking-challenged? This sector has been growing with providers like Hello Fresh, Dinnerly, Marley Spoon …. will this become a staple for restaurants?
  • Pre-prepared meals?

 Being real has never been more important

The pace of change has been fast, and some changes will empower businesses in a post COVID world. Authenticity and transparency will be highly valued as people want to cut through the hype, want to support and be supported.

“At the end of the day people won’t remember what you said or did, they will remember how you made them feel.” Maya Angelou

Stay safe.

Barb Jones, Marketing Insights, CCI

 

 

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Related links:

https://www.qsrmagazine.com/outside-insights/mobile-gains-even-more-importance-during-covid-19

https://www.smh.com.au/business/small-business/food-delivery-apps-still-waiting-on-coronavirus-boom-20200420-p54lcr.html