Never in our wildest dreams could we have imagined pre-pandemic that the hospitality sector would virtually shut down overnight as it did. Sadly, the dystopian nightmare scenario became reality, but green shoots have now emerged and, thankfully, we are finally getting to the other side of this horrifying crisis that has turned so many lives upside down.
However, with much of the sector already reopened, and with certainty around indoor dining hopefully clarified this week, restaurants, cafés, gastro pubs and other food businesses are remerging now to a very different competitive landscape characterised by much greater fragmentation and complexity than before.
While many restaurants and cafés closed temporarily during lockdown instead of chasing the takeaway segment, a whole host of young entrepreneurs up and down the country launched micro foodservice businesses to plug the demand gap. This is evidenced by the many food trucks and coffee pods that grace carparks, hard shoulders and even under used outdoor dining spaces of existing and well-established food businesses, creating destinations where no one thought possible.
While no official figures have been published, it’s safe to assume that the number of new micro food business sites established over the course of the last year has breached the [thousand] mark, adding a major new dimension to the foodservice industry.
This new dynamic, which I refer to as hyper fragmentation, means traditional restaurants, cafés and others are now looking at a very different competitive landscape, and one that appeals to younger generations while also ticking all the right boxes in relation to outdoor dining in the context of managing the transmission of the virus. While micro food businesses can’t compete with the overall dining experience, they do have the benefit of being far more agile and nimble and, for example, can much more easily change the focus of their menu to keep up with trends than a restaurant that has a specific and well-established culinary focus.
Another challenge for many restaurants and cafés will be in deciding what to do with food-to-go/takeaway options that they might have launched during the lockdowns. While high quality food occasions from home will likely still appeal to certain segments of the consuming public, for most businesses, indoor/outdoor dining is much more conducive to a strongly trading business as it often facilitates the sale of higher margin options. In short, takeaway, especially when the cost of delivery is factored, is rarely profitable. However, the question for some businesses might be, is providing takeaway options, despite the low margin, better than potentially losing a customer to a competitor.
The other new dimension complicating matters further is how positively consumers have already embraced continental style outdoor dining, vista or not, and while colder weather in Autumn and Winter will force many people indoors, businesses that have both options will likely boast better appeal. As we are increasingly being told, this virus is here to stay, meaning there will always now be an appetite for outdoor dining so businesses need to consider this in the long term.
Looking forward, like any business across any sector, it’s critically important that food businesses review their target market and identify the wants, needs and expectations of their customers now and into the future. The market has evolved more over the last 15 months than the previous 10 years so businesses must take a temperature check to ensure their proposition, everything from menu to facilities, are up-to-date, appropriate and compelling.
Businesses should be looking at whether their customer segment might be looking for something new and different and therefore whether they need to refresh their menus. It’s important for food businesses not to make any knee jerk decisions that could undermine the essence of their culinary proposition but subtle changes that align with seasonal or health trends can make all the difference.
We’ve also witnessed another leap in digital transformation and it’s now so important for food businesses to invest in having a strong digital platform to engage with customers including an attractive website, an easy-to-use booking platform and an engaging social media presence that virtually invites customers into your doors.
Businesses also need to look at creating experiences to entice people out of the house and away from takeaway options. While better than ever customer service, making the customer feel special beyond just not having to wash the dishes after dinner will be critically important, food businesses that create memorable experiences, be they tastings or cocktail design occasions for example, will likely win a new cohort of loyal customers. Research shows that positive experiences are 20% about the food and 80% about the experience so businesses must create an ambiance and bring the drama. Remind customers of what it feels like to be served at a table and all the luxuries that come with that versus eating curbside.
In this regard, the challenge of finding, training and retaining staff in the current environment is more important than ever. A positive dining experience can oftentimes depend on the quality and attitude of the servers and, in this regard, it is imperative that standards are higher than ever. These are all elements that must fuse together perfectly to ensure every single customer has a positive experience – word of mouth endorsements will be crucial over the coming months as people venture out once again.
Finally, as the entertainment industry continues to reopen slowly, there will be an opportunity for some food businesses to establish collaborations, be they event link ups or other, as long as it aligns with their brand and clientele. If there’s one thing we know this summer, it’s that customers are hungry for entertainment experiences after a year locked indoors, so the more food businesses can put themselves at the centre of those experiences, the better.
With the marketplace set to remain fragmented meaning a more intensified competitive environment, I expect the next 12 months to be characterised by further accelerated innovation and those that fail to step up to the challenge may unfortunately get left behind.
It’s been a tough and onerous journey to now. The hospitality industry has suffered greatly, and somewhat disproportionately. Hopefully, we are now at the beginning of its resurgence and I, for one, can’t wait to experience all that our wonderful hospitality sector has to offer over the coming days, weeks and months.
*Ricky O’Brien is Foodservice Director with BWG Foods Wholesale Division. He is responsible for all elements of the Foodservice Management team of Sales, Trading and contracts, while also focusing on growing sales through independent and contract business as well as developing and driving foodservice own brands, innovation and promotional activities and services.
An honours graduate of UCC and core business credential from Harvard Business School, Ricky has a passion for food and the Foodservice industry and assumed his new role in October 2020.