At the time of writing this article, we have completed 5 weeks of curfew and
lockdown in Sri Lanka due to the Covid-19 pandemic.
The overall economy has been impacted due to this pandemic with small businesses being hit the most. Initial forecasts indicate that the global economy would contract by at least 3% this year.
Analysts also predict that the economic recovery may take around 24 months for
certain countries. Interestingly, most countries seem to be allocating between 5-10%
of their GDP in order to fight off the pandemic and provide a much needed stimulus
to their economies.
Sri Lanka unfortunately is not in a position to allocate such amounts due to the limited fiscal space available at the moment. Kantar Sri Lanka, in their recent Consumer Sentiment Report (Covid-19: Barometer Sri Lanka) outlines that consumers are ready to downsize their lifestyles and the focus is apparently more on saving rather than splurging. Around 54% of the respondents have claimed that they are now saving more in comparison to the pre-lockdown time period.
Similarly based on the research data, Kantar is further of the opinion that
‘indulgences’ maybe under threat and preferences seem to be shifting towards local,
traditional and healthy food and beverages.
Across the globe, the Restaurant Industry, Cafes, Eateries, Pubs and Recreational
Clubs are some of the most impacted businesses due to Covid-19. Considering that
the horrific Easter Sunday Terror attacks happened just a year ago, the current
pandemic situation has come as a double blow to the Restaurant, Food and
Beverage Industry in Sri Lanka. Irrespective of whether you are a ‘Casual Dining’,
‘Fine Dining’, ‘Home Baker’ or a ‘Take Away Food Service Provider’, no one has
been spared by Covid-19. Most urban and affluent Sri Lankans used to regularly
patronize the various Recreational Clubs in the city to relax, unwind, network and
entertain their families and guests. These subscriptions based ‘Members Only’
Recreational Clubs are impacted not only at the moment but due to social distancing
norms it seems they will continue to suffer for a reasonable time post lockdown as
well. It can be predicted that the same scenario will apply to ‘Pubs’ too.
When you look back and reflect on the last 5 week time frame, arguably some
Restaurants, Cafes and Eateries have been more nimble, agile and adaptable than
others. They have resumed operations (even though limited in offerings) rather
quickly through various online delivery models either by themselves or in partnership
with ride hailing services like UberEats, PickMe Food and YouCab. Most of the other
restaurants have struggled initially but by now have got some operations going. The
staffing, supply chain and immobility issues due to the curfew regulations and other
challenges have hampered these entities thereby disrupting their usual operations.
Unfortunately some players have still not been able to get their operations going at
all. Surprisingly some of them are well established entities who have been in the
business for a long period of time.
As per the Colombo City Restaurant Collective (CCRC) the Restaurant Sector is a
highly labour intensive industry that directly employs over 30,000 people while
indirectly providing employment to many others. Due to the decrease in tourism
arrivals and the overall negative economic situation, the CCRC predicts that the
adverse impact on the Restaurant Industry may last for at least a period of 12
months. It is reasonable to assume that due to the lack of business, the industry will
be faced with cash flow issues leading to most players struggling to pay rents,
salaries and other overheads. Few will unfortunately have to close down and that is
the brutal reality. In addition to the recently announced Rs. 50 billion economic
stimulus package, the Government will also have to see how best they can provide
additional support to this sector. We will understand the developments and policies
with this regard in the future and until such time the players in the Industry will need
to re-evaluate their Business Models and come up with various strategies to survive.
The new regulations and best practices announced by the authorities for the
Restaurant Industry for the commencement of operations post lockdown has been
exemplified below (only the most relevant to the scope of this article has been
outlined here). Whilst it is unclear if these are the final regulations, it can be argued
that most of these will be applicable in order to ensure health and safety alongside
meeting the necessary social distancing requirements.
Currently Prescribed Guidelines
Disinfect all the surfaces of chairs and tables in the premises after each use.
All workers and customers should maintain at least 1 meter distance inside
the Restaurants and Eateries. Furniture should be arranged accordingly.
All workers should wear face masks.
Display the menu either by TV screen, display board or under the glass pad of
Places where buffets are available, there should be dedicated staff member(s)
to serve the food to avoid many customers handling spoons and other utensils
in the buffet.
Customers shall not share crockery and culinary equipment.
All cleaning staff should wear gloves and masks.
Waiters shall wash their hands frequently to prevent any cross contamination.
Culinary equipment and crockery should be thoroughly washed with soap and
Payment counters shall ensure minimum handling of cash (preference should
be given for credit/debit cards). When using the credit/debit card ask the
customer to insert and also remove it from the machine.
The officer in the counter should not share the pen used to sign the
documents (The customer should use his/her own pen). In case the customer
does not carry a pen he may use the pen of the cashier but it should be
disinfected immediately afterwards.
Keep an alcohol rub/hand sanitizer by the side (one per each person in the
counter) and use it as frequently as possible or alternatively wear gloves
(gloves should never be re- used).
The other countries have also implemented similar guidelines to the above and it
seems to be the norm more than the exception.
Since we now understand the various challenges that the Restaurants, Cafes,
Eateries, Pubs and Recreational Clubs are facing both during and post Covid-19,
let's try to explore 3 areas that the industry needs to focus on, in order to minimize
the impact to their businesses. There is a need to re-examine, re-strategize and re-
calibrate their businesses. Decision makers in the industry need to apply a rational
and pragmatic approach. Planning and strategizing is important alongside a strong
execution focus. It’s basically now or never. Tough times call for tough measures.
Survival is not a choice, sadly it’s the only option.
1. Re-look at your Business Model: Considering that customers may not be
comfortable to ‘Dine In’ at Restaurants and Cafes or patronize Recreational Clubs
and Pubs in the short term (at least) one needs to examine the validity and relevance
of the current Business Model. As a business owner you need to make a decision on
whether it is prudent to have a Dine In option. An accelerated strategy to move from ‘On Premise’ to ‘Off Premise’ may be the way forward. If the customer foot fall is lower than expected, the business may not be able to cover the basic costs such as
rent, utilities and the staff required to serve (as in the case when operating at high
capacity). Rather, can you now explore a Take Away Online Delivery only model? Will it make sense to have fewer menu options so that the food costs and the supply chain can be managed better? Are there any new menus that you can
introduce to meet the common demand patterns (even though it is different to the
desired concept)? Can you introduce a lower base salary plus profit share scheme
instead of fixed salaries for key staff like Chefs Restaurant Managers until
business picks up to the usual level? Do you deliver the products to customers by
yourself or through a reputed ride hailing service? Do you continue to operate the
usual hours or will you now focus mainly on the peak hours only? These are some of
the areas that the industry players need to think hard with an open mind-set and
accordingly come up with the most appropriate strategies to implement.
If you decide to continue with an On Premise- Dine In model, then you will have to
redesign the space in a manner that minimizes space efficiency issues whilst
meeting social distancing guidelines. This may be tougher than one can expect.
Innovative and creative thinking is absolutely crucial here. Similarly Recreational
Clubs can also look at delivering its most famous bites so that members can enjoy
the next best alternative to patronizing the Club. It is reasonable to assume that a
Hot Butter Cuttlefish, Cheese Toast or a Devilled Meat Dish delivered from your
favourite Recreational Club will be an experience that you wouldn’t want to miss.
Traditionally most of these Recreational Clubs did not have a food delivery option.
Now is the time to think out of the box and explore every possible way to improve the
revenue scoreboard. Recreational Clubs can also look at giving special offers to the
members that have paid their subscriptions in full for the year 2020. For the
members who have not yet paid the subscriptions, they need to explore
implementing a flexible payment plan to encourage payments. Every rupee matters
today. The key is to adapt quickly by changing your Business Model to deal with the
new realities, the changing dynamics of the market and customer lifestyles. Of
course heavy emphasis will have to be placed than previously on the safety aspect
when implementing your revised Business Model.
2. Partnerships and Collaboration: By partnering and collaborating with other
players in the Industry, you can derive a number of benefits such as reduction in
costs and managing underutilized (or excess) capacity. Instead of running their own
kitchen, a business can outsource it from another player in the industry thereby
creating a win-win scenario for both parties. The Hotel Industry in Sri Lanka is
severely impacted by the Covid-19 pandemic. All these hotels have kitchen facilities
that will have an underutilized capacity at present. Can the Restaurant Industry strike
a partnership with the Hotel Industry to use their staff and facilities at a pre-agreed
payment and an operational model? The answer is definitely yes because we see
this happening already in other countries. The author of this article is of the view that
there is a significant opportunity for a Kitchen as a Service (KaaS) model or a Cloud
Kitchen type of concept. Industry players can obtain the services ‘On Demand’ basis
with such a model without having to worry about overheads and fixed costs. The
mind-set should be that ‘we are all in this together’ right now. There is no room for
ego or myopic thinking. Actively seek out and identify opportunities for partnerships
with other local players. Sharing kitchen space, resources, staff and supplies are all
possibilities with the right partnership and collaboration. We see this happening
already in other countries too. The writer is of the opinion that the industry should
move away from looking at each other as competitors but rather look at each other
as partners who are navigating ‘stormy seas’ together.
3. The Power of Marketing: The industry will have to focus heavily on the Marketing
aspect once the lockdown is relaxed. Digital Marketing and Social Media Marketing
will play an integral role more than ever before. It’s all about having the mindshare of
your customers. Make sure that your loyal customers are aware that you are ‘open’,
understand any changes in your Business Model and are familiar with the various
promotions that have been introduced. It is important to exemplify to your customers
the various health and safety (including sanitization) measures that have been
implemented. If you have a database of your customers, now is a good time to keep
them posted about your initiatives, menus and other plans. Continuous engagement
is the key. Instead of bombarding them with irrelevant content, focus more on
Reaching out to your loyal customers with personal letters, emails,
calls, texts or WhatsApp messages is crucial and an absolute necessity. The Social
Media pages such as Facebook and Instagram need to have the right content. It
should be relevant and appealing. If you do not have expertise on this area, seek the
help of a professional. Recreational Clubs in Sri Lanka has historically been rather
weak in their Social Media Marketing. Now the time has come for them to place more
emphasis on this aspect. Designing the right promotions will also help one
differentiate itself from the competition. Whether it is meal vouchers, loyalty and
referral programs, family packs (and bundle offers) or off-peak discounts the various
promotional options available are limitless.
Customers will now be looking at value and the demand for indulgences will reduce
at least in the short run. Businesses need to therefore, exemplify the ‘value
proposition’ in everything they do. Update your website and give it a new look and
feel. Use Search Engine Optimization (SEO) tools to drive traffic to the website. The
power of ‘Storytelling’ should not be underestimated as well and this is where Public
Relations (PR) can be immensely beneficial to a business. It should be understood
that what worked before, may not work or be relevant now. There is no room for
complacency or ignorance. It is a survival battle. Every activity and minute spent on
the business matters, so make sure you make it count. Therefore, it is evident that
the Restaurants, Cafes, Pubs and Eateries in particular need to understand this and
come up with the necessary strategies. Once the strategies are in place, the
marketing mix and the relevant tools need to be used effectively.
As we already know, the world that we are going to embrace post Covid-19 is a new
one. As exemplified above there a number of decisions that Restaurants, Cafes,
Eateries, Pubs & Recreational Clubs will have to make in order to mitigate the
challenges associated with the Covid-19 pandemic. However, the author of this
article is of the view that the above ideas and strategies will definitely be useful for
the industry if implemented with diligence and careful analysis of its strengths,
weaknesses and strategic options. Sri Lanka is a resilient nation and together we
can weather this storm. The Covid-19 pandemic does not differentiate based on
race, religion, age, nationality, gender, political affiliation or lifestyle. The entire world
is united in the fight against the pandemic. From a Sri Lankan perspective as well,
we need to be united to mitigate the impact of this deadly virus. There is no room to
be myopic, selfish or narrow minded. Diversity is our strength and unity will be our
recipe for success. There is nothing which is impossible for us as Sri Lankans. Let’s
work together as one nation to fight this pandemic. Let’s also collaborate and support
each other so that we can collectively get our companies and industries to overcome
this crisis situation and move forward with a renewed purpose, proactive
methodology and positive mind-set. We need to support the local Restaurants,
Cafes, Eateries, Pubs and Recreational Clubs. They need our support now, more
than ever. Let’s ensure that we play our part and do the needful. Sri Lanka together,
By: Dr Nirmal De Silva (Entrepreneur, Consultant & Associate Professor in