New Normal, Changed Consumer Behavior; Restaurants Need to Adapt in Time

The Kasikorn Research Center revealed an analysis of restaurant business adaptation to a new post-Covid-19 standards. The center predicted that, throughout 2020, restaurant businesses will shrink for the first time in eight years, being worth only 3.85-3.89 hundred million baht or shrinking 9.7% – 10.6% from the previous year, assuming that there will be no new outbreaks for the rest of the year.

Moreover, the business environment, which is changing to the new normal era, is another factor that requires all types of restaurant entrepreneurs to promptly adapt, so their businesses keep up with changes in consumer needs. What are the things people in the restaurant business field have to change? Let’s take a look.

• The number of services and average price per person will decrease due to the decrease in purchasing power.
• Lean everything to save on costs.
• Delivery that is vicious in terms of competition and GP.
• Technology is not just a choice, but a tool that can help your business go far.
• Hygiene is a high-cost investment that is absolutely essential.
• New customer groups and new opportunities.

1. The Number of Services and Average Price per Person will Decrease Due to Less Purchasing Power

The Covid-19 pandemic has slowed down the global economy as well as the domestic economy which was already sluggish. Consumer purchasing power was already starting to slow down. Then the crisis made the domestic economic situation even worse. A lot of people lost their jobs and income. This part definitely affects restaurants. The possibility of people using your services is probably reduced. The same goes for the average price per person due to the decrease in purchasing power.

The group of restaurants that seems to be most affected is that of restaurants with a middle-class customer base like restaurants in malls that are not chain restaurants, buffet restaurants, food gardens, pubs and bars and restaurants at tourist attractions. These restaurants are directly affected due to their rather high operational costs.

Meanwhile, street-side restaurants, food carts and small restaurants are either little or positively affected, because they can take advantage of the fact that middle-class customers will use their services. This has been obvious throughout the lockdown. Restaurants with better sales are street-side restaurants and restaurants in alleyways, because this group of restaurants has prices that match the current purchasing power.

            Ways to handle it: The economic situation is expected to be problematic throughout this year or maybe even into the next year. Therefore, maintaining as much cash flow as possible is most important in addition to managing your every cost, especially food costs, raw ingredient stock management and cost of labor.  To learn this via a free online course here, click.

 

As for increasing your sales, increasing the price per person is another necessary action. The recommended method is to create a new menu with a new cost structure to allow the price to be lowered while maintaining the good, expensive look. Create a super-save set menu, so your customers can come back to using your services more often.

The offering of discount, exchange and freebie promotions for regular restaurants during this time may have to be more carefully thought out because these promotions might not be appropriate at a time when entrepreneurs are also having cash flow problems. You may come out at a loss. If you’re going to offer promotions, it is better to offer to-go promotions because your restaurant has a limited seating capacity.

Lean everything to save on costs. If entrepreneurs pay more attention to the small, often overlooked details like turning the lights and air conditioner on/off, they can save quite a bit. You should create a schedule for your employees to know when to turn on the AC, which AC should be turned off when there are no customers and how many minutes before the restaurant closes the AC should be turned off.  Then do the same for electricity, water and other utilities.

 

In conclusion, from now until the end of this year, or possibly into next year, is the period when the overall purchasing power will be reduced. Therefore, entrepreneurs have to give importance to internal management. Evaluate your daily sales figures, so you can use the information to analyze it and create a marketing and cost management plans. Any high-cost dishes that sell poorly should be avoided. Reduce the number of menu items if you have too many options on your menu, because the more dishes you offer, the more ingredients you have to pay for. For now, create a new menu aimed at generating cash flow.

2. Storefront Income Might Not Be the Same, but the Expenses and Costs Are Increased

            Although restaurants are allowed to offer dine-in services again, the measures and regulations issued by the government, such as the social distancing measures causing half of the seats to disappear and resulting in lower income will inevitably have a negative effect on income,. However, the expenses are moving in the opposite direction. This includes rental, goods and labor costs. This particularly affects pubs and bars, which cannot open yet.  Even if they did open, the customers might not return to use their services as usual. Otherwise, in the case of regular restaurants, customers might be used to eating alone right now and eating alone reduces the chance to boost sales.

 

For this reason, as long as there is a risk for storefronts not winning back their usual crowds, entrepreneurs need to find new channels or methods to sell their products.  For example, some brand stores in malls are starting to change their business plans right now by expanding their stores outside the malls, and reducing the store sizes for fluidity as they move into the target customer group’s communities. In addition, stores are focusing more on selling via delivery channels.

It is apparent from the past few months that the delivery market has grown exponentially. Even the types of food, like buffet and shabu restaurants for which delivery was never offered have had to think of new selling methods tailored for delivery.

From now on, restaurants will not be able to rest their futures on just the storefront sales. Whether it’s the measures people have to follow or the uncertainty about the pandemic, the results are consumers getting used to living at home and ordering their meals. As a result, delivery is another big way for restaurants to generate income.

3. Delivery Which is a Fierce Fighter in Terms of Competitiveness and GP

            Of course, when the delivery market grows and consumers use more delivery services, competition is naturally higher since every restaurant can enter this market and there are only a few major delivery platforms well known to consumers.

The advantage of joining a major platform is that these platforms continuously offer promotions to build a user base comparable to the traffic of people in malls. In addition, famous platforms already have a management system with riders standing by. Although restaurants have to exchange that for a high commission rate or GP, the chances of selling also increase since these platforms are good locations.

Our recommendation is for restaurants to join the platforms or delivery apps for the aforementioned pros, but they have to create new prices for their food to support the GP deduction. To read how to calculate a cost structure to support the delivery GP here, click. Moreover, restaurateurs should consider making deliveries within a 10-km radius themselves and offer special promotions for customers who order deliveries to bring in customers via this channel.

Use targeted Facebook ads within a radius of 5- to 10-km, give out promotional flyers from the restaurant with the food the customers order through an app or join alternative platforms to increase your sale channels.

However, if the sales via apps are high and consistent, you should consider doing the marketing with apps for your store to always show up on searches or be part of the apps’ recommended restaurants.

4. Technology is Not Just a Choice but a Tool That Can Help Your Business Go Far

            From now on technology will play a major role for restaurant operators, whether for the reservation or pre-order systems, particularly for payment channels. Cash transactions are likely to decrease, so this is something entrepreneurs have to study and seek these technologies to support changes in consumer behavior. There isn’t much to it. These days, when you want to pay someone, you can just send your account number. Even then, you don’t want to transfer the payment because you have to waste time typing.  With a QR code, however, the transfer happens immediately.

5. Hygiene is a High-cost Investment That is Absolutely Necessary

Hygiene is another essential investment, even if the cost is high, because hygiene is one of the factors customers use in deciding whether to use your services.

Hygiene in the Restaurant:  From the storefront, how do you manage it, so customers feel safe inside your restaurant? What measures do you have to take? How do you handle your containers? Examples for this include having alcohol gel at various locations, performing temperature checks, spraying disinfectants regularly, keeping utensils and dishes completely covered in containers, wiping the tables and chairs every time customers are done using them and maintaining cleanliness at various points by adhering to the standard procedures issued by the Center for Covid-19 Situation Administration (CCSA) or other public health agencies.

Employees’ personal hygiene is also vital. From now on, you’ll probably have to add standard rules for how your employees conduct themselves when in the restaurant, during breaks and while serving customers as well as what personal equipment they need to have and how to maintain the cleanliness of their bodies, clothes, faces and hair. You have to pay attention to every aspect.

The cleanliness of raw ingredients, of equipment and in cooking is just as important. For example, your restaurant needs a good raw material management system and steps for washing and cleaning to ensure that your equipment is disinfected. Your cooking steps need to be clean. The cook needs to prevent saliva and hair from falling into the food. Gloves need to be worn and equipment for handling raw materials need to be used instead of using hands.

6. New Customer Groups and New Opportunities

            The lockdown period has created an amateur chef in almost every household. Cooking has become an activity many people subconsciously enjoy. You can look at this as an opportunity. This is a new customer group. Restaurants can create signature dishes in the form of meal kits for this customer group to buy and cook. This can also be done with other dishes to create an opportunity to return some of the income. This method can make customers want to try cooking the dishes and might also want to actually try the food at the restaurant.

The necessary changes in people’s behavior due to the Covid-19 pandemic and resulting in the creation of many new things have become the new normal, regardless of whether or not these behaviors will be long-term.  As a businessperson, it is necessary to learn new things to be able to adapt to the changes in consumer behavior in time so your business can generate profit continuously.

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