‘Premium restaurants to see demand upswing and in a sense benefit at cost of small, medium outlets’
Updated: Nov 09, 2020 12:19 PM
Ease of Doing Business for MSMEs: Given that the tax-paying classes have either seen flattened wages or significant loss of jobs, food consumption will reduce. This, in turn, has a cascading impact on QSR or restaurants.
All small and medium food service providers and restaurants will need to tweak their processes to become more efficient. (Representational image)
By Sanjay Kumar
Ease of Doing Business for MSMEs: To begin with, there is no silver bullet that can help small and medium players to come out of the Covid crisis. The reason being that apart from food at work, continuous eating out is a discretionary spend that people make. Given that the tax-paying classes have either seen flattened wages or significant loss of jobs, food consumption will reduce. This, in turn, has a cascading impact on QSR or restaurants. In the pandemic world, it is unlikely that we will see a rapid increase in food consumed in restaurants or taken away from QSR. However, premium restaurants and restaurants in 5-star hotels will continue to see an upswing in demand. Hence ironically in the post COVID world, what we are going to see are these restaurants expecting an increase in growth, and in a sense benefitting at the cost of small and medium restaurants. Hence, there are four things that all small and medium restaurants need to focus on.
They will need to be more customer-centric such that they have a presence on delivery platforms to analyse consumption better and provide live visuals of safety practices being followed in the kitchen. So, what one can say is that, just like a small restaurant publishes its menu for food, it should also publish its menu for safety protocol alongside it. It is smouldering but it is a big reassurance for the consumer.
All small and medium food service providers and restaurants will need to tweak their processes to become more efficient. What this would involve is designing menus with fewer choices but more targeted ones with specific cuisines, giving recipes that offer something different than the standard menu items. The reason being that the normal discretionary spending is going to be lower, so when people are going to spend on takeaways and dining, they would probably look for a typical chicken tikka masala or paneer butter masala or an Alleppey fish curry. Even if they would look for these common dishes, they would want some tweak in it, and that is where a small and medium restaurant can step in because they have a greater level of flexibility. The process of designing the menu and the way of building the offer must change. What that also means is an investment in backend equipment must be discounted so restaurants can learn how to sweat their assets better by improving their management processes like inventory, recipes, and production.
The third thing that restaurants need to do very differently is to reduce the number of people needed in enabling the execution of their offer. What this means is rather than feeling scared of paying higher wages to employees in the post-pandemic world, it is more crucial to have fewer people and pay them more than to have more people and pay them less. The reason being that the productivity gained through the skilled workforce will be far higher, there is an added benefit of safety if the staff multitasks to improve productivity rather than limiting it to just pure unskilled workers who need constant supervision. For example, a Sous Chef can also double up as an assistant to the restaurant manager. Such workforce deployment tweaks in a small restaurant setup are vital.
Last but not the least, comes around the location. Typically, there are two kinds of restaurants today in the country- standalone establishments in scarcely populated areas and the other which are in areas popular for food joints. The latter ones are more likely to suffer in the post-pandemic world as they tend to attract larger crowds. So, restaurants have to be more careful about how they make their decisions on where to build their presence. This is going to be a key driver in delivering value, because today in India, rental on real estate is the second most expensive item after manpower when it comes to running a restaurant. There is, however, a spinoff benefit today with people still working from home. If work from home is going to be a practice in the future, then restaurants don’t have to depend on the weekend traffic to monetise their investment and costs. Even though orders can be spread throughout the week, the quantum of size may be smaller. This will require optimisation of those people and related resources including those who manage the inventory in a leaner fashion.
These are some of the things which small and medium enterprises will need to focus on in a post-pandemic world to come out of the crisis that they are in, given the fact that they are unlikely to have access to low-cost capital and definitely no access to the working capital subsidy.
Sanjay Kumar is the CEO & MD of Elior India. Views expressed are the author’s own.