There is humungous anxiety and uncertainty is prevailed in everybody’s mind related to impact of COVID-19. I don’t want to feed any further speculation by quantifying the impact as all no.s on board is as good as the assumptions made to forecast.
Lets not oversimplify the future as simple as the topic name we started with but importantly lets not get bogged in gloom of negativity spread as of now. By now almost every industry is assessing their losses and future course of actions. Suddenly essentials or commodity is looking lucrative business options against high touch services like restaurants, malls cinema and socialization events to name few.
My idea is to create scenarios which are broad intuition base and figure out which kind of strategy a restaurant or Bar can acquire to adapt and thrive against which ever the scenario really hits. Generalizing all market scenario is oversimplifying for me and I realized like every time gloomy stories have more takers than truth biter.
So starting with the setting when we started hearing about COVID-19 and reacted in lockdown and expecting to open in May , June or later , but recovery will follow one of the below three most likely scenario
Lets name them as per their apparent shapes and asses the characteristics of each.
V Shape recovery
This is the scenario what we all are praying or hoping to follow at our complete optimism. Confidence is not baseless this type of recovery is the most occurred economic (GDP growth) recovery path post pandemic like 2002 SARS, 1968 H3N2, 1958 H2N2.
U Shape recovery
This recovery is pessimistic and many specialist speculating that consumption will be suppressed down for longer than V shape because of many uncertainty like , relapse of desease, government lock down to keep the epidemic on the bay and flatten the curve. This will be frustrating and testing for many restaurants who are running in silo with in their internal departments like kitchen, Sourcing and front end this will be a phase which will burn all little thin margins which a restaurant is expecting to survive.
L Shape recovery
This scenario is gloomy and depressing like recession where demand will be almost nil for longest of time and supply chain will loose its agility. This is also a phase which will expedite “survival of the fittest” .
I have specified indicative no.s in graph to evoke intuitions , you are free to have your own assumptions here but relativity among the curve should be considered prime.
So lets count what are the supporting clues we must believe and be optimistic
We are young
We are deemed to be aware on safety and hygiene, awareness is increased multifold.
We love to be together and socialize in common served places looking at the growth of working and not cooking at home populations.
We spend more than our last generations. So, we have high streak of coming out of lock down and resume to our pre COVID consumption behavior? I assume yes, we will wear mask and wash hand regularly, and check rating on hygiene of the place to visit.
So far we even in the best scenario COVID-19 has added a crucial aspect which was mostly ignored in last era i.e. HYGIENE so let’s list some hygiene practices what I read multiple contents listed speculating what consumer or lawmakers may come up with. I am listing the most common features in this subject
- Multiple hand wash dispensers at all contact points with compulsory masks donning for staff right from the valet.
- Reducing the no. of tables to keep groups of people at distance.
- Transparent kitchen, so people can observe the cleanliness.
- Self-service and contactless ordering to avoid many hand touches during transactions. Contactless dining . ( No Touch Order Process)
So far hygiene is no surprise for any of us but rest all might require structural and technology changes.
I am trying to illustrate simple flow of NON Touch Order Flow what Digitory is proposing to their clients.
This is seamless and have many advantage
- This is proprietary so you don’t yield into the conditions and margins of aggregators.
- You can customizable to change and promotions.
- Great Saving on front end serving staff cost, training and hygiene vulnerability.
- You own the data and integration to all other functions of back of the office.
This is basically a digitization of self-service for in-dine environment. This may be a quick change which can assure consumers who might be preferring self service over the risk of any kind of contamination during the process. Simple workflows eliminate touch of menu, servers and currencies.
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Restaurants must prepare to respond the sales fluctuations as this unforeseen scenario where consumer behavior will erratic and your traditional knowledge of how much to prepare. Restaurant has vulnerability to both sides first under cooking or cooking extra to waste.
technology can be great tool to avoid mistakes of guesses and averages. In any of above scenario what you cant afford is invest in waste. Now every paisa which will be wasted will hurt much harder than earlier.
Modern Machine learning forecast is the best way to account in such scenarios. I am suggesting that you must get out from hollow analysis of reports which is post mortem in my view . You must have a predictive alerts and forecasts at every day for that matter every cooking session as now law o average will fail as nothing will be same once lock down will open , Restaurants needs to be agile to respond exactly way fluctuations are.
I am presenting a typical graph of comparison among Machine learning forecasts VS Guesses compared with actual sales of a bar on one of a meal plan sold.
Source : www.digitory.com
Orange line which is typical wisdom comes from sales or business is prone to default the actual pattern of sale (Grey line) while Machine learning algorithm has followed the pattern with minimum errors.
Robust inventory optimization
Prepare the business to buy exactly what it needs to sale every penny invested in inventory must result in quick result. In my personal interview with many purchasers across Indian subcontinent i realized there are many unhealthy norms like weekly once procurement, ordering minimum orders suitable to vendors than restaurant.
Extra inventory hurts not only with cashflow stuck in wrong amount but storage space requirement. Imagine 20 kg of cold cuts bought because of MOQ(minimum order quantity) you invested a 1000 INR for the same at average consumption of 100gms/day , you invested 20k in slow mover, now spending precious space by keeping cold storage and guess what spending expensive electric power 24*7 to preserve it , well post COVID-19 era will not let you survive with such mistakes.
You got to observe Dynamic Par Level on every inventory you keep this must tango with your sales. This is very important
Negotiate with your vendors thoroughly for indirect aspect like multiple deliveries and smaller packaging sizes.
Institutionally it hits topline for many buzzing restaurants where people are waiting in ques to enter in peak hours , but if government consider option of reducing no. of tables allow to open , restaurants must be ready with the plan of monetization to the best. Restaurant must have a strong lay out system which allows limited no. of tables to be operated. This can be used as inviting people by appointment and let them book the tables on many of the way available , I will suggest restaurant should approach their loyal members personally and this can start right now by hinting them their birthday and issue certain presold vouchers.
It is imperative now to buy more per penny and you must be aware not only the best guy to source from but the best rate of the market. Restaurant raw materials are commodity and by nature they have arbitrage opportunity. In interest of saving cost your sourcing must be top of the notch and you must aggregate your demands to create economy of scale ( High quantity in one item like chicken) or Economy of Scope ( Small quantity but many items) for this you need seamless ,state of the art systems to trace it , surprisingly cost of technology is far cheaper than opportunity loss.
It is highly likely that customers will be reluctant to resume in full force till the encouraging news like avillable vaccination or cure is announced , till that time it is important to survive and while you pushing the sales , more important activity would be you should not lose.
I trust everyone should prepare themselves to give a best chance to survive in new era which will come after pandemic.
Digitory has many such solutions which focus to simplify and robust your processes and amplify the cost effectiveness in every process of which leads to cost. Eventually we all learnt “ Money saved is Money Earned.
Consult with us free to know how can we unlock the values together. We are ready with every possible scenario like Innovative contact less dine in to complete automation, lets prepare to thrive in new era.
(Author is chief of analytics and data science. He is an ISB alumni with More than 15 years experience in Demand forecasting in a highly dynamic and complex fashion & Food industry)
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