Oct
07

What’s Next for Restaurants and Other Food Businesses?

Posted on October 7, 2020 by Ash Bennett

Uncertainty and competition have been always here for restaurants, cafes, bakeries and other food service outlets. But this time it’s different because of the pandemic and the rapid changes in how people consume and run businesses.

What’s next for restaurants and other food businesses

Takeaway service will likely to expand and stay. This means more packaging, faster service and a focus on costs and convenience. This also means less space for dining in and most likely a lot less space for the entire business (seats and tables take a lot of space). As a result, there could be cost savings here because of lower rent.

It then becomes easier and cheaper to set up a new food business. Lower barriers of entry means more intense competition. With more competition comes lower margins for everyone because there’s a tendency to compete for lower costs. Aside from the lower barriers of entry and more intense competition, another challenge is about differentiation. Back then what differentiates restaurants and cafes are the setting and the dining experience. Now, everything looks almost the same with nothing to make the food service outlet stand out.

How to survive and thrive in that harsh environment? It’s still possible because there are always winners (and often winners take it all). Because of the intense competition and lower profits, many businesses will come and go. The survivors will get by and somehow a few will get lucky or make the right decision at the right time. Those survivors were able to get by partly because of tight cost control and customer obsession. It’s also partly a result of rapid response to trends and changes (such as more people staying far from commercial areas because of the work-from-home).

The key then is to focus on every little opportunity to gain an advantage. This is also about having a commitment to continuous improvement. This is much easier said than done because it’s already fierce out there. Most business owners are already doing everything they can to survive these uncertain times.

Good thing is that many businesses are still in line with sustainability (e.g. eco-friendly packaging, biodegradable cleaning solutions). This is great not just for the environment but also for business profitability. Keep in mind though that this is just one small piece of the puzzle. Business owners have to deal with dozens of other challenges and variables. But with a commitment to sustainability, there’s always a clear direction for responsible business owners.