By SGN | 11 Jun 2020
Instead of café hopping on a lazy weekend afternoon, we’re now rolling out of bed and trying our hands at a homemade dalgona coffee. As more people retreat to the kitchen space, the impact of COVID-19 is apparent on the F&B sector on a global scale.
Local businesses with a regional and global presence are feeling the heat as they scramble to deal with the pandemic on all fronts, working closely to match each country’s strict regulation. The uncertainties on operating a traditional brick and mortar has also prompted for quick business transition into the digital space.
Sarnies, the local favourite, homegrown café brand has a branch in Thailand, which had experienced a country-wide lockdown due to the pandemic. It’s founder, Benjamin Lee, shares that COVID-19 has affected plans for expansion in the region as businesses tighten up for survival in the hard-hit sector.
“Any capital available will likely be allocated towards surviving rather than directed towards expansion projects,” Benjamin says. To combat the impact of COVID-19 on business, Benjamin predicts that for most in the F&B trade, plans for expansion would likely be turned into one for survival.
He reckons that with COVID-19, the total consumer spend on restaurants will “probably be vastly lower for a while yet” and that it will see many players having to exit the F&B trade. While delivery services are a seemingly ‘hot option’ to continue remote operations, Benjamin reckons that getting the food to customers can adversely rake up much higher costs.
“Every bit of incremental revenue helps [with the situation] but with such a huge percentage of revenue going to the existing delivery companies (around 30%), after food costs, rent and staff, it leaves very little for the restaurant,” he explains. “There will be many more casualties in the restaurant space in the next few months as most restaurants are unable to make nearly enough via deliveries to make ends meet.”
Coping with COVID-19: finding online opportunities
Alvin Loh, the chief commercial officer of popular local snack brand IRVINS, shares that they too have experienced impacts to the “development and execution of expansion plans for the foreseeable future”, but also shares a silver lining.
“In certain business segments, we see bright sparks of growth and potential, which is very encouraging,” he says. F&B brands are finding opportunities amidst the pandemic by building their presence online. In a saturated market that has been heavily impacted, building brand presence may just be key to survival. Alvin shares that venturing online to scale business operations in the virtual space and make products readily available for consumers has always been a goal for IRVINS.
In the Philippines, the pandemic was a catalyst for widespread e-commerce adoption especially for those in the F&B trade. “Studies also show that even after the Enhanced Community Quarantine (ECQ), there will be a renewed desire to stay at home and there will be a continuous shift and preference to food deliveries,” Alvin says.
He explains that these two consumer trends have shaped IRVINS’ plans and directions to keep up with the changing demands in at least the next few months. Specifically, the key priorities for its Philippines’ business is to enter products into supermarkets and increase its presence on the e-commerce front.
Staying agile for an unpredictable future
Benjamin shares the same sentiments that building an online presence is ever important today. “Now, more than ever, the digital shopfront is in many ways, more important than a physical shopfront,” he stresses.
Sarnies have taken on projects to venture into a more mobile and online way of operations, which includes working with external specialist social media agencies to build up an attractive online presence. This will be a strategic move that well applies to its Thailand business too.
But for now, as businesses in the F&B trade continue to push through a harsh business climate, brand will have to stay relevant to rapidly evolving consumer needs and wants. “While we cannot predict when this crisis will end, we will focus on being adaptable and agile – to unlearn and relearn the needs, wants and behaviours of consumers so we can remain relevant to them,” Alvin shares.