Restaurants: Innovative ways to deal with the corona crisis
“The shutdown posed major challenges not only to retailers and hotel operators, but also to the restaurant industry”, says Patrick Homm, MA, Head of Commercial Property Marketing at OTTO Immobilien. Decisions had to be made very quickly, such as whether to set up or expand delivery or takeaway services, lay off staff or put them on short-time working, and how to deal with stocks.
The complete shutdown of local pubs and restaurants resulted in huge losses. For example, one consulting firm, RegioPlan Consulting, estimates that the complete shutdown of Austrian restaurants and cafés likely resulted in a total loss of sales of around 60 million euros per day. The cumulative drop in sales since the lockdown was around €3.8 billion, of which just over 60 per cent can be attributed to the lack of tourists. “But now with the reopening and the necessary constraints, this will be the real test”, says Homm. Hygiene and physical distancing requirements still need to be met, and the latter will make it particularly challenging for small businesses to remain profitable.
Yet despite these difficult circumstances, many restaurants are still undaunted and have come up with new concepts. Some have carried out renovations, while a few others are even thinking about expanding.
For this Immobilien Kompass real estate guide, several OTTO Immobilien clients were asked to provide insight into their strategies and experiences.
System catering: Burger King
“During the lockdown, we were forced to shut down our restaurants completely, and our customers were less than thrilled. Due to COVID-19 and its effects, we resorted to short-time working in our group of companies. We then reopened in phases, starting with the drive-in and delivery service distribution channels.”
How did you manage the post-lockdown phase?
“As part of the reopening process, we have implemented extensive distancing and hygiene measures that go far beyond the government’s requirements.
We also used the time to present exciting product and technology innovations to our customers in the second half of the year. As a result of COVID-19, our restaurants achieved significant sales growth in both drive-in and delivery services. Our expansion plans were not significantly impacted – we managed to successfully open our restaurant in St. Pölten three weeks ago and are still constantly looking for locations for new Burger King restaurants.”
To the Burger King Website
Wiki Wiki Poke
“We reacted immediately and focused 100 per cent on the delivery business. Our advantage was that we had always operated a delivery business and therefore did not have to establish ourselves on the market. As many people quickly lost their appetite for burgers, pizza and those types of things, it was just the right move for us to offer our healthy fast food as a decent, fresh alternative. Then when our customers were able to come and pick up the food, we also gave them this option. By implementing these measures and also putting some employees on short-time working, we made it through the lockdown just fine.”
And what was the phase after that?
“After the lockdown was over, it took a few weeks to get back to the regular ratio of deliveries to in-house/takeaway service. However, business was good the whole time and we survived Corona with hardly any losses. Since people also like to order our food to go, the reduced seating wasn’t a problem for us because we then generated more sales with our takeaway service. Our plan is to open another restaurant in the next three months.”
To the Wiki Wiki Poke Website
Café/bars in Vienna Mariahilf and Neubau: Owner wishes to remain anonymous
“At first there was only one real decision to make: lay off the employees or register for short-time working. We went for short-time working at a late stage; given the other policy announcements, it seemed to be the better choice at the time. The café and bars were completely closed during the lockdown, since there was no telling whether there would be any demand for the food offerings outside the unique atmosphere of the premises. They reopened as soon as the lockdown was lifted.
Perishable stocks were ‘sold off’ to help those in need before the lockdown. In addition, attempts were made to have periodically due payments suspended, above al rents. This was the main activity of the employees during the most difficult part of the lockdown, along with minor renovations to the pubs and kitchen that had already been put off for a long time.”
How did you design the reopening phase (restrictions on guests, half/full service) and what is your plan for the next few months?
“In line with the reopening requirements, the furniture and the layout have been adapted for maximum efficiency within the restrictions. Any subsequent easing of restrictions was implemented right away. Our goal has always been to create an illusion of the old normal. That has worked quite well. We started right off with the full menu and only had minor difficulties with deliveries.”
How are you doing now?
“The café and bars are running at break-even. We are still trying to make positive changes to the things we can control and leave aside all the things beyond out control. And we are proceeding cautiously with our expansion plans, taking into account the new risks and opportunities.”
Speed and creativity required
“The feedback from our customers reveals that a quick response was essential and creative solutions had to be found to optimise the cost structure and cover ongoing expenses”, says Homm. Delivery service in particular was and still is a popular alternative that allows businesses to provide their customers with the best possible service. In the wake of the Corona pandemic, it became clear that pubs and restaurants with delivery services that had already been established before the crisis were able to offset severe losses. “We believe that this has created a sustainable trend and that the number of orders will keep rising over the long term”, said Homm.
However, this has also attracted many guests back to the premises, as mask requirements in eating establishments have been lifted and opening hours extended. “It is nevertheless clear that the feeling of safety is a relevant factor when it comes to visiting a restaurant and that food service operators have so far been making serious efforts to maintain safe conditions”, says Homm.
“However, the impact of the pandemic on the industry will not be felt until the fourth quarter of 2020 or the first quarter of 2021”, adds Homm. Once the subsidies run out, the restaurant industry will have to bear the entire cost burden again, even though the frequency of restaurant visits is still far below that of pre-Corona times. In addition, tourists have been slow to return, as they still have concerns about travelling to cities”, says Homm.