Restoring the Catering Business

The content of this Report is mainly limited to the de-escalation phase, but it tries to provide a global vision of what gastronomy will have to be when it returns to normality.

 

As a result of the coronavirus pandemic, we are facing a critical situation, especially for some business sectors such as the catering industry.

In Spain, this sector is a fundamental engine for our economy. According to the latest KPMG report on Gastronomy (with data from 2017), nearly 280,000 hotel and restaurant establishments coexist in Spain, which translates into a production of some 130,000 million euros and more than one and a half million jobs. We only have to review these figures to realise the impact that the pandemic could have on the sector and on our economy.

Due to the confinement of the population, many restaurants have had to close doors, only those prepared to serve food to be delivered at home were allowed to open. But even after the health issue is over, a situation of great uncertainty is foreseen for the catering sector.

Until now, in Spain the public used to attend bars and restaurants to enjoy a varied range of quality food, to be enjoyed, especially, in company. However, in the immediate future and for a time yet to be determined, it is possible that a large part of the population will avoid going to the aforementioned establishments for fear of contagion. On the other hand, there will be significant changes in consumer demand.

It is clear that in the short and medium term, the catering world – restaurants, food houses, bars, cafeterias, taverns and cocktail bars – will have to reinvent themselves in order to get ahead without this situation threatening their survival. It is time to innovate and change the approach of the catering business so that they can be adapted to the new reality.

It will be necessary to Restore the Catering Industry.

 

INTRODUCTION. ADAPTING SUPPLY TO NEW DEMAND

Once the first stage of bewilderment has been overcome, the kitchens must resume their normal functioning and professionals must return to work. But how can the public continue to consume in bars and restaurants, and how can these eating establishments respond to this demand in the new conditions?

Above all, it will be necessary to make an analysis and readjustment of the costs, to ensure that the catering businesses remain profitable, avoiding, as far as possible, that the reduction of expenses affects the personnel.

In addition, the business model should be adapted to make it easier for customers to consume, so that the chances of contagion are reduced as much as possible. This is where new formulas come into play, such as take away, delivery or home service.

But to motivate consumers to use the services of the new catering business, it is not enough to change the logistics. It is also essential to adapt supply to new demand, making it not only more attractive to the consumer, but also valuing it in one way or another. In addition, food will have to undergo delivery time without having its organoleptic qualities excessively altered.

With the pandemic, the population has become more aware of the importance of caring for the health of the population and our planet, as well as promoting solidarity. Therefore, restaurants are going to have to demonstrate that they are in line with these values of healthy, sustainable and supportive eating.

Once this model has been redesigned, good use must be made of communication technologies, through the most up-to-date media, mainly social networks, e-mail and instant messaging applications, to transmit these changes to the consumer effectively and quickly. Chatbots have proven to be very useful in facilitating customer communication.

On the other hand, the different specialised informative spaces, such as GastroMadrid and GastroMarcaEspaña, will be key to disclose and spread the new offers in the catering industry.

 

1. COST REDUCTION TO MAINTAIN PROFITABILITY

As a consequence of the economic and work stoppage that we are experiencing, the first approach that Spanish restaurants will have to take is the need, as it happened in the 2008-2009 crisis, to reduce expenses. On that occasion, the reduction was mainly in the workforce.

In the near future, the restaurant industry will suffer a considerable decrease in its clientele, mainly due to the lack of international tourists, but also of Spanish customers.

It should also be borne in mind that a large part of the population will have liquidity problems and even fear of spending due to economic uncertainty. And this is going to be reflected in the need to adjust prices to keep customers.

This is a difficult problem for many restaurants to solve. It is therefore necessary to analyse all the elements where cost reductions could be applied, in order to ensure that eating establishments remain profitable and that this situation will affect the staff as little as possible. Moreover, taking into account the problem of unemployment that will occur in our country and probably worldwide.

 

2. CHANGES IN BUSINESS MODEL

In a situation like this, which is unusual for all of us, it is practical and very revealing to observe what is being done elsewhere and which is giving, a priori, good results.

In this regard, if we look at the example of the United States, we see that, despite having decreed the confinement and cessation of all non-essential activities, most restaurants continue to operate, implementing a series of alternative measures to be able to adapt to this new situation, without having to stop work completely.

To this end, four possible courses of action are presented:

Take-Away – Grab&Go

The idea is that the restaurant offers its closest customers the possibility of ordering by phone or via the Internet, so that they only have to go to the premises to pick it up. Another alternative is that the customer goes directly to the premises to order and pick up the orders.

In both cases, a specially designed organisation is required to avoid crowding and to ensure that safety distances can be respected, both on the premises and in the street, as is already happening in supermarkets or pharmacies.

 

Delivery – Home Delivery Food

In this case, the customer also orders the food by telephone or via the Internet, but it is the restaurant itself that delivers the food directly to the customer’s home, either with its own couriers or through other companies that provide transport.

This business model is already working in Spain, and there are different companies specialised in logistics (especially distribution), partly because it had begun to prosper before the pandemic.

 

Home Service

Same as the previous model, but with the difference that, in addition to bringing the prepared food, the restaurant can provide staff to move to the customer’s location to finish the orders and serve them there, either in private homes, offices or any other place where there is a certain number of people that justifies the move.

This modality would allow, besides recovering the work of the kitchen staff -a priori easier to keep -, to also engage waiters, who could participate in the logistic activities and, also, finishing and serving the food in the place of consumption.

 

The Chef’s Pantry

Restaurants could offer some of the products that they offer on their menus to customers who come to have lunch or dinner at their facility, either raw materials or dishes prepared for consumption at home.

All these models would be feasible by adapting them to the particularities of each restaurant. Some could even offer a 16-hour service, similar to hotels, with two 8-hour shifts so that customers can order breakfast, lunch or dinner at any time.

Another aspect that may be interesting to develop is that of drinks and beverages. Although most of the business will be focused on food, since people usually buy their own drinks in supermarkets and specialised eating establishments, these eating establishments should aim to offer, in an appropriate format, those drinks that harmonise with the dishes.

All these measures, which may be more or less temporary, would make it possible to avoid total cessation of activity and, with it, the indebtedness of the restaurants and the massive dismissal of staff. It is, however, of paramount importance that an adequate activity planning is done.

For this system to work, it is necessary to redesign the menus, simplifying the offer of dishes and adapting it so that the transfer to the houses can be done with maximum efficiency.

Dishes must incorporate ingredients, cooking techniques and simple presentations, so that it will be sufficient to heat or cool them for consumption and conservation. They can also be finished at the clients’ homes, providing some ingredients or condiments that could be added at the moment of consumption.

When planning this type of business, it is important to pay special attention to the design of the packaging, that is, the way in which the food is prepared and packed and the utensils used for it, so that they can be easily transported and arrive in optimum condition at destination.

In short, the restaurants will have to take into account the prices in addition to offering an original and quality experience. In short, they must reinvent themselves, and propose a way to be more profitable, saving costs and maintaining prices.

 

3. THE MARKETS

The food and beverage industry and markets are functioning better than the restaurant industry, due to their essential nature.

But there are certain niche markets that are going to have to be reinvented as well. We are talking about those “gourmet markets” or “gastronomic markets” converted into tourist and recreational destinations, which not only allow the purchase of quality food and beverages, but also the possibility of enjoying them inside as well.

In recent times, they have become a reference point for Spanish gastronomy and an example worldwide. They have made it possible to avoid the closure of many markets, revitalising the local economy and even, occasionally, favouring the rehabilitation of emblematic buildings in large cities.

For all these reasons, it is essential to find a way in which these business models can also be put in place.

Formulas such as delivery or, especially, take away can also work in these eating establishments, offering the consumer not only unique or quality products, but also cooked dishes.

 

4. DEMAND FOR HEALTHY, FAIR, SUSTAINABLE AND SATISFACTORY FOOD

Perhaps one of the few positive aspects that can be drawn from this pandemic is that it has enabled us to broaden our awareness of such important issues as health, the environment and solidarity, and to recover much of our spirit through culinary skills. During health emergency, we have remained united, supporting and collaborating with each other to move forward.

We have discovered an unusual vulnerability, especially in the most advanced societies, witnessing first-hand the importance of taking care of health; and, in this sense, food has a fundamental role.

We have also understood that we cannot continue to maintain certain habits that damage the environment and that endanger our ability to feed ourselves in the future.

For all these reasons, it is logical to think that, from now on, consumers will demand healthier, fairer and more sustainable products, as well as satisfactory ones, rewarding those companies whose activity is in line with these values.

The reinvention of restaurants and markets has to take into account all these aspects, ensuring that minimum quality and safety requirements are met (use of healthy, local, organic, fair trade products…) as far as possible.

Restaurants, food houses, bars and taverns must continue to provide customer satisfaction, whether they can enjoy their food on the premises or choose to take it away or order it from home. Moreover, they will have to stand out maintaining specialities, models and experiences.

The catering industry must contribute to the happiness of people, especially during the de-escalation stage, but also with hope for the future.

During this de-escalation phase, waiter service will be an essential part of the reinvention of restaurants. Customers will want and need special attention, as their experience will be crucial in getting them to use the restaurant services again.

 

5. COMMUNICATION IN THE 21ST CENTURY

In recent years, and especially during this pandemic, the online world has become very important as a means of communication. During confinement we have become more accustomed than ever to communicating and receiving information through the internet and social networks.

The online world is, therefore, one of the main tools of the catering industry to communicate to consumers all the changes they produce in real time. Email, store websites, social networking sites such as Facebook, Instagram and Twitter, and messaging applications such as WhatsApp are essential marketing tools. Not to mention other more conventional media such as phone calls, media ads, traditional signage, and word of mouth.

But there is also a type of technology that can be very useful for the new business models to come: chatbots. A chatbot is a computer program that has an artificial intelligence capable of communicating with the customer and solving the problems that arise. It is a virtual assistant that can carry out different actions such as offering personalised information to the customer, managing an order or solving any possible incidents.

The new situation we are facing will generate a greater flow of customers to virtual media, which could become saturated and collapse. The advantage of this technology is that it will allow us to channel that flow more effectively, allowing establishments to attend to all the questions or demands of their customers.

It is also fundamental, in the communication plans of this industry, to make the production processes transparent in order to account for the health measures and to generate confidence in the customers.

 

6. DISSEMINATION THROUGH INFORMATION SPACES

The different information spaces, guides, media, social networks and specialised websites such as GastroMadrid and GastroMarcaEspaña should include a section to publicise all the news in the hotel and catering sector, with information on restaurants, markets and other establishments that offer their products through take away, delivery or home service. Also, those that promote a healthy, fair and sustainable gastronomy.

In addition, these spaces could show a list of the companies that offer the hotel and catering sector the different services of distribution, advice, gastronomic marketing, customer relationship management, etc.

 

7. LEGAL FRAMEWORK

With the legal uncertainty that this situation has generated, it is necessary to respond to the doubts and legal scenarios that arise for each of the agents involved in the catering sector.

The different activities, eating establishments and professionals in the sector require specific measures for each case. Therefore, it is of vital importance that law firms and specialised institutions will provide adequate professional advice.

Most restaurants and food services are facing a difficult economic situation, so it is imperative that they know about the various options available and what steps to take to best cope with the changes.

In recent weeks, the Government and the Autonomous Communities have approved many legal measures to deal with the cessation of activity. These measures include economic aid, rent payments, deferment of payments and debts, amendments in contracts and labour agreements… All these new regulations may be difficult to understand.

On the other hand, new business models and the increasing digitalisation of professional services can open debates when interpreting the current legislation.

With the help of a specialised person, gastronomy companies, restaurants, bars, taverns and cafeterias will be able to solve these legal issues and find ways to make their businesses profitable and sustainable.

 

8. CALL TO ACTION

The Royal Academy of Gastronomy would like to call on the Public Administrations (the Government, the Autonomous Communities and the Town Halls) to address, with special interest, all the support and collaboration required by the gastronomy sector in general and, particularly, the hotel and restaurant industry.

According to the KPMG report referred to at the beginning of this writing, the entire gastronomic activity in Spain accounts for around 30% of the Gross Domestic Product. The food industry is, in principle, the most important one in Spain in terms of turnover.

There is no doubt that the hotel and catering industry is of paramount importance to job creation and tourism.

For all these reasons, it is essential to maintain the activity of all these companies, large, medium and small, and also the self-employed, who have managed, in recent years, to place Spanish cuisine at the highest level and make Spain one of the main tourist and gastronomic destinations.

The Royal Academy of Gastronomy understands that the Government’s policy is basic, but it also wants to appeal to the Autonomous Communities and, particularly, to the City Councils, which can take temporary measures to allow a minimum of continuity to hotels, restaurants, bars, taverns, cafeterias and cocktail bars.

So that they can overcome the dramatic situation caused by the pandemic and continue, albeit in a minor way, with their activities, ensuring that they can resume full operation in the future.

 

9. THE ROLE OF RAG IN RESTORING THE CATERING BUSINESS

The RAG, like the other Royal Academies, has to address, propose and anticipate visions of the future, global focus, schemes and scenarios that allow the protagonists in each sector to know where they are moving and what their future possibilities are.

This is what the RAG is trying to do with this report and the document on “How to Restore the Catering Business”.

From its position as a reference institution in the sector, RAG will urge the media, gastronomic guides, information spaces on the Internet and social networks to expressly support these new forms of business in the catering sector, making known the new gastronomic offers available at eating establishments.

And also, those who in some way support fair and sustainable gastronomy, acquiring local, ecological, handcrafted products and, in some way, maintaining that immense wave of gastronomic solidarity that has existed in Spain during these last few weeks.

Two years ago, with the support of the RAG, the European Association of Law and Gastronomy was incorporated in order to provide specific information to all professionals in the restaurant and general gastronomy sectors. This is now vitally important, given the innumerable rules and regulations that are being developed in response to the havoc wrought in the sector by the pandemic.

Now, without a doubt, the most important thing is to approach the global vision of what this transition stage represents with a view to the new normality in order to offer all entrepreneurs, managers and professionals in the world of gastronomy and catering a horizon of hope.

This report refers mainly to phase 2 for de-escalating the confinement. But it should serve to facilitate the evolution into phase 3, which at the time of writing this document is difficult to visualise.

On this basis and according to this global vision, the evolution in the different territories must be carried out with the indispensable and necessary collaboration of the Academies of Gastronomy of the Autonomous Communities.

RAG’s knowledge of the evolution of the Spanish gastronomy in recent years until becoming one of the best and most outstanding in the world is now a key tool for analysing the future of the restaurant industry.