The COVID-19 pandemic was responsible for overnight transformation in various guises. The rate and scale to which it impacted our lives, our societies, our attitudes, our values and our economic landscape was a once-in-a-generation experience.
As we emerge from the pandemic and return to normal, we are hearing more and more this over-used phrase “the new normal”. Designed to describe the long-lasting ways in which our lives and businesses have changed, it may be overused, but it definitely works as an accurate descriptor. Happy as we may be to have our lives back, we are all aware of the altered courses we are plotting. Along with our forever changed habits and priorities and the way we have been forced to adapt.
Economic burdens
On the whole, our economy bears the obvious scars of lockdowns, work from home orders and consumer uncertainty. Although certain industries benefited from misfortune and others were relatively unaffected, there are some who suffered great financial losses. The Food and Beverage (F&B) industry was arguably one of the most affected.
According to the UK Government, the hospitality sector saw the biggest economic decline of all sectors during the pandemic. The peak of the economic downturn was in April 2020, where economic output in the food and accommodation sectors was a staggering (but unsurprising) 90% below pre-pandemic levels.
Although it wasn’t plain sailing, the F&B industry rapidly responded to overnight disruption with the ultimate pivot. In the space of only a year, this industry has undergone an evolutionary transformation that would typically take as long as a decade. And it is for this reason the industry is seeing rapid growth throughout 2022 – growth which is expected to continue even during economic uncertainty and high inflation.
Online ordering
If the mountain can’t come to Mohammed (because he’s not allowed to leave the house) then the proverbial mountain must find a way to make it into Mohammed’s living room. Where there’s a will, there’s innovation. And accelerated digital transformation.
Online ordering took the UK food and beverage industry by storm during the first lockdown. And so it continued even as restrictions were lifted throughout the course of the pandemic.
Many businesses responded to consumer demand and legal restrictions by keeping their kitchens open whilst closing their restaurants. Contactless delivery and pick-up services could ensure customer safety and legal compliance whilst keeping revenues and consumer relationships ticking over.
Consumers felt comfort from knowing they could still get their favourite meals from their preferred outlets despite lockdowns. This sense of the familiar amongst the alien and absurd, like online pub quizzes and Friday night zoom drinks with colleagues, was a novelty at first. But soon it became a preference (unlike the virtual quizzes and drinks). Online ordering has therefore remained a post-pandemic fixture that doesn’t seem to be going anywhere – despite the fact that we can now go anywhere.
Third-party delivery services
Businesses like Deliveroo, JustEat and UberEats were just some of the lucky ones who were not only pandemic-proof but whose growth was pandemic-fuelled. They also became a much-needed source of flexible employment during desperate times for those in hospitality and entertainment careers.
Despite the commissions that food and beverage outlets must pay (up to 25%), these third-party services were attractive revenue streams. Ones that allowed instant access to ready-made digital ordering systems, marketing channels and the consumer convenience factor. This has meant many retailers have stuck with these third parties post-pandemic.
Local independent food and beverage businesses kept afloat by offering online ordering, but many large chains also jumped on the bandwagon and have never looked back. F&B giants like Nandos, Costa and TGI Fridays began operating online ordering and delivery services, and have no plans to stop.
Mcdonald’s, of course, now famously delivers its fare to consumers. A convenience that was sorely lacking in pre-pandemic times, much to the chagrin of hungover students and tired parents longing for a delivered Happy Meal.
More than two years on, and we consumers may be back in the restaurants, but we would like to keep our options open. We have become accustomed to enjoying our restaurant favourites without leaving the comfort of our own homes. And without having to put trousers on.
In-house digital ordering
When we can be bothered to put trousers on and head out to an actual restaurant these days, our expectations are quite different.
When restaurants could reopen, albeit with restrictions to capacity, group sizes, mask-wearing, and tracing systems – venues were expected to mitigate virus transmission risks by reducing shared surfaces and staff-customer interactions. How to minimise touchpoints and increase the speed of service were the questions. Technology was the answer.
Reusable menus became a thing of the past. Although single-use paper menus are naturally commonplace, online ordering apps and QR code menus quickly became a convenient and cost-effective way for restauranteurs, publicans and bar owners to manage their businesses with a few extra perks.
App-based digital ordering systems were used by cost-conscious chain Wetherspoons even pre-pandemic. The no-frills chain opted for the app development for long-term cost-saving purposes. The app meant they could reduce staff headcount and speed up service.
During the pandemic, other restaurants followed suit. Reducing customer-staff interaction was crucial for infection control. Also, government guidelines meant that customers were only allowed to order and be served at their table.
It was easy to walk in, take a seat, scan a QR code, enter your table number, survey the menu, be immediately aware of any unavailable items, make your selection, order and pay, consume and leave. No need to wait for staff to take your order, no need to ask for the dessert menu, and no bills to wait for.
A win-win situation
The marketing benefits are an additional perk for F&B retailers. Taking advantage of enticing imagery, clever menu formatting and upselling opportunities means that retailers can expect increased order values.
Consumers also happily hand over their personal details, and you get to capture all their personal and behavioural data. Which, GDPR compliant practices notwithstanding, you can use for digital marketing purposes and individually targeted offers.
Convenience is king in a post-pandemic F&B market
Consumers are no longer willing to tolerate waiting. New technological advances extend to waiting list applications and transform a customer’s experience of waiting, whether for entry to a bar, a restaurant table or collecting an order. A waiting list application means that patrons can be added or even add themselves to a list, be kept updated with real-time waiting times and receive smartphone notifications or SMS/Whatsapp messages regarding availability.
Reaching out, rather than inviting in
2Photo by Sara Kurfeß on Unsplash
Marketing trends for F&B businesses also had to change during the pandemic, becoming increasingly digital in nature. No longer able to rely on passing trade, F&B businesses needed a change of tactic. And fast.
With workers furloughed or working from home, there was no midweek lunches or after-work drinks trade. With non-essential retail closed, there were no mid-shopping-trip refreshments, coffee dates or leisurely lunches.
OOH marketing, so popular with the F&B industry, was also ineffective during lockdowns and periods of restrictions. F&B businesses needed to connect with their customers and potential customers in new ways. By getting into their homes, and increasingly onto their smartphones, through digital channels including apps, emails and social media.
At one point during the pandemic, social media was the only socialising any of us could do. Platforms like Instagram, Facebook, Twitter and TikTok have been incredibly valuable engagement tools for struggling F&B outlets throughout the pandemic. This is another digital trend that isn’t reversing as we begin to move on.
Behind the scenes
With all this digital transformation to combat huge market disruption comes investment in infrastructure. These new digital services require updates and investment in infrastructure to underpin their performance and the user experience. Internet connections, wireless networks and LANs all need to be able to keep up with demand and ensure a consistent user experience replete with all the latest apps, security features and compatibility with existing network devices.
This has meant that despite the huge hit on income, restaurant operators had to simultaneously invest extensively in rapid digital transformation. They now need to see a rapid and sustained return on that investment.
F&B industry growth is strong, but the position is still precarious
Despite the total lifting of coronavirus restrictions, the investment that F&B firms made in tech to combat the challenges of the pandemic seems to be paying off long-term. Consumer behaviour has changed, and the world has changed. Probably forever.
Growth in the F&B market is rapid. Consultancy firm Oxford Economics correctly forecast that the hospitality and leisure industries would be the fastest growing areas of the economy between 2022 and 2027. And though this is encouraging, and there’s evidence of growth and confidence as F&B giants pop up with new locations, it’s part of a bigger picture.
In the report mentioned above, the government soberingly reminds us that many businesses in the F&B market are growing rapidly because they are making up for great losses. This means that many are in precarious positions, with high pandemic-related debt, narrow profit margins and little resilience. This means there may still be COVID-related F&B casualties to come, especially given the economic situation.
But cost of living crises and high inflation are traditional challenges for the F&B industry. These are familiar foes. If COVID proved anything, it’s the bouncebackability and tenacity of the hospitality industry. The agility and innovation demonstrated by F&B businesses in such challenging times tell an encouraging and optimistic story.
If technology can help F&B overcome national lockdowns and social distancing restrictions lasting years, then an economic blip won’t blight the future of an industry thriving on digital transformation and sheer determination.
Overcoming challenges through innovation isn’t new to us. We’ve been solving business challenges with technology since 1984. Find out more about how.