The impact of the coronavirus is clearly hugely significant to all of us and has implications for businesses across the world. The impact on the food industry has been somewhat atypical creating real winners and losers. Not every industry has been impacted in such a polarising way. The overused “bounce back“ phrase that is being applied in general to businesses is highly relevant to the sector. Whilst it may seem obvious that some food businesses will recover quicker and to a higher level than others, the preparation and remodelling of your business now will determine to what extent your future profits will match or exceed what you saw pre-crisis.
The adaptations that many businesses have made to survive have been significant. Restaurants have launched takeout, semi-finished, distribution and local reselling to maintain some revenue with variable results. Online grocery purchasing has doubled whilst impulse and sandwich sales have fallen dramatically. The Chinese market, which is ahead of Europe, has seen 90% of restaurants that started a takeout service maintain this. It is crucial that business owners now make the correct choices as to how their business will be shaped post the crisis. It is unlikely any revenue streams will be the same as pre-crisis in the near future and selection of the food business model that is best in any environment, potentially with several different income flows is a crucial planning requirement at this time.
What is clear is there is a pent-up consumer demand for the return of food services as soon as is feasible. In countries where lockdown has been lifted restaurant demand has been very high with the need to operate with new operational and customer seating plans. This will occur in the UK although the impact on profitability needs to be modelled with appropriate financial measures taken. The double-edged sword of increase costs and lower capacity has an obvious detrimental impact on profitability. There are, however, strategies to improve this and whilst most business owners will focus on costs it is important that pricing and capacity planning, both variables that can be managed are a key part of recovery plans.
There are many food trends that have grown during this period and it is important to predict where these will continue. Healthier eating and sports nutrition have been driven by the increased time available for food preparation and the growth in exercise activities. The government is intent on reducing the burden on the NHS from obesity and it is likely a “sugar tax” will be introduced more forcefully. The predicted increase in home workers and the drive away from public transport to cycle and walk to work will undoubtedly provide food marketing opportunities and ongoing high levels of online purchasing. Analysis of these trends and how they can influence your business should form part of your current business planning.
This pandemic has been a global health and business shock and a new way of day to day living will undoubtedly emerge. Whilst the food business has been impacted significantly there are also real opportunities emerging as life starts to return to a new normality. Making the right decisions now will impact on the future profitability and sustainability of your business.
The business growth team at EMC are not theorists but practitioners and will assimilate your business needs quickly and work with you and your management teams to develop and execute a recovery plan. Our experts operate on an interim or project basis and represent a totally flexible and cost-effective solution.
Take the first step and contact us to discuss your business challenges and how we can provide the support you require. An initial discussion will ascertain where there are opportunities to quickly influence your company’s performance and who would be most appropriate to support you.
Andrew Crumpton – Food industry specialist EMCBack to all news