COVID-19: A Blessing in Disguise for the F&B Industry?

Covid-19 caused a global industry-wide downturn when it first surfaced, and the ripples of this pandemic will be around for many years to come. The F&B industry took a brunt of the impact – some would say it was the hardest hit by the global pandemic. Singapore’s lockdown measures and no dine-in laws were the main culprits behind the downturn, with the sector reporting losses of almost 30% at the end of 2020. Since then, with Singapore returning to tolerable normalcy with phase 3, the F&B sector has managed to recover moderately.

Deserted coffee shops and restaurants during circuit breaker. Cr: The Straits Times

The latest heightened alert proved that it was somewhat a false sense of security with the path forward thorny and unpredictable. However, with all the measures that the first round of circuit breaker brought about, restaurant owners are much more prepared for such a situation and have adapted speedily.

Now, we can all agree that COVID-19 was detrimental to the growth of our economy and even our social lives. But was it really all bad?

Sure, restauranteurs were thrown into a frenzy when the circuit breaker announcement was made. For the first time ever, dining in as an option was no longer available. For many, this was essentially a death sentence – cafes who have invested tens of thousands into renovation to attract patrons, restaurant chains who made a name for themselves through their outstanding service…

All of their main selling points or competitive advantages were rendered ineffective in an instant.

It did not take long for innovation to kick in, however. Resourcefulness and creativity saw many novel ideas take root and grow. Thousands closed shop, while the rest rose from the ashes, emerging stronger than before with contingency measures in hand.

With that in mind, is it possible that COVID-19 was actually a blessing in disguise for the F&B industry? A wake-up call that motivated the once stale landscape to make drastic changes, both for their own and their customers’ benefits?

Product Innovation

In order to make up for the drop in revenue, restauranteurs considered other avenues of profit making. The first and most obvious way was repackaging products for retail purposes, such as packaged meat, sauces, condiments, or ready-to-cook packages. Next came other innovations like picnic baskets, online food courses, custom recipes... you name it, it’s probably available.

Cr: Sina

An example of a ready-to-cook product is Haidilao’s “Kai Fan Le”, a ready-packed kit with all the ingredients and sauce you need to cook up a feast from the comfort of your own home. This was hugely popular as customers could recreate that same taste they were missing during the lockdown.

This not only created many new ways for the public to enjoy food from the comfort of their homes, it also expanded the horizon for the F&B industry as a whole. The sky’s really the limit when you get thinking!

Digitalization

How many times have we tried to look up a restaurant or hawker store only to find nothing on the internet? It’s a common occurrence, despite it being the digital age as some of the older generation hawkers are not tech-savvy enough to set-up social media pages for their businesses, much less proper websites. Some might even consider it a hassle that provides little to no benefit and dismissed the thought entirely.

COVID-19 made digitalization necessary for survival. Smaller businesses that shied away from the digital grid before had to establish an online presence, be it through ordering websites, social media accounts or delivery platforms. This would have initially cost a pretty penny but coupled with government grants like the Hawkers Go Digital scheme, the investment required was drastically reduced.

Cr: IMDA SG

Not only are these smaller F&B businesses easier to locate now, they have also secured more revenue streams that have built a stronger foundation for them to weather through storms in the future. Customers are also pleased as they now have more access to information and a wider variety of food on delivery platforms!

Rise of Ghost Kitchens

Cr: The Straits Time

A Ghost Kitchen has none of the things we commonly associate with a restaurant: servers, seating, and a sign. The Ghost Kitchen - sometimes called Virtual Restaurant, Dark Kitchen, or Cloud Kitchen - exists only to serve orders placed via mobile app or delivery service web page.

This means the cost of setting up and running a Ghost Kitchen is significantly lower than your average restaurant. You can do away with dining space, service staff, dining utensils, menus et cetera. All you have to focus on is preparation, cooking and packaging. This concept existed before COVID-19 but only gained real traction once it became apparent that traditional restaurants was no longer the de facto way of operation.

We are seeing a monumental shift in establishments of restaurants along with how they operate in the post-pandemic landscape with Ghost Kitchens. The changes will provide unprecedented chances to experiment, test, and refine the public’s reaction to new food concepts at little risk. Running multiple concepts from a single location and meeting demand for a wide variety of cuisines can become the new norm. This opens up more possibilities of cuisines for consumers, and very likely at lower prices as compared to their brick-and-mortar counterparts.

What do you think?

The F&B industry in Singapore has undergone several rounds of changes and innovation ever since COVID-19, and with the pesky virus looking set to be around for at least the foreseeable future, we can expect further developments as restauranteurs adapt further to what we now view as normalcy.

It’s not ideal, but at the very least, it has breathed new life into the F&B industry. Do you think that COVID-19 is a blessing or a curse?