Three ways food and beverage businesses can innovate in a post-pandemic world
Restaurants had to pivot rapidly during Covid to survive. With life now getting back to normal post-pandemic, what lessons can be learnt and what is the outlook for the food and beverage industry? Here are three thoughts for how the sector can embrace change to sustain their businesses in the long term.
The swiftness with which the Covid pandemic hit didn’t just catch everyone by surprise, it also changed our lifestyles and the way businesses operate, too.
The food and beverage industry was no exception. Suddenly, only takeaway orders could be accepted, and if restaurants failed to pivot quickly, some weren’t able to survive.
Given the threshold for entering the industry is relatively low, the net profit generally accounts for about 10% of turnover. But once the turnover plummets sharply, either companies are left in the red or face closure altogether.
During the pandemic, many restaurants or eateries couldn’t survive as their modus operandi was relying purely on dining-in. Obviously, this way of doing business didn’t work, as customers couldn’t visit restaurants. As a result, many companies temporarily switched to online operations. As one door closed, another opened.
But post pandemic, the ramifications are still being felt, fuelled further by rising energy costs. As a consequence, there are still a number of challenges – and opportunities – facing the restaurant industry.
How the food and beverage industry can innovate post-Covid
1. Rethinking the business model
The wake-up call of this pandemic reminds us that focusing just on food quality is not enough. Should restaurant owners now reposition companies as service industries? Focusing on how to develop new customers, understanding their needs and tastes, and serving them delicious products through effective channels (online and offline) has shifted the traditional thinking of restaurants. Now, direct interaction with customers is key.
The sudden negative impact of the epidemic caught many traditional restaurants by surprise. First, people stopped going out to eat. Secondly, restaurants that remained open were limited to takeaway only. The lack of online and offline trading tools greatly affected the business of the industry. Even with online ordering, many products weren’t suitable for takeaway – compromising food quality and customer experience. Product development and packaging was a major wake-up call to the industry. Of course, food delivery doesn’t just affect the quality of food, but increases costs as well. Owners must rethink their costing models and create a plan to control it.
Allowing customers to order food online is only the first step. More importantly, restaurant owners must rethink the whole supply chain process, from product research and development, to packaging and logistics, to retain customers at a reasonable cost.
2. Technology is no longer a nice-to-have. It’s a necessity
Generally, traditional industries like food and beverage are slow in adopting technology. It’s hoped that the epidemic will change and accelerate the digitisation of the industry. Through technology, people can be better utilised and product consistency improved. By using enterprise resource planning (ERP) systems and data, restaurants can analyse costs, identify problems, improve management efficiency and customer relations in real-time, from customer orders right through to the product on plates. Doing so can increase the competitiveness of the business.
By embracing technology, operators can use different tools, including social media, to provide the convenience customers expect, from placing orders to interacting anywhere and anytime.
This epidemic serves as a wake-up call. Technology needs to be used as a competitive tool. Without it, the business can’t survive. Technology, just like other business management tools, helps companies improve and enhance management performance.
3. Bring innovative ideas into the entire supply chain of the enterprise
Vijay Govindarajan, a well-known American professor of creative management, developed a simple but incredibly effective three-box solution for strategy innovation.
The first box, the past, is about selectively forgetting what has gone before, such as methods and processes that have become out of date. The second box, the present, is about managing the here and now to improve the existing operating environment and seek better profit. The third box is the future, seeking breakthrough ideas and translating them into new business opportunities.
In his experience, it is difficult for the average enterprise to let go of the past and forgoing ideas or methods that have been successful in the past, but are no longer appropriate. The current state of many food and beverage players confirms this view.
When it comes to innovation and new ideas, the industry often focuses on the creativity of product development and ignores the entire business process. But from order to delivery, the entire structure is ripe for creative reinvention. Like how to introduce products to customers online, so that they can place orders and transact easily. When designing products, in addition to considering whether the product is suitable for takeaway, creative product packaging can also play an important role. For example, making the packaging beautiful and practical through internet platforms and social media, so that it can attract new, younger customers.
For the foreseeable future, we have to co-exist with the virus – it hasn’t gone away entirely. And we’re still living with its effects. In order to survive and thrive amid this uncertainty, embracing change and being able to pivot is the only way to move forward.
Tolstoy, the famous Russian writer, once said: "Everyone thinks of changing the world, but no one thinks of changing himself”. The silver lining is that the pandemic will be over soon. However, are you ready to take this opportunity to accelerate change and prepare for the post-epidemic era?