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Guest Viewpoints

Hospitality Industry Checks into the COVID Era

August 31, 2020
By George Katrantzos

It was Thursday, March 12, 2020 around 3 PM. That was the day everything changed for me. I had already been living in New York City and working in the hospitality space for 18 years.

I’ve worked in a range of capacities: chef, event host, manager, supervisor, server, busser, bartender — you get the point. At my most recent job, a leadership role at a boutique events company, I found myself thriving as never before. At this company, I truly loved what I was doing. I was learning all about online marketing and selling events during the day while excelling as a chef and host at night. I was using my full arsenal of skills, while using food and wine to connect complete strangers at our events, and marveling at the atmosphere we’d created by the time an event ended. People came to our events with feeling shy and a bit estranged. By the end, they were leaving with a cadre of newfound friends, talking like besties as they sashayed out the door.

And then the pandemic hit.

Just as I’d realized how connecting people is my calling. I started making assumptions and asking questions about the industry and how COVID would impact the market.

I asked myself, how are the older generations going to order? Was it safe to even order food from restaurants?

In the beginning, everything was so uncertain. It became clear that closing was the only option for an establishment which lacked a reliable channel to facilitate delivery. Without delivery, 76% of restaurant operators would have been forced to close their shops.

Let's face it, the old normal is not coming back, EVER! Some good news though, we have a great landscape of social media channels to work on! The world was actually over-connected to the point that these connections felt scrambled! 

There’s such an overabundance of social media, email, and URL channels, social-distancing has led to lost opportunities simply because the messaging on one channel may be slightly different from another; this leads to confusion.          

I interviewed a chef and client in NYC who owns her own restaurant and product line, who fortunately avoided closing her doors. She said, “A lot of patrons from even outside the NY-Metro area were calling to pick-up food!” She even mentioned how one of her vendors gratefully indicated that her restaurant was one of the few still placing orders.

I attended the Food-On-Demand virtual conference, that took place on August 10-12, 2020 which focused specifically on food delivery and online sales. All the leading industry professionals were there. And, of course, major polling companies were there to share new information. Percentages and data in this article are the result of research presented at the virtual conference by the research firms Gallup and Sense360.

An overall takeaway — integration companies are essential to keeping businesses efficient. These companies that can source local delivery fleets for you, with many third-party marketplaces are starting a “drive only” program.

COVID has actually changed consumer spending.

Some key points:

•   Guest tips have increased per transaction, which shows that people are grateful for service and rewarding consistency.

•   54% of all people use delivery as a vehicle to procure restaurant food.

•   63% of people who ordered online prefer to order directly.

•   Ordering directly from the restaurant, rather than using a third-party service, supports the local economy.  

•   Third-party marketplaces can charge up to 30% commission. (As restaurant margins are bad enough, it’s better to let the local business owner profit than the third party.)

•   The local business owner will reinvest their profit locally, and ultimately prove better at retaining their individual consumers.

•   Consumers prefer to spend their money directly with the merchant if they know it supports the community.

•   Third-party deliveries are encouraging businesses to lower their costs in any way they can.

I personally observe how third-party services exhibit a holier-than-thou attitude, believing that all restaurants are obliged to sell their products on those marketplaces.

Think about it — they are telling you to lower the quality of your product and brand so you can continue to make it worth your while to sell. Life is all about compromising, right? Wrong! People only use third-party services because of the convenience. They simply do not know what they want to eat, so they enter a marketplace and try to figure it out. Seventy percent of consumers spend when they are feeling emotional. The more hungry you are, the more emotional you will be. This is the major reason online delivery has gone from convenience to necessity.

Unfortunately, third-party deliverers always put their brand first, and they don’t feel threatened by locals supporting local businesses. Now the big boys are consolidating and expanding to other F&B [food and beverage] avenues like supermarkets with even smaller margins than restaurants.

Interestingly, data that was shared on the virtual conference by Sense360 indicated that “consumers 45 and older have been much less enthusiastic about delivery” and “typically tend to be more engaged in drive-thru, carryout and curbside.” This consumer behavior is exactly what my client, the NYC chef, was describing.

The reality is, we have created a convenience-based economy. A CEO of a company who does online booking and delivery believes that this relationship of convenience can persist just as easily between the consumer and the merchant — rather than with the third-party! Consumers have simply been dis-intermediated by third parties and unable to establish a solid connection with merchants. 

Higher-end restaurants were ironically more likely to close due to lack of delivery options. However, the businesses that were able to reach out to the patrons found a way to engage. They would communicate and invite their patrons to become a part of the cooking experience. They would offer them reheating instructions and requested that the patron tag the restaurant in the post about their meal. Now THAT’S what I call digital connection!

The point is: not many restaurants are offering the proper marketing and engagement that solidifies their relationship with their most valued guests.

Strategies to support and reenforce an emotional connection between the business owner and the consumer should be fundamental. In this brave new world of day-to-day uncertainty, closed-door existence, and lives growing ever more virtual, it’s advantageous for us to pool our resources, genuinely listen to each other’s feedback and become a new kind of community.

George Katrantzos is the Founder of My Cloud Solutions https://linktr.ee/mycloudsolutions.co.

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