The coronavirus pandemic has severely damaged the prospects of most small businesses in the hospitality industry. No one can predict how long this crisis will drag, which has only made the business owners cautious about their future. But with the best practices to do the business online, they can meet the challenges. Industry experts, Matt Plapp and Heleri Rande offer useful tips and insight from their experience and expertise in the restaurant business.
The coronavirus pandemic has severely damaged the prospects of most small businesses in the hospitality industry. No one can predict how long this crisis will drag, which has only made the business owners cautious about their future. But with the best practices to do the business online, they can meet the challenges. Matt Plapp and Heleri Rande offer useful tips and insight from their experience and expertise in the restaurant business.
Like many other industries and businesses, the hospitality industry also is going through tough times due to the pandemic. Customers are absent from restaurants and hotels and prefer buying food online. Consequently, the demand has slumped, and many small restaurants are on the verge of closure or closed.
Still, not all is lost for the small players in this industry. Those who can quickly adapt to the new situation and implement a new marketing strategy can surely come up as winners. This is the battle to survive until finally the pandemic is over and markets are bustling with crowds.
To find out the hospitality industry’s critical issues and the solutions, Designhill conducted a panel discussion on 14th May 2020. The industry veteran Matt Plapp and Heleri Rande were the guest speakers. They shared some valuable tips on how to combat the crisis in the hospitality industry.
During the discussion, the experts talked about the industry’s current challenges and the best marketing strategies small businesses should adopt. They shared some survival ideas and gave an overview of the effective government policies for the industry. Other vital aspects, such as the scope of digital ordering and convenient tech, also came up during the discussion.
Here Is The Video Of The Panel Discussion With Matt Plapp & Heleri Rande
Here Are The Key Points You Should Consider While Running Your Small Hospitality Business During The Pandemic
Designhill: How entry and exit barriers have shifted during these pandemic times, should one divest, invest more carefully or just postpone starting up?
Heleri Rande: Well, I think it’s incredibly country and region-dependent because government guidelines influence it so heavily. I mean, here in the UK, we still have no idea when we can reopen. They say that the markets can reopen by July 1, but that’s not set in stone, as everything will be reviewed on an ongoing basis. In that sense, everything is changing by the minute. You have to be incredibly on top of your game, make sure you get the right information and adapt.
Adept to The New Circumstances
I think adaptability is the keyword right now. We have seen many operators, restaurateurs, and hotel groups trying to navigate this whole environment. When we look at other European countries, they are already easing restrictions in Austria and Denmark. I think Sweden is an entirely different case study because they never went into full lockdown. They never have similar restrictions imposed like most other countries. Yet, they did have social distancing rules, and how restaurants have gone through that. They have survived and completely adapted and readapted, which is interesting.
Make sure you look at the Swedish model a bit to see how different restaurants, groups, and hospitality businesses have adapted to the climate. It is heavily region and country dependent.
Be Aware of The New Developments
The best course of action is to make sure you are continually following the news and see what is out there. There are great trade bodies in the UK. We have UK hospitality headed by the wonderful Kate Nicole’s, and they give constant updates because they are in touch with the government and know how to move forward. I think trade bodies are becoming an important tool for restaurateurs, especially independent operators. They have much less coverage and shielding when it comes to strategy and way forward then bigger groups.
Matt Plapp: Here, in the US, the situation varies state to state, and you have no clue what’s going on in most states. We have got clients all over the United States. So, I can’t pay attention to 50 states, and some of the states are going county by county. California, for example, has different rules in every county. We have clients in a lot of different countries. I tell my clients to keep doing what they can do best right now. Don’t guess what’s going to happen in a week or two. You should communicate with your team and your employees or customers online and create a relationship.
Designhill: How can we prepare for the crisis in terms of financial functions, marketing functions, or even the human resources, and how should the funds flow?
I think the current situation is so unprecedented that no one saw this coming a mile away. We have seen a lot of brands deal with this differently. A lot of hospitality happens within the house. The UK is a developed market when it comes to delivery. In that sense, I think a lot of restaurants that already were operating with a delivery business we have seen turned to delivery a lot more and also just pick up not just delivery using a third party delivery service.
In other countries where delivery is not as advanced as it is here in the UK, we saw companies taking immense cuts from restaurants. Such restaurants are already cutting into very thin margins. Therefore, restaurants end up encouraging people to do their daily walk to go pick up the food rather than using a delivery service. I think the footfall is a big issue and will continue to be so until this pandemic is finally over.
But in the last eight weeks, many independent restaurants have tried to go more online, reduce menus, and make them simpler. They have also introduced cooking at ready-made home packages. So you pack everything, kind of what HelloFresh is doing already, but they’re on a restaurant basis. You get a restaurant meal at home, but you just need to prepare yourself. We have seen some of the higher-end restaurants do that. The delivery has been probably saving some companies but again, the margins are not great.
Designhill: How should we optimize our ad campaigns like that, and how can we have subtleness to prepare for the new markets?
Use Storytelling to Drive Customers
Matt Plapp: Ironically, what company should have been doing before this is what they should be doing right now. I have got a client who was up 6% in April, and he was 75% in diamond this time a year ago. He has a sit-down-casual dining restaurant. Five-six months ago, when we talked to him, he embraced storytelling and spent money on advertising to acquire data, not just to advertise like getting something for a discount or free. Every dollar you spend should be used to acquire data, then use your abilities to talk to people and draw them into your restaurant.
This restaurant owner has always been a storyteller and done live videos. He had conversations with customers via Facebook and Instagram and Snapchat stories. When this crisis came about, it took him three to five days to adjust and figure out how we carry out food and curbside. They had a drive-thru that they had made into a patio a year ago. So they had to rip a deck off, recreate this drive-thru. They are not a drive-thru restaurant, but they adapted.
Connect With Your Audience
And the most significant part of it is that I found over here in the United States that consumers went back to places where they felt a relationship and a connection. And here in the United States, I can’t walk to a restaurant. It would take me an hour and a half to walk to a restaurant probably. But I can drive to about 50 within five minutes, and I have got McDonald’s and the Burger Kings all the fast-food restaurants. I’ve not been into one since this happened, and I wasn’t a huge fast food person before, but I would go occasionally.
Well, when I look at the restaurants, I find that I have been eating that way. There were places where I had a relationship where I went to Facebook or Instagram, and I saw their employees. I saw the employee that month and pictures of customers and videos from the owners. It was a place that I felt like I wasn’t just a number. Ironically, I just ordered lunch for my son and me at a third party. It is a struggle with some of the restaurants that cost because there are two ways to look at it. I wouldn’t order this food. I wouldn’t drive and get it and leave here for 25 minutes and come back. So the only way they’re going to get my business is through that app. And yes, it’s going to cost a little more than what they’ve done.
This particular restaurant has made some smarter moves than some others. It has a different menu that is marked up like this meal that I just spent $36 on would have cost $20 in the restaurant budget. They changed the quantity size, and I went to the restaurant where I would generally get 10 wings for this amount. Now I have 12 wings at this amount. I am absorbing that 30% fee because I am too lazy to drive over there.
Every time one of our clients spends 43 cents on Facebook, he gets somebody to join his VIP program. Every time somebody joins his VIP program, one out of three comes into the restaurant within two weeks. I mean, the return is like an average of $40. So, he spends 43 cents times $3 20. And he gets a $40 order within two weeks. I think that is a pretty good investment. But the problem is for most businesses it is hope and prays. They’ve traditionally hoped and prayed for their marketing and say that they will boost the Facebook posts, throw $10 on Instagram, and write by some radio.
Advertising is Cheaper Right Now
A reason for advertising much cheaper these days is because, like in the States, 90% of the small businesses have stopped marketing. This leaves Facebook and Instagram and YouTube with a lot of inventory. And there is a lot of inventory, and there are a lot more eyeballs because people are at home a lot more often today. I spent a half-hour outside talking to two neighbors in our street, and every neighbor was out there, they got nothing to do. And so, they are on their phones more often.
People are not spending money on Facebook because their restaurants are closing down. And then you got consumers who are spending 10 times more time there. So, there is all this inventory that we are seeing clients that used to pay $1 for six months ago. They are paying 10 cents for right now.
Designhill: How to Build communication plans during the pandemic?
Heleri Rande: I think it’s essential to build a communication plan, especially when getting the market opening dates from the government. It means there’s going to be 30,000 restaurants opening that same week. Then, that amount of communication goes through the roof, and people will not have the ability to focus on one or the other. There is going to be a massive overload of communication at that time. So brands are likely to communicate throughout this process.
For example, BrewDog, a fantastic company that has come through incredibly during these times, has been communicating. The company informed them about their food-producing hand sanitizer gels in their beer breweries, providing free IPAs for everyone when they come back to their bars. So every day, there’s new initiatives and new ways of creative ways of communicating what the brand stands for. Therefore, they are always there in people’s minds.
Once all the restaurants and bars are opened in the same location, the same city, there will be a massive overload of all kinds of promotions. I think it has to be a staggered way. So, this is when you should have a communication plan, and a marketing plan is crucial to have right now.
Designhill: Should the brands invest more advertising to get more ROI right now?
Henri Rande: Well, I think anything that comes to communication has to be thought through a lot more carefully now. As I said, I think there is a communication plan that needs to be put in place. That involves marketing and how you deal with your customers. It is also about your communication with your suppliers and vendors. Overall, it involves communication internally and externally with your brand.
So, I think there is a whole lot of strategic work that should be going on. If the first possible date of opening is July 1, we have more than a month to go. I think this is the ideal time actually to focus on putting a plan in place.
Think of The Digital Fatigue
Where are you going to spend those dollars? And how are you going to stagger out to that time of communicating wisely and ensuring that you are staying true to your values? People have a lot more time on their hands right now, and they are on their devices. But I also think we have had so much digital content thrown at us in the last couple of weeks. There is this massive digital fatigue. I have tons of people who have just turned off Zune calls and things not doing them anymore. I am doing all the crucial ones.
People’s attention spans also should be thought about, I think marketing has to take that and whatever doesn’t have to take that into account as well is making sure that this fatigue gap is part of the strategy when they build it out.
Designhill: Can you give me an example of a case study of some, some group or some restaurant, which is doing this to perfection?
Heneri Rande: I think everyone should really go check out BrewDog.They released on Twitter, the 10 things that all their bars will be doing when they’re opening. They have clear guidance on how they are communicating this. I think that will be a great one to look at. It’s on their website now as well, for each market where they have bars. They have about 130 bars around the world. The guidelines are different. They have adjusted those for each of the markets. And I think it’s just been incredible.
Another great group here in the UK is Hawksmoor. They were supposed to open in New York on around March 19, but that didn’t happen. But it is another group. I think that’s doing extremely well in terms of dealing with the situation. Buddhists are probably more globally known in their bar spaces. They’re putting up partitioning walls right now and doing things very creatively. But they have this ten kind of point mantra, and you can find it on their website.
Designhill: How will the market dynamics change for small restaurants, the equivalent of mom and pop restaurants?
Matt Plapp: I think the market dynamics are playing in the minds of small restaurant owners. The big companies suck at marketing with digital marketing. I can say in the US here that small mom and pop restaurants do more creative and engaging content and get more interaction than national brands.
For example, a chicken brand has got thousands of chicken restaurants across the country. They put up a contest recently on their Facebook posts. The page has a million followers. I know a local business that did a similar promotion and had 10 times the Facebook engagement on a 2000 person audience on their page. This is because local businesses are a lot more creative and more in touch with their audience than a 20-year-old college grad that just got out of college.
Advertising on Social Media is Affordable
From a cost standpoint, I don’t think Facebook is expensive. I think getting a restaurant that is not active on Facebook, Instagram, and YouTube right now, spending money is crazy. I can have a client of ours, a pizza restaurant in Minnesota, that for $46 got $900 in sales and 173 contacts into a database for 40 bucks. I mean, if you are doing it correctly, it’s not expensive.
Small businesses need to get out of their way. If they’re not equipped to run Facebook ads, then hire somebody better. I’m not equipped to do my accounting, so I have an accountant. I’m not equipped to my bookkeeping; therefore, I have a bookkeeper, I have an attorney. I have a graphic designer. We have all those professional people to do specific works. One of the big problems with the mom and pop business is that too many of them are in the kitchen, running their business and trying to do their books and own marketing.
Use a Bailout Program
You are amazed by the number of restaurants I have come across online. In the United States, we have a bailout program called the PPP loan. Under this program, a restaurant in the United States can get a loan two and a half times their payroll for future payroll over the next 60 days. When you go online and Facebook groups in the states, you find that 90% of these restaurants don’t have to use it. This is because they don’t have a bookkeeper and accountant.
I think many small restaurants need to do better, stop doing everything themselves, and spend a little money on your festival to do it for them. This is because the opportunity is there. They have got more, and they are more nimble. They can adapt quickly. You talk about stories and telling the story over the next couple of months. One of the big stories here in the US is that probably 20% of the restaurants will go away. And many restaurants probably should have been in business five years ago because our economy was doing good.
I have a friend of mine who’s going to a restaurant that closed his doors for 60 days as he was financially stable. This restaurant is opening up this past week. His employees all made more money due to the United States the way the government structured. So they closed. But most restaurants here aren’t structured that way.
Evaluate Your Business Model
Heleri Rande: I think it is time that restaurant owners reevaluate their business models. Independent restaurants are trying to do as much in the house and having three to four roles per person. But this crisis shows that it is not a sustainable model, and you need to think differently and reevaluate and re-strategize.
I see here in the UK that people have their favorite go-to places in their neighborhood. I’m living in a residential area of London, and we have the places that we love to go to and want to support them. So, we made sure that we have been doing that throughout the crisis. These are the actual places where you can get high-quality products, and you want them to stay post-opening. I think the timing of how long this crisis drags will be a massive indicator of how many will return when we talk about especially independent restaurants. This is because government support varies.
Here in the UK, it has been a very decent package in terms of support. But it will depend on how long this pandemic continues. I think independent restaurants are in a lot of trouble, but some will return much better if they can survive through the crisis. But restaurants have started selling vouchers to get cash in for spending later when they can reopen. So that is how people are trying to support the restaurants they want to see being placed once the situation stabilizes.
Matt Plappe: I made this comparison the other day. I turned 44 this Sunday, and I talked to a friend of mine about the good economy in a bad economy concerning good business and bad business. When I was 20 years old, I could eat whatever I wanted, exercise a little, and still feel and look fine. When I got 30, I had to run a little more. I had to do CrossFit one or two more days. I eat bad right now in my 40s. I better work out ten times more every week, or it’s catching up within a couple of weeks. I think this is what happened to a lot of businesses, not only restaurants, small businesses. A bad economy highlights a lot of bad things in their business. And that’s just what is going to happen.
Designhill: How do you envision any strategy for restaurants in beach resorts?
Matt Plappe: That is a tough question to answer as it all depends on when people come back. I have friends who live in beach towns, beach resorts, and these communities are in different parts of the world. But it is a two-pronged problem. Number one is that there are no visitors, and secondly, no visitors mean no economy locally. The people living in those areas don’t have any money either. One of the inclinations is that all of our visitors aren’t here. Let’s market to the locals. Well, the locals are all broke because they don’t have jobs.
Wait Until People Come Back
So it’s tough. I don’t do a whole lot of business in tourism as it is too dependent on certain things. But I think you will have to find a way to survive or at least shut down until you can start surviving again until people come back. I know of a whole lot of options because I travel a lot myself. And the places we go to have great beach communities. But some places have certain attractive areas around them.
When I go to Mexico when we go to an overseas friend who lives in a room or a friend who lives in Australia, they are isolated that if there’s no, there’s no tourism, there’s no nothing. So I don’t know if I can give much advice there other than just to keep telling your story and hope and pray that people come back and come back quickly.
Beach Restaurants Have The Advantage
Heleri Rande: Let us say a restaurant, in a hotel, is in an urban environment versus on a beach if people do come. I think beach resorts in some ways are in a better situation because the more outdoor space you have right now, the more you can use the social distancing rules to your advantage. We see massive crowds here in Europe where outdoor cafes are getting permits on any possible plot of land, using parking spaces to utilize outdoor space.
Depends A Lot On The Resumption Of Flights
There are some very terrible statistics that the 2019 levels will not return until 2027 when it comes to hotel occupancy. But I think we are going to see pockets of better stories coming through. The UK is a big feeder market in Spain because many UK people go on vacation in Spain. What we’ve seen from people here right now there, everyone is waiting for flights to start. So flights are the first thing if you rely on external tourism. Once the flights start, utilize your outdoor space as much as possible because you can have the rules of social distance much more in place.
Designhill: Do you think we should redesign the menu or move away from multi-cuisine menus?
Lack of Trust is a Significant Factor
One of our partners runs and operates restaurants around the world and designs them. They run many surveys in the last couple of weeks and found that trust is a big thing right now. But the trust between brand and consumer is not the one that is worse off. There is a lack of trust between consumers and consumers, as well.
People don’t trust other people when they start going back to restaurants due to the virus spread. They do not want to touch menus or anything that another person might have touched. We have seen many venues going cashless and have a one-time-use menu that you can dispose of away. But in terms of when you’re looking at items, I think the guidance that we are saying to our clients is reduced because you need to simplify things.
We can have extensive menus because that means incredible stocktaking and inventory suppliers. What we’ve seen from suppliers is they can’t deliver the way that they used to. So it might be a three-day delivery as opposed to a daily delivery, they might not have all the items that you need. So I think reduced reduction is for groceries from a cost perspective, but an inventory perspective is essential.
Designhill: What is the biggest challenge that you have faced figuring out a strategy?
Heleri Rande: Well, I think it’s the uncertainty right now. You have no clue about all the variables that can change within an hour a day. It’s very hard to predict certain things. So, make sure that you are in constant contact with them. You should always be monitoring and shifting your strategy. But many things have come to a standstill because people focus on running the business operationally and not maybe pursuing the initiatives they have. I had initially thought to roll out later, perhaps this year or next year. So I think it is just the factor of uncertainty. Will we have a second wave or third wave of the pandemic, and when, and how will the vaccine be found? I think there are just so many questions that we cannot answer right now.
Be In Touch With Customers
Therefore, I think the key thing for us has been to be in constant contact. When this crisis first happened in about mid-March, we started a live Facebook channel called homeschool life to get rid of global fatality. So we are providing daily content, eight to nine sessions a day. The content may be anything from industry insights to what you can do to reopen. Many big brands tell us what they are doing and how they’re mitigating the risks.
We hear from World Cup chefs, cooking demos, etc., and all of this is free content in about 300 videos. I think this has been our platform to communicate and make sure that we keep people engaged and motivated. This is because we also have to think about all hospitality staff’s mental health aspects as all of a sudden, they are confined to a small apartment, smoking.
Review The Changing Situation
Matt Plapp: Yeah, I think it comes down to trying to understand the situation as best possible that I am in my career for 10 years. I was the owner of a boat RV dealership here in the United States. I went through September 11, the attacks, and when the economy shut down for months, I also went through the summer of 2008 financial collapse here where I lost a million dollars. When I hear businesses say oh, we went from 100 Grand 10 grand, I understand what they mean. And so, I told all my employees that they are coming from a weird time right now they are overworked and stressed. Many people who have never failed or never fallen don’t understand how easy it is to get up. They don’t understand how easy it is to rebound. And I think that’s what’s helped me and do that.
Communicate With Clients
And so we have been in contact with our clients. We use the Facebook workplace to communicate with our clients. We text and email. I am driving eight hours tomorrow, between two restaurants in my house to shoot video podcasts that we do, and check in on to clients and say, hey, what is going on and how are you doing? Make sure they’re okay as this is a tough and trying time.
But the big thing we have done, and we’ve told our clients is that hey, they need not worry. We tell you have got these four things that we do monthly and these 50 things we can do daily. We have all had different tragedies. We went through in 2008 when the economy collapsed here, the only people that got help were the banks and the big car manufacturers, the small mom and pops businesses like that of us got nothing.
And so I look at it now, there’s a lot of handouts happening in the States, which is great. But a lot more needs to be done. So, we’ve gone to our clients for me as a provider and said that we want to help you. If you can’t pay your bill, we’ll figure it out. We want to help as much as we possibly can.
Designhill: After the markets are opened, how can we deal with the lingering fear of the pandemic and the psyche?
Heleri Rande: I think that all kinds of operators and restaurants can do many things to make customers feel safe. We have seen hand sanitizers outside before you walk into an establishment, and tables in the middle saying this is a social distance table, to provide room in-between stuff. But I think it is all about communication if something does go wrong.
I think one thing, obviously to keep in mind is that none of us are medical experts. So you cannot, as a brand, give medical advice. But you need to make sure that you have opportunities to reach that advice quickly. If you have workers who speak a different language, which we see a lot in the hospitality business, make sure they have a buddy system that can support them. Should they follow all these things, this is an excellent sign for empathy and growing up as a brand. So I think honesty and communication is the key to mitigating the fear.
These are the key tips that the panelists Heleri Rande and Matt Plappe had to offer to the restaurant owners in these difficult times. It would be best if you tried all the tricks of the trade to survive this phase to restart when the pandemic is over, and markets reopen.
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The restaurant industry is undergoing a tough phase due to the coronavirus crisis. But there is still a way out to survive if restaurant owners can revisit their strategies. Matt Plapp and Heleri Rande advise the industry to build relationships and connect with the customers as a plan to attract the customers.