COVID-19 has walloped the restaurant industry — you’ve been reading it for the last five months! This global crisis has pushed companies to innovate like never before. The world is reshaping in terms of thoughts around F&B business. While some restaurateurs are looking to reduce their operational cost, some are relying on the technology. The fixed operating cost for restaurants are very high. Even if restaurants get 70% of the business back, it will not be viable.
COGS – Cost Of Goods Sold
Two things the restaurant industry will see more of in the near future: Cloud kitchens and Automation. We will show you how, as explained below:
During the coronavirus pandemic, many restaurant businesses were seen moving to the cloud kitchen segment. Is this going to be the post-COVID mantra for the F&B industry? Will all restaurants start their own delivery apps? How will the restaurant business survive the COVID crisis? Will there be a downsizing of menus? How safe is it to visit restaurants? What’s the future of dining out? What should single restaurant owners do? To answer all of the above, the next big solution is cloud kitchen model which will be adopted by the restaurants quickly.
Taj Hotels has started “Hospitality@Home”, a contactless takeaway service, at 10 of its hotels in Delhi, Mumbai, Bengaluru, Hyderabad, Kolkata and Chennai, with select dishes from its iconic restaurants available. Similarly, Marriott International has launched the “Marriott on Wheels” initiative. Over 20 of its hotels have created a compact menu, with dishes delivered in sanitized vehicles.
The main reason is the rise in delivery orders over the last few years.
According to the National Restaurant Association’s 2020 consumer trends, 52% of consumers say purchasing takeout or delivery food is essential to the way they live.
Another reason that cloud kitchens are gaining popularity is the convenience it offers to restaurateurs who are struggling in the rise of competition. Considering the harsh conditions after COVID-19, the restaurant industry is in a worse position than ever. Especially for fine dining restaurants and franchises, the cloud kitchen concept enables restaurant operators to stay afloat with online ordering solutions and cost-saving options.
Here are the benefits of cloud kitchens compared to the traditional restaurant business model:
A cloud kitchen is much more cost-efficient than a dine-in restaurant in so many ways. Firstly, there’s no need to invest in real estate or pay high rents or overspend on interior design, furniture or equipment. Shared facilities allow restaurateurs to produce and deliver food in a much more affordable way.
Secondly, a cloud kitchen’s labor force consists of chefs, dishwashers and delivery drivers. In this concept, the front of house staff is no longer necessary. So, in this way, cloud kitchens reduce operational and labor costs. Lastly, it is also possible to save on inventory with cloud kitchens. By tracking data and removing ingredients that are not as popular, it becomes easier to save on overhead expenses.
A cloud kitchen concept can be expanded easily geographically without investing in expensive real estate. Cloud kitchens opened with low investment amounts can help franchise companies grow their business.
Cloud kitchens run more efficiently than traditional dine-in restaurants. For obvious reasons, busy eating hours and wait times make the delivery process much more difficult in traditional restaurants. And in cloud kitchens, as the only focus is to prepare and deliver high-quality food, the whole process gets faster and easier.
Cloud kitchens can use their resources to invest in new menu ingredients easily. Observing real-time customer data, restaurant operators can update their menu ingredients, set competitive prices and run their business much more effectively.
Cloud kitchens give flexibility to restaurants. Different delivery restaurants can operate from the same kitchen or the same restaurant can build many brands under one roof. For example, a restaurateur who offers Thai cuisine can decide to offer Indian cuisine as well.
Leaders who may have been slow to adopt automation technologies. In the next two years you will see pretty significant automation adoption in the food space because of COVID.
The basic reason why one should go for Automation is well, “Machines can’t get the Virus”.
Automaton can be leveraged as a way to cut costs during economic turmoil, provide faster service to customers, and revamp their operations for distributed work. The automation work done today will pave the way for a better future tomorrow.
The kitchen automation could speed up the order fulfillment process for many businesses.
At one point suggested a hub-and-spoke model where a machine-like Picnic could prep food in a central kitchen before sending it out to smaller Cloud kitchen operations for final fulfillment of orders.
Automation ensures a higher level of sanitization and better ways to keep workers in the kitchen socially distanced.
As salad bars shut down, California-based Chowbotics started getting more inquiries about Sally, a robot about the size of a refrigerator that makes a variety of salads and bowls. Sally lets customers choose from 22 prepared ingredients stored inside the machine. It can make around 65 bowls a day before kitchen workers need to refill the ingredients.
Prior to this year, Chowbotics had sold around 125 of its robots ($35,000 each), primarily to hospitals and colleges. But since the coronavirus hit, sales have jumped more than 60%, CEO Rick Wilmer said, with growing interest from grocery stores, senior living communities and even the U.S. Department of Defense.
Blendid had a handful of kiosk operating around San Francisco, but since the pandemic began, Blendid has started contract discussions with hospitals, corporations, shopping malls and groceries.
Blendid sells a robot kiosk that makes a variety of fresh smoothies. Customers can order from a smartphone app and tweak the recipe if they want more kale or less ginger, for example. Once or twice a day, a Blendid employee refills the ingredients.
We’ll see more of this kind of efficiency in the near future. Especially for quick-service restaurants and delivery-only concepts that are all about making fast food faster.
Automated food companies insist they’re not trying to replace human workers. At White Castle, Richardson says Flippy will allow managers to re-deploy workers to drive-through lanes or help them cover a shift if an employee calls in sick. Wilmer, of Chowbotics, says Sally may actually create jobs, since it keeps selling food at times of day when it wouldn’t have been available before.
Different parts of the world are at different stages of the pandemic. Some have recovered faster than others, while the rest of the world is still fighting the crisis. Unfortunately, the scale of the outbreak is directly proportional to the impact on the business.
In the coming months will see restaurateurs come up with innovative multipronged approaches to the challenges to create the best possible experience for the customer. While some measures like masks and screens will be temporary, others such as contactless menu and contactless engagement are structural changes. Automation, in particular, may be the way ahead. Automation is not a choice. You must automate in order to survive the future.