The Covid-19 pandemic has pushed the restaurant industry into adopting more innovation, technology and new priorities to survive the repercussions. As the dine-in services have almost fallen into a despire, the restaurants have no option but to create alternative sources of revenues through online delivery services.
According to restaurant management platform POSist’s Restaurant Industry and Market Evolutions (PRIME) report, nearly 43% of Indian dine-in only restaurants have started delivery services during the pandemic. These delivery services are majorly conducted with though food aggregators like Zomato and Swiggy, while some restaurants have also started their own direct-to-consumer (D2C) services as an ad-on.
With both revenue streams set in place, nearly 57% of the orders come in through food aggregators, while the rest 43% come in from direct channels. The report has further noted that WhatsApp has emerged as one of the most popular direct channel for order placement, while Instagram is the top social media platform for marketing and promotions. Notably, the restaurant industry has recorded a 3X jump in food order during the first quarter of FY2021.
With this spike in online ordering, nearly 44% of the restaurants are willing to invest in technology to digitise their restaurant operations. Meanwhile, 53% of the players have placed their bets in setting up a cloud kitchen or delivery-only outlet of their brand. Besides this, opening new locations and hiring more staff is another set of investments the restaurant industry is willing to make.
The latest report, which is based on a survey of 300 senior executives in the restaurant industry, highlights that nearly 80% of the restaurants believe that technology has become an important fact to run a restaurant business in today’s time. POSist’s cofounder and CEO Ashish Tulsian expect the contactless dinings and cloud kitchens to gain momentum during times like this. “As India recovers from Covid-19, technology will play a significant role in reviving the restaurant industry,” he said.
The survey also reveals that digital technologies like QR Code ordering, online ordering channels like website and mobile applications and digital payments options are a must have for the restaurants. Nearly 50% of the respondents have integrated digital payments solutions, followed by 30% who launched their own D2C ordering system and 35% that installed their QR code ordering technology. Interestingly, nearly 9% have installed self order kiosks at their restaurants.
Alongside this, the priorities for the restaurant industries have also changed significantly as the high margin dine-in business is almost out of the picture. It has forced many to turn into cloud kitchens and cut down expenses on labour, food material and rentals.
Restaurant owners across India have ranked high operating costs covering variable expenses — labor, food, salaries, marketing, etc — and rental expenses as their top challenges to running a restaurant, with 65% citing high operating costs and 55% citing rental expenses. Reducing or lower margins came in third with 52% of restaurateurs selecting it as a top challenge, followed by 40% stating hiring and retaining existing staff.
In order to stay afloat, the restaurant industry has undertaken several steps anticipating a recovery time anywhere between 3 months to over a year. According to the survey, only 7% of restaurants expect a recovery in less than 3 months, while 30% are looking at 3 to 6 months, 31% at 6-12 months and 23% at more than a year. More than 80% of restaurant operators agree that food safety and hygiene will replace price as the biggest differentiator for consumers to dine-out.
Talking to Inc42 back in August, Tulsian had said, “Everyone will have to move to a brand, every restaurant will have to think of their product as their menu and their name as the brand. That brand will have different manifestations, and one of them is going to be cloud kitchens,” Tulsian said. He had emphasised that no restaurant is going to do a dine-in only model again, there will always be a hybrid approach.