Closed for business: How the F&B industry responds to COVID-19

by: Rachelle Ma
19 Aug 2020

At WOM, we typically love when the phrase ‘third-wave’ is brought up in conversation. It usually means we’re about to go into a lengthy discussion about speciality coffee but for now, it goes without saying the phrase conjures up a very different image. When Covid-19 curtailed eating in restaurants this summer, the association of ‘third-wave’ with F&B became one more disheartening than talks of latte art and nitro brew. In July, as fears of catching the virus sank in, the pandemic pushed the already struggling industry to a dire point. Over 100 restaurants had confirmed infections, total restaurant receipts plunged, then came the unprecedented ban on dining in entirely.

The ban was shortly reversed but everchanging social restrictions have made the nature of dining in Hong Kong unpredictable for not only customers but restaurants owners. As we follow updates closely, we’ve talked to industry leaders to scope out what this means for F&B at large. 

The New (New) Normal

By now, we all understand that to effectively curb the outbreak means wearing masks in public spaces, staying home as much as possible and quarantining if you travelled in the past 14 days. But what does this mean for dining in restaurants? No one knows exactly. Hong Kong saw a whirlwind change in government regulations last month, going from a curfew restricting dine-in to 6 pm, to an entire ban on restaurant dining before retracting the new law just one day in and allowing lunchtime dine-ins again. For a city steeped in the traditions of eating out, this is good news but concern over the spread of the virus in eating establishments is at an understandable high. 

In restaurants where everything is in close proximity, social distancing has meant taking some necessary extra steps. It’s hard to think of the last time hand sanitizer wasn’t offered like candy on Halloween and partitions weren’t set up to separate you from other customers. So while restrictions can be revised, questions over health and safety may have altered restaurant culture for the foreseeable future, establishing a new, new normal

Farm to...Doorstep?

As small and connected a city as Hong Kong is, there’s no denying delivery has been a crutch when it comes to keeping restaurant business afloat. You’re hard to press to find a place that doesn’t offer delivery options. Most will even offer discounts on takeout in an effort to promote safe social distancing while still ensuring you get abundant content for your food Instagram. 

Food delivery is a customer’s best option but what’s convenient for your food Instagram may not be as clearly the case on the provider’s end. For a restaurant to provide delivery services, there’s a lot to consider mainly the extra costs of hiring riders, packaging and piling fees that come with enlisting services such as Deliveroo and Foodpanda. 

Restaurant giant, Black Sheep Restaurant was first to test out an in-house delivery system, launching GO back in 2018 before anybody could even forecast what’s to come. This allows total oversight of the takeout service process but Black Sheep’s Director of Business Development, Akbar Butt said while pivoting to delivery was an inevitable step they were glad to have been ahead of, it hasn’t been the be-all-end-all solution we’re quick to see it as. 

“Even with GO,” Butt explained, “delivery only accounts for around 5% of sales. Delivery can help a little but it’s certainly not enough to save us and it certainly will not help independent operations using big delivery aggregators. Too much is made of how much delivery actually helps restaurants, right now it is a lifeline that we are clinging to, but it will not sustain us. “

Restaurant owners will tell you that cash flow is probably what’s most important for their operation now. If delivery is hardly covering the loss of profits from dine-in, then this is where other ventures like offering dining vouchers play a role. Cash flow from selling vouchers has been the most direct form of help, said CEO of JIA Group Yenn Wong. Having to pivot has also spurred a creative spark amongst F&B operations. Even under restrictions, restaurants have found ways to make dining exciting with bottled cocktails, meal hampers and private chefs to name a few. But the buzz and experience of being at a restaurant is one that’s hard to replicate. 

“These new dining alternatives might be here for the long run,” Wong said, “But we believe people really just crave dining properly in restaurants again.” 

A Community Effort

F&B in Hong Kong has taken a hit, that’s no secret. F&B owners have been bracing for the brutal chance restaurants and bars may be forced to shut down permanently without financial support. But something that looms just as large, is the loss of something bigger than profit or business. Hong Kong’s F&B scene has remained a close-knit community, where support comes not only from loyal customers but peers in the industry. To watch on as restaurants grapple is akin to watching your teammate lose. It’s a sight that many hoped not to witness.

Earlier this year, when Hong Kong was one of the first countries to reopen restaurants, many looked to the COVID-19 Playbook Black Sheep Restaurants released for when reopening would be safe for them. Ahead of government mandates, Black Sheep released the 17-page resource online, catching the attention of CNN, Business Insider and restaurants around the world. 

“Nothing in the playbook is groundbreaking,” said Butt, “It’s just distilled in a way that makes sense and in one place which gives operators a little more breathing room to focus on taking care of their guests and their teams.” 

Butt added that it was their responsibility as a bigger F&B player to try and help independent restaurant operators who do not have the same resources as they do. 

As it turns out, everyone is learning as they go. The future for F&B will continue to be unpredictable as we navigate our way through the pandemic and while there’s real merit for looking at the worst-case scenario, it’s also important to look at the silver lining. In many ways, the pandemic has pushed us to reevaluate how we can still share our passion for food in a time when eating in isn’t a viable option. 

While remaining within social distancing guidelines, we still want to be sure we show up for our friends in the food world. We saw an opportunity to provide chefs and restaurant owners with a platform where they could open up about hardship and struggle. Offering exposure to smaller local businesses, when advertising budgets are small was also a priority for us. 

“We believe in the Hong Kong story,” Butt said. “We’re optimistic that there’s going to be a demand for interesting work. The eclectic and vibrant dining scene will return.” 

There’s no way of undercutting the dire need of support F&B in Hong Kong could use now, but that’s not to say we should abandon any and all hope.