Liz Cooley takes a look at the impact of Covid-19 on the foodservice and hospitality industry across the Asia Pacific and Australasia region
Three months on from the first reported cases of Covid-19, the number of new cases in China is beginning to slow. Having emerged from lockdown, businesses in Hubei province are beginning to reopen. In the city of Wuhan, where the virus is said to have originated, restaurants are opening their doors and market vendors are returning to their posts.
This is a promising sign for the rest of the world and the restaurant industry across the Asia Pacific region, which has been hit hard during the pandemic.
Many businesses have fallen victim to the financial impact of welcoming fewer customers through the doors, often being forced to shut down operations and lay off staff.
For others, however, it has given rise to a whole new revenue stream, as they foray into takeout and delivery services, perhaps for the first time. One trend in particular that has grown exponentially is contactless delivery.
To protect their economy and ensure the survival of as many businesses as possible, governments across the Asia Pacific region have also put provisions in place to support both companies and individuals as they ride out this storm.
Countries across the world have imposed lockdowns of varying degrees to try and curb the infection rate of Covid-19 to manageable levels. As well as requiring social distancing, this has seen the closure of non-essential businesses, in some cases including clubs, pubs and hotels.
Restaurants and bars have broadly been able to continue operating, if not for dine-in customers then offering takeaway and delivery services. Industry conferences and events in the region have been cancelled or postponed, including FHA-Food & Beverage and ProWine Asia in Singapore.
Japan has so far avoided lockdown, with many restaurants remaining open, albeit with less seating. However, reports of a significant rise in cases mean the country is shortly expected to declare a state of emergency.
The Toyko 2020 Summer Olympics and Paralympics have also been pushed back, which is likely to have a knock-on effect on the hospitality trade and the wider economy in a year where tourism was expected to be strong.
New Zealand has taken much more decisive measures. All restaurants, cafes and bars – including delivery and takeaway services – were ordered to close when the country entered lockdown on 24 March.
While extreme, this approach has proved to be successful in flattening the curve.
Delivery vs. dine-in
The provision for restaurants and bars to offer takeaway and delivery services has seen a surge in people ordering food online and via apps.
In particular we’ve seen the rise of contactless delivery across the region. McDonald’s led the way with this model in Singapore, before rolling it out to the numerous other countries it operates in.
In India, delivery services Zomato and Swiggy have introduced contactless delivery and Swiggy has also announced a fund to ensure the welfare of its delivery partners and their family. Meanwhile, Domino’s Pizza is working with ITC Foods to deliver essential items to customers during lockdown.
In Australia, research from the NPD Group shows an increase in delivery, pick-up and drive-thru sales of 10% during February, with this trend expected to continue.
“Full-service restaurants and cafes are adapting to the current situation by introducing take away and delivery friendly menus. NPD has also seen strong demand for ‘in-store hygiene’ and ‘contactless’ delivery,” said Gimantha Jayasinghe, senior vice president and deputy managing director Asia Pacific at The NPD Group.
In some countries, such as Taiwan, Singapore and South Korea, many restaurants and bars have been able to remain open. These countries have managed to maintain relative normalcy largely due to their proactive approach to social distancing and testing.
Meanwhile, China is beginning to reopen restaurants, albeit at reduced capacity. More than 90% of Starbucks stores are now operational in China and 95% of Yum China stores, including its KFC and Pizza Hut brands.
“We are seeing early signs of recovery, as business gradually resumes and people return to work in China. However, restaurant traffic is still heavily impacted as people continue to implement social distancing measures,” Yum China said in a recent financial statement.
Support for the industry
The limitations placed on the industry have led to sever cash flow problems for many restaurants and large swathes of workers losing their jobs, even if only temporarily. However, numerous schemes are being introduced to support both businesses and individuals affected by the pandemic.
In India, online reservation provider EazyDiner has launched an initiative allowing customers to buy pre-paid dining vouchers to help provide a steady cash flow so restaurants can keep up with essential costs.
“Dining vouchers under the “Support The Restaurants” initiative will seek to safeguard our 60 billion-dollar restaurant industry and protect millions of livelihoods directly/indirectly dependent on them,” said Rohit Dasgupta, CEO and co-founder, EazyDiner.
In New Zealand, the government has made provision for a wage subsidy and issued an epidemic management notice that extends the visas of temporary workers.
“At present we are locked down, however migrant workers are also being supported by the government and employers,” explains Marisa Bidois, CEO of the Restaurant Association (RA) of New Zealand. “There is also opportunity for a variation to visas and a transfer to assist essential service providers.”
The RA of New Zealand has come up with a training package for the industry, presented by industry, for industry, to help businesses make the most of the time in lockdown. Thirty-minute sessions covering a variety of topics aim to help the industry plan for the next step and up their customer service game.
“Our advice to the industry is to plan for the next step so when we can start trading again you are ready,” says Bidois.
Meanwhile, the Australian government has introduced the JobKeeper payment, a scheme that will offer wage support of $1,500 per fortnight per employee for up to six months for eligible businesses, including those in foodservice.
“Our scheme is designed to actually keep people not just in pay, but in actual work, wherever that’s possible,” explained Australian prime minister Scott Morrison. “This is an incentive for businesses to adapt to these new circumstances to keep people on doing actual work. And for those businesses that have had to close their doors because of the decisions to close down certain businesses, that means they can still have them on the books, on the payroll and still looking at how they can work together to resuscitate and revive the business on the other side.”
“In Australia we’re really blessed,” said Mario Sequeira, chair of FCSI Asia Pacific in a recent FCSI roundtable on Covid-19. Sequeira cited the Australian government’s JobKeeper initiatives as well as its day-care centre provision and a six-month moratorium for property tenants from the Australian government that are all “helping its economy during these dark times.”
Predicting how other countries in the region will recover from the crisis, Sequeira feels “Singapore, Malaysia, India and China will turn it around [quickly], while Indonesia many struggle.”
In the hopes that the Japanese government will make similar commitments, chef Hajime Yoneda has launched a petition calling for support for fixed costs and subsidies for employee salaries.
“In order to stop the disappearance of my favourite restaurants from this city, I would like to raise the voice of the food and beverage industry to the national and local governments,” Hajime said in the petition statement on Change.org – which has so far received more than 100,000 signatures.
Despite some promising signs of recovery, we are no closer to knowing when the world will be able to return to business as usual. The outlook for the foodservice industry remains uncertain.
The only thing we can be sure of is the need for food production and delivery services. Let’s hope that the progress being made in China signifies a light at the end of the tunnel.
Pictured: life begins to returns to normal in Suzhou, China, in April 2020