Indoor v Outdoor – What does future hold for hospitality sector?

If online orders had always represented a fraction of order volume, they have now become the primary revenue driver for restaurants. [SHUTTERSTOCK]

The COVID crisis has hit economies hard but it is also providing the foodservice industry and the hospitality sector a chance to test new ways to engage customers, taking into account how their eating habits are changing.

In the midst of the pandemic, some restaurants and cafes have managed to ‘delocalise’ their business through delivery and takeout services, while others have invested in technology to raise hygiene and safety standards within their premises.

So far, the first group seem to have been doing better than the latter, although both digitalisation and heightened safety in the wake of COVID-19 have helped many struggling businesses to at least stay afloat.

A survey made by EIT Food, Europe’s leading food innovation initiative, showed that the obvious decline in out-of-home consumption has been the main factor of the current crisis in the HoReCa (hotels, restaurants, cafes), and even the HoReCa-oriented retails saw increased at-home consumption.

The landscape of hospitality might irrevocably change and the trends that emerged during the pandemic need to be assessed to see if they are going to have a prolonged impact.

Attempts at recovery will be also challenging as the expected rebound will not happen overnight and drastic lockdown measures are only to be removed gradually in the coming months.

Hospitality sector calls for support to unlock entrepreneurial spirit post-COVID

Despite the challenges the pandemic has presented to the EU hospitality sector, hopes remain high that it can bounce back and adapt to a new post-pandemic reality, but this requires support “commensurate to the hit it has taken”, according to the EU hospitality association.

Outdoor: the power of digitalisation

Restaurants have shown creativity and resilience but it is clear that, since the start of the pandemic, digitalisation has helped the sector the most.

While online orders had always represented a fraction of order volume, they have now become the primary revenue driver since businesses were forced to shift almost entirely off-premises for long periods during the first and the second wave of the pandemic.

Those who already had strong digital presence rode it out, although with enormous difficulty, and consumer demands for a more digital engagement have been accelerated by the pandemic.

What is changed is the outreach, as the number of people ordering delivery and takeout meals has increased, particularly for demographic groups of boomers (ages 56 to 70) and Gen X (ages 40 to 55).

And this new digital push is here to stay, as it follows an already established trend of gradual digitalisation of the foodservice.

In a survey made by the global consultancy Deloitte, nearly a quarter of respondents say their more frequent use of takeout and delivery will be permanent.

In some cases, restaurants have opted to develop their own platforms for deliveries and takeouts, as fees of the existing platforms were considered high for a low-margin business

Platforms also control all consumer data without sharing it with restaurants and several countries have disbursed public aid to help SMEs in the HoReCa go digital.

If a strong reliance on takeout and delivery results in lower spending for the restaurants, it also implies the need for reskilling the workforce to improve the customer experience.

Digitalisation is not just about placing orders online. It also comprises the surge of contactless payments or AI-enabled assistants, like chatbots.

The increase in digital payments is also an opportunity for more data analysis, even though it is complicated to implement for many businesses, according to the EIT Food survey.

Restaurants that start experiencing the benefit of digitalisation could be also interested in developing breakthrough technologies such as driverless or drone delivery.

EU reshapes its vision for SMEs amid emerging threats

Policymakers have started re-thinking the EU strategy for micro, small and medium-sized enterprises (SMEs) that the European Commission unveiled only a few days before the start of the first lockdown all over Europe.

Indoor: the importance of tradition

On-premise demand collapsed due to the reduce opportunities for outdoor dining once the summer ended and also because the new peaks in COVID cases in autumn and winter of 2020/2021.

This affected and partially reshaped people’s dining habits, while the main focus of the private and public sector has shifted toward guaranteeing safety for both customers and workers.

In a recent interview with EURACTIV, the Commissioner for jobs, Nicolas Schmit, recalled that in the context of the pandemic, the Commission has presented a range of guidance to assist both employers and workers in resuming their activities in safe conditions.

“I am thinking in particular of the “EU Guidance for the progressive resumption of tourism services and for health protocols in hospitality sectors” and “EU-OSHA guidance on a safe return to the workplace”, he said.

More generally, the Commission is developing a new strategic framework for health and safety at work. However, this new focus on safety also involves consumer demand, in some cases accelerating restaurant roadmaps for innovation.

In the Deloitte survey, 87% of consumers expect surfaces to be cleaned after each use, and 85% of consumers want to actually see the cleaning take place.

Cleanliness and safety have become top priorities for consumers, who now commonly expect measures such as employees wearing gloves and constantly cleaning common surfaces, as well as structures like plexiglass shields.

Although this has not prevented restaurants from being shut in some European countries, investments in sanitising restaurant venues will be increased in the next months as the challenges ahead will remain avoiding crowds and implementing social distancing.

An emerging trend in between the indoor v. outdoor dichotomy involves the ghost or dark kitchens, basically restaurants without a customer-facing storefront or premises.

The market research firm Euromonitor predicts the market cap for dark kitchens will grow to $1 trillion by 2030, as they are rising in popularity, but that is not a suitable option for the whole market, according to the EIT Food.

Europe’s hospitality sector makes last appeal 'before it’s too late'

Hit hard by the pandemic, Europe’s hospitality sector is struggling to find a way out of the current chaos. Speaking to EURACTIV, its representatives have painted a bleak picture and called on governments to take immediate action to help the sector revive rapidly before it’s too late.

[Edited by Zoran Radosavljevic]

Subscribe to our newsletters