Restaurants must keep innovating to survive the impact of another lockdown

As with many sectors, the Covid-19 pandemic has hit the restaurant industry hard, with eateries having to shut their doors for a further time on Tuesday 5 January. As a result, many businesses have faced no other option than to make redundancies. Data compiled by the Centre for Retail Research (CRR) shows that UK restaurants have recorded almost 30,000 job losses in 2020, causing a 163% jump in redundancies and it looks as though this will only increase in 2021, with the Government’s Coronavirus Job Retention Scheme (better known as the furlough scheme) due to come to an end on 30 April. The increase seems stark compared to that of 2019, where 11,000 job losses were reported across the sector.

Although the governments ‘Eat Out to Help Out’ scheme provided a well-needed increase in footfall for many restaurants, they simply cannot withstand further closures. The pandemic’s impact on the restaurant sectors seems to have contributed significantly to a host of problems already faced by many restaurants such as overexpansion, inflated rental prices and increased competition.

It is therefore of no surprise that major eateries have put forward closure proposals and redundancies such as the SSP Group, who own fast-food chains such as Burger King, Yo! Sushi and Starbucks, and the Casual Dining Group who operate restaurants Bella Italia and Café Rouge. Many other restaurants have also sought to restructure their businesses by way of company voluntary arrangements including Pizza Hut who have reached an agreement with creditors pursuant to a CVA which seeks to save 90% of the business.

However, despite the issues faced by many, the current climate has also forced operators in the F&B sector to innovate and find new ways to interact with their consumers, for example, by teaming up with entities such as Deliveroo to offer online takeaway. This is a trend that is likely to accelerate as consumers get used to the convenience of being able to order food online. An increased online presence means that more customer data will be available that can be optimised and analysed to assist with targeting customers more accurately and increasing sales. Making sure that operators get this right at the outset will be key under the General Data Protection Regulation.

Other operators have sought to innovate by offering customers a new service – Pizza Pilgrims have started sending their customer pizza kits in the post, and Burger & Lobster are offering home delivery DIY kits. It will be important that operators offering new services ensure that their customer-facing terms cover off any new risks that may be associated with these services, for example, by making sure they comply with consumer law and that their liability to consumers is limited if the service does not perform to the standard expected. Additional food safety regulations may also apply if the scope of the service offered to customers changes.

The UK restaurant industry has shown remarkable resilience throughout the COVID-19 impact with an ability to adapt. Whilst a focus on the short-term is entirely understandable, those operators that keep an eye to the future and ensure that their legal compliance and processes complement their new strategy are likely to be best placed for the “new normal”.