Covid-19 has fundamentally changed consumption habits. However, F&B businesses will have long-term strategies to get back on track post social distancing.
In recent years, the F&B Industry has been considered one of the most promising in the hospitality and tourism sector with 540.000 restaurants, 22.000 cafes and bars. The revenue from this industry reached 200 billion USD in 2019, corresponding to an increase of 34% compared to 2018.
Experts speculated that 2020 would be a year with skyrocketing development. However, the Covid-19 pandemic has had a detrimental impact on its progress, making everything stagnant. Turnover stood at 510.400 billion VND - dropped 13% in comparison to the previous fiscal year. Even worse, the tourism industry “got frozen” because of continuous lockdowns and national isolations which have been quite a shock to all Vietnamese entrepreneurs and F&B business owners.
Multiple burning questions have to be addressed. How can businesses have a speedy recovery to sustainably progress after social distancing? How to make the most of the new O2O model (Online to Offline)? And what is the ultimate solution for the F&B industry to mitigate all Covid-related challenges? Read this article with Hufr to find out with us!
Since the Covid-19 surge in Ho Chi Minh City these months, the retailing market in Vietnam has witnessed many shops going out of business, downsizing or cancelling rental contracts.
Since then, F&B retailers have massively changed their business models to adapt to the pandemic. Large-scale luxury restaurants with stay-in services had to shift their attention from high-paying tourists to domestic customer segments.
Even traditional goods retailers, such as Ninh Huong Moon Cakes (Hanoi), changed their approach of connecting with customers. We have ceased to see colourful moon cakes booths on the pavements from Madame Huong, Kinh Do, and Long Dinh and queues of customers waiting to choose the most palatable treats. Currently, these shops have no option but to interact with customers via social media on a regular basis (e.g., fanpage, zalo, hotline) to enable remote orders.
A survey in July 2021 reveals that the online revenue of most brands grew by 1.5 to 2 times higher than pre-Covid which proves the growth potential of F&B businesses, hence all retailers’ focus on online sales. This is precisely one of the examples of how quickly this industry is adjusting to “the new normal” post-social distancing, and it paves the way for a playing field of E-commerce and delivery services. Small to medium-sized F&B start-ups can also join this fierce and exciting competition with ever-increasing opportunities amidst the difficult Covid-19 situation.
This stage is also ideal for strategic planning, reinforcing the business foundation and resources to enter big commerce sites, namely Lazada, Shopee and Tiki, to make use of their vast customer bases. Besides, F&B companies can accurately locate their target audience to better satisfy their specific demands. “Under the circumstance that consumers cannot experience in store, product quality, delivery and word-of-mouth marketing are the best tools to promote brand images” - a marketing specialist remarked.
A YoGov questionnaire from June 2021 shows that the trend of cashless payments has been much more prevalent since Covid-19, with 51% of consumers switching to using digital wallets (e.g., MoMo, PayPal, Zalo Pay, QR Pay) and debit cards. As a result, F&B retailers are required to research and soon invest in these channels to maximize payment convenience for customers, enhancing their familiarity and comfort in daily shopping activities.
Another important decision is about store expansion. Specifically, business owners must carefully select their next location and switch from clustering in one popular central area to branching out to several districts. This not only increases their reach to local customers but also gives extensive access to their delivery networks.
In addition, reducing the size of brick-and-mortar shops to avoid wasting space and costs is undoubtedly recommended. All premise rents should only make up 10-16% of revenue to maintain store efficiency and profit potential. On the other hand, multi-functional training for staff is imperative to downsize the number of employees and make sure they can flexibly take on different responsibilities.
Despite closing all shops and staff working virtually in the pandemic, many businesses still have to pay rents, salaries, and PR costs to retain customers. However, for Ms. Nguyen Ha Linh - the owner of Koh Yam Thai restaurant chains, this period is dedicated to self-reflection and reshaping the brand. “We take advantage of this break time to improve our appearance and practices to welcome customers with a newer and more comprehensive brand image” - Linh said.
Business owners also need to be aware of the change in consumption habits and know how to provide a different but high-quality experience for customers after social distancing.
For some academics, such as economics specialist Nguyen Tri Hieu, there is no light at the end of the tunnel yet. Still, he is adamant that if and when we find a way to control the pandemic, our national economy can gradually recover with sectors open one by one, F&B including.
He suggests giving shippers the freedom to work first with specific safety regulations, then letting vaccinated people use physical services in highly controlled environments in terms of number and distance.
Before Covid, huge trends such as healthy or organic products made their way into consumer interests. These will continue to stay and grow in the time to come. However, whichever business model or customer segmentation you are following, the essence of success lies in the quality of products and services offered - Ninh Huong Moon Cakes owner asserted.
Breakthroughs post-Covid are feasible considering the current versatility that F&B businesses are displaying. This is also the optimistic outlook for all consumer retailers to renew themselves and find their unique path to survive and thrive as well. The F&B industry can still make a strong comeback in the near future.