David Parnham has 35+ years of successful FMCG Business Management, Directorships, Media Services, Big Data – FoodService Focused Research & Development Reporting to assist hospitality and roasting businesses across three countries. Currently David is not only the Research Director of Café Culture International, he is also the President of the Australian Café Owners and Barista Association COBAA, and the Australasian Specialty Tea Association AASTA and is an active member on many F&B industry bodies.
Most of you will hear, see and sadly experience the negative effects of COVID-19 in your local cafe communities and if not felt already those now placed on your own business. Today, I would like to share new thoughts and ideas gathered from talking to our cafe friends, those expressed on social media posts and first-hand experience after the China outbreaks, along with just how many China cafe businesses have successfully returned to work this past two weeks. The fact is COVID-19 now signals real harm to many small cafe businesses in 2020 with business turnover levels expected to be far worse than the GFC and any past Stock Market crashes have ever produced.
We had written a few weeks ago Corona Virus Impact Café Market Australia/New Zealand 2020 to prepare you for the small business effects of COVID-19 and now we wish to update you, our valued cafe and roasting businesses, as to the future survival plans if needed to be considered by you. What we have seen overseas is that only the strong cafe businesses will survive, those that have a minimum 12 weeks cash flow to pay regular bills, rent and staffing costs. These are many of the positive tips gleaned from these successful businesses for you to consider. The important fact as reported is that 20% of Australia’s tourist dollar is from the Chinese tourist, now that all inbound overseas flights are restricted, this will further impact the tourist area spending.
With 100% of international guests as well as locally infected persons placed into a forced 14 day self-quarantine, combined with the new government touted buzz words of “Social Distancing”, there will be a marked effect on the cafe business sectors at various degrees depending on your location, target audience cafe patrons and other local community factors. It’s true, those offering takeaway or with delivery apps, online sales opportunities will see an uplift in demand, additionally many cafes will turn to “The Dark Kitchen” (a term now commonly used for an after-hours cafe with closed front doors), operating outside of normal cafe times – say after 4pm into the night for back door express pick-up and delivery menus only.
There will be an upsurge in both CBD and suburban cafes now seeking these Dark Kitchen opportunities to help pay the rent and thus profit from home-based online app orders and day time takeaway only options with the recent downturn. Smart businesses are promoting their beverage and gourmet kitchen menus to locals/social media and those known to be in self-quarantine. With Social Distancing that means office blocks and other SME businesses may now consider ordering in meals and beverages versus outbound cafe meetings and meal times.
Here is a good example of a recent cafe social media post – Have you considered these too?
Dear Customers and Friends,
We all need our coffee, delicious food, fresh bread and baked goods, now more than ever! At Bake Bar the safety and health of our customers and staff is our priority so we’d like to tell you about some measures we are taking in these unprecedented times.
1. Our stores are conducting additional cleaning and disinfecting each and every day, both in public areas and behind the scenes.
2. Sanitiser is available for your use at each counter. Please use it.
3. If you are dining in or waiting for a takeaway order, customers are reminded to maintain their distance from each other and practice recommended social distancing.
4. Wherever possible, customers are asked to make payment using tap and go methods and to only use cash where no other alternative is available.
5. Reusable cups have been removed from the free water taps. Customers are requested to bring their own refillable water bottles or request a takeaway cup from staff if you have forgotten your refillable bottle.
6. Your Keep Cups cannot be used right now. We apologise for any inconvenience.
7. We encourage you to consider ordering your chosen menu food and drinks in takeaway containers, even if eating in.
8. Consider using the “Hey You” App to order takeaway online. Alternatively, you can phone the store, place your order, pay over the phone and quickly collect for yourself, workmates, friends and elderly family who love their Bake Bar but are unable to visit us in store right now.
Please be patient, be kind and be understanding if we need to implement changes at short notice. Let us all support each other through these difficult days so that we come through this crisis a more bonded and supportive community.
We thank you for your understanding and support and wish you and your loved ones’ good health.
The Management of the Bake Bar & Team
The above example clearly covers most points and well done to the Bake Bar team for an effective concise customer broadcast. Now is the time to truly consider what your plan B is.
The cafe game will be changing post COVID-19 and the smart operators need to seek, review and trial the many, many new cafe options, all while not creating a disruption to your regular business cash flow needed as sales income. So, what’s next and how do you profit from the changes happening in your local area? It’s time to look at other businesses in your area, ask your regular customers what services and menu changes they would suggest to you. Check out what the cafes and restaurants nearby are projecting on social media cycles and if possible adjust your cafe business, which makes perfect sense operationally and at a reduced risk to your long term business model plan and brand image in these unexpected hard times.
We importantly as cafe businesses have to tell people why and how to help; if we don’t, we can only blame ourselves for staying quiet when we may have a strong loyal social media base willing to support you in a real time of need.
Once you have settled on your new cafe product menu and services, then social media will likely be the most cost-effective way to market:
- Target your current ‘cafe friendly’ customers and thus their online friends and families as new followers and potential new business
- Promote your new cafe services/menu offers to your existing customers
- Target all of these in your close geographical proximity
- Communicate your cafe story effectively and proudly at all times
- Have your staff buy-in to ensure these offers are understood and supported internally.
All of the above has been said to project the positive word externally, now we should have you consider the internal points to keep your business healthy and survive this global pandemic COVID-19 outbreak now on our shores. It really comes in the form of common sense business trading and a solid amount of communication with your own staff and external businesses that rely on your past business success. Your own voice and that of your business partners is vital at this time. Honesty and integrity will carry you through this major business disruption, that like you many others are also facing.
May we please now suggest that if you haven’t yet sat down to actively review your current business actual versus your projected budget business plan, that this is now the time to make important decisions for the operational future success of your valued cafe business livelihood.
Here are some key areas to review.
- Contact your landlord. Will you be able to make your next few rental payments? If no, then please flag it now not later to avoid potential business disruption and/or legal issues.
- Contact all your recent creditors. Business loans, key stock suppliers, equipment leases or rentals. As above.
- Fixed Costs. What can you reduce? Remember, Don’t Need It = Don’t Buy It.
- Sorry to say Fixed Costs also means adjusting staffing decisions (minimum hours and days may need to be applied) for the short term.
- Ensure strict staff and customer safety procedures are always followed in relation to the new workplace hygiene practices in your state. Caution; these may change often during the COVID-19 containment period. Be aware.
- Excessive stock levels. Use what you have and purchase the essentials only.
- Use social media marketing and importantly staff ‘word of mouth’ as we mentioned to promote your new website, pre-paid offers, eCommerce menu, thus beverage and/or meal delivery or takeaway services created.
- Seek Dark Kitchen opportunities for rental recovery and/or growth where possible.
There are many other things to also consider for your individual business and these tips are offered in the spirit of your consideration. The fact is this COVID-19 outbreak is new to Australia and comes with many business to business challenges that are yet to be forecasted or considered even by the major cafe chains here and overseas. How can you protect your business from the uncertain risks and unforeseen disruptions pending? We ask you to be aware, use these as a timely check list and please keep well informed. Café Culture International will continue its coverage as COVID-19 causes havoc and potential loss of business and confidence in the hospitality industry. We ask you to look to the positive points above and remember all those negative topics and their direct impact on your valued cafe industry.
David Parnham – Research Director Café Culture International