The hospitality sector has been hit especially hard by the Covid-19 pandemic. Government mandated shut downs and confusing re-opening policies have made it more difficult than ever before for independently owned concepts to survive.
Since the start of the pandemic 17% of American restaurants have closed. That's over 110,000 shuttered restaurants, and three million people out of work. So, how is the industry- which runs on notoriously thin margins at the best of times - expected to survive?
By evolving and embracing technology and E-commerce in ways it has never done before.
“What Amazon started, the pandemic has finished – in terms of consumers living through their smartphones,” explains Tim Angelillo, founder and CEO of Sourced Craft Cocktails, one of the nation’s most successful cocktail delivery services. Angelillo’s business has reported over 800% growth since the start of the pandemic, a trend he doesn’t see slowing down. Bloomberg news predicts that online liquor sales will quadruple by 2024.
The food delivery industry has skyrocketed in the wake of the pandemic, too. After months of social distancing, consumers have been ordering more food than ever before, and popular third-party delivery apps like UberEats, Grubhub and DoorDash, have enjoyed triple-digit growth since March. Food delivery is estimated to become a $200 billion industry by 2025.
E-commerce is clearly going to play a vital role in the future of the hospitality industry, but it’s a daunting arena for many small business owners to enter. That’s why we've put together this beginner’s guide to embracing digital commerce for small businesses.
Grow Your Online Presence
Easy to navigate websites and up-to-date social media are two of the easiest ways to stand out online. A company website with beautiful images and an easy-to-read menu can help prospective customers find you faster by boosting your ranking on Google. Optimizing your social media pages by using high quality photos, engaging captions and the right hashtags can also attract new customers. Social media is often a prospective guest’s first introduction to your concept, so you want to make it a good one.
If you need inspiration, think about how Wendy’s Twitter account revitalized their brand, or how El Arroyo’s viral signs turned the Texas restaurant into a national favorite. You don’t need to go viral or spend thousands on a website developer and a social media team – just focus on great photos and honest engagement. You can always upgrade your software and strategies as you go.
Offer Gift Cards & Merchandise
Offering digital gift cards and merchandising options brings in immediate cashflow, even when your doors are closed. San Antonio restauranteur Steve McHugh refers to gift cards as “interest-free loans”, and credits them for helping his venue, Cured, survive the pandemic. Studies have shown that 80% of people will spend more than the value of their gift card, which in essence means they actually pay you interest.
Merchandising also builds a sense of kinship between concept and customer, while helping to grow a brand reputation. Nothing grants someone ‘foodie’ status as quickly as a Ross & Daughter’s tote bag or a St. John cookbook. Think about what type of item your customers would relate to, and then experiment. Order small batches of a few different items, whether that’s mugs, shot glasses, t-shirts or hats, and see what sells.
By selling directly to customers, you can also start to build an email database. This means you can send out newsletters, special promotions and even subscriber-only deals.
Make Online Ordering Easy
“The time and logistics of adopting E-commerce is one of the biggest hurdles,” says Annie Tucker, Director of Marketing for The Social Order, a dining collective in Oklahoma. "We don’t see it going away anytime soon.” Adopting a more digital-focused sales strategy can be as simple or as complicated as you make it. Partnering up with a dedicated third-party app is an easy way to pivot into the E-commerce sphere. Angelillo calls them ‘turn-key’ options, because they don’t require any investment to develop and are easy to use. They’re particularly attractive to smaller businesses who need to grow quickly. Though they offer plenty of benefits, they can also charge steep fees.
If you have the resources, you might consider investing in your own E-commerce system. In Hong Kong, popular hospitality group Black Sheep Restaurants spent almost two years developing their own delivery platform. “This lets us control the entire process, from order to delivery. This is our food, our brand and our passion – we have to protect it. That means doing it our way,” says co-founder Syed Asim Hussain. It has become the fastest growing sector of their business and is projected to bring in US$2.5 million in revenue by 2021.
Expand your Offerings
An amazing in-person experience isn’t enough when it comes to operating in a post-Covid world. Since March, restaurants and bars have had to get creative with their offerings, finding new, virtual ways to bring in cash and build their community. Beyond merchandise and delivery, consider adding new revenue streams that are available for guests to order online. Meal kits, cocktail delivery kits, virtual classes, hand sanitizers, pop-up grocers and private event catering have proven to be popular across the country, and could work for your concept, too.
Ultimately, E-commerce is becoming an integral part of the industry’s future. And as with any new endeavor, there’s a learning curve. Treat it like a new menu and be prepared to tweak as you go according to customer feedback – there’s no such thing as perfect, only what works best for your business at this moment in time.