Australian hospitality business trends during COVID-19

Five hospitality business trends SMEs need to know about

With continuing COVID-19 lockdowns, Australian café and restaurant owners are innovating to keep their heads above water.

Prior to COVID-19 approximately 45,000 businesses across Australia made up the hospitality business segment of cafés, restaurants and catering. The industry reliably generated $26.7 billion in retail each year. Despite 92 per cent of those businesses classified as small (19 or fewer employees), they collectively employed 630,100 people.

COVID-19 impacts on hospitality businesses in Australia

As of August 2020, Australian restaurants and cafes had lost an estimated $4 billion as a result of lockdown restrictions and limits on seating numbers. Since then, Melbourne has entered its sixth lockdown, and Sydney’s  restrictions will remain until a 70% vaccination rate is achieved (anticipated in late October 2021).

Many of the nearly 300,000 foreign workers who left Australia since the start of the pandemic worked in the hospitality sector. In May 2021, over 46,000 hospitality jobs were advertised online, reflecting the sector’s significant resourcing challenges.

Innovative hospitality trends 2021

Despite ongoing lockdowns, restricted seating capacities and international borders remaining closed for the foreseeable future, we are witnessing privately owned hospitality businesses getting creative to stay solvent.

Some of the trends we’re seeing require a capital investment, which to some of our clients initially feels like too much of a stretch. But what is the cost of not investing in business practices that will improve your efficiency and are likely to become the norm — whatever that might look like after COVID-19.

Trend 1: Digitalisation

If you don’t already have a well-designed website, the only question is: why not? A sharp digital presence increases takeaway orders while lockdowns remain, and will continue to attract diners post COVID-19. Make your website easy to use and fast to navigate. Embed reviews on your site and offer incentives to patrons to leave one – 94% of people choose restaurants based on their online reviews.

Trend 2: Contactless technology

Right now, contactless technology such as at-table digital ordering and tap-and-go payments support social distancing requirements. Within a few months, the same software and equipment could help your business manage a return to busier periods with fewer staff.

Trend 3: Virtual and augmented reality

An increasingly popular tool is a virtual reality tour of your establishment. Uploaded to your website as a video, a virtual tour helps a prospective customer visualise the look and feel of your place before they visit or make a reservation. Google analysed the performance of virtual tours in 147 New York restaurants, which reported a 30 percent increase in online bookings.

Augmented Reality (AR) gives your patrons a 3D view of menu items before ordering. Turns out the Roman gourmand Apicius was right in saying we eat first with our eyes: a study by AR food menu app Kabuq found that diners viewing virtual dessert options at the table increased dessert orders by 25%.

Trend 4: Fine dining at home

The pandemic has generated a range of new in-home dining experiences. If your business provides traditional takeaway and delivery services, consider developing experiences and offers to build loyal clients. In Melbourne’s 2020 lockdown, restaurant Atlas started offering in-home meal kits for customers to create themselves with an online masterclass from Atlas’ head chef. Not only did it help the restaurant survive, in the first two weeks they recorded two of their most lucrative days ever in the business.

Once life returns to semi-normal, the food delivery service industry is expected to grow AUD $2.4 billion by 2025. Smaller businesses will be able to take advantage of this growth via increased competition among third-party delivery partners. Bopple focuses on smaller restaurants, taking a smaller percentage than larger home delivery partners such as Deliveroo.

Trend 5: Sustainability

Climate change is now at the forefront of many consumers’ purchasing decisions. Nine out of ten Australian consumers look to purchase from ethical and sustainable businesses. Reducing single use takeaway items, localising your supply chain to reduce carbon emissions and minimising your restaurant’s food waste can help you stand out from your competitors while also potentially improving cost-efficiencies.

Balancing short-term risks and long-term viability

However your hospitality business is navigating this year’s extraordinary business conditions, cashflow and continuity are the keys to staying afloat until Australians can once again enjoy a flat white in a ceramic cup. If you are concerned about falling behind your competition, perhaps it’s time to review your processes and expenses to see how you can invest in the post-pandemic future of your business.

Pryor Tzannes & Wallis has a dedicated resource whose full-time job is advising small business clients on government support during COVID-19. Contact us to see if you are complying fully with your current obligations to suppliers and employees — and to discover what help is available to you.

Any decision that affects your business has legal implications. Contact us today to help secure your business for whatever tomorrow brings.

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