Lockdown forces innovation on to the menu of hospitality sector

The closure of pubs and restaurants has pushed technology and new business models to the fore

Restaurant
Coronavirus has forced radical changes on to the hospitality industry

Covid-19 has upended the world. The New Normal is a 10-part series looking at the stunning ramifications for the world of economics and business. Part six looks at how pubs and restaurants have adapted to the pandemic by utilising new technologies and new business methods to keep themselves going.

When the hospitality sector was thrown into lockdown earlier this year, the nation’s pubs and restaurants were forced to think on their feet.

“It was a rollercoaster,” says Thom Elliot, co-founder of restaurant chain Pizza Pilgrims. “We’d just had our busiest-ever week and then within two weeks our sales were at zero and everything had closed. We thought we were going to have to make 200 people redundant.”

A hefty package of government support unveiled over the following days prevented many businesses from taking such drastic measures, but a lot of firms had already begun exploring what they could do to keep the tills ringing throughout lockdown.

Pub landlords set up farm shops and delis on their premises, restaurants quickly switched to delivery and takeaway options, while others offered meal kits to allow customers to cook restaurant-quality meals from their homes.

After toying with the idea of delivery, Pizza Pilgrims decided to launch “pizza in the post”, a kit with the ingredients to make two of its margherita pizzas in a frying pan delivered to customers within 24 hours of ordering. “We sold the first 100 kits in 25 seconds,” Elliot says.

“We decided to make hay while the sun was shining and put 1,200 kits online which we thought would keep us busy for a week. They sold out within 50 minutes and it ended up being the busiest hour of trading in the history of the company.”

Kate Nicholls, chief executive of industry trade body UKHospitality, says the pandemic has encouraged many firms to rethink their business model, with some choosing to permanently alter how they trade as a result. “That idea of being a restaurant or pub that only does one type of offer throughout the day and throughout the week is going to have to change,” she says.

“The pandemic has accelerated the take-up of things like delivery and home-cooking kits. ‘Omnichannel’ is a horrible phrase but I think more brands will look at diversifying and having that approach so that if there is a black swan event again, you’ve got more strings to your bow.”

Prior to the pandemic, the implementation of technology across the sector was a slow-moving process, which many firms were sluggish to take up and consumers were loath to accept.

Social distancing and tracking and tracing of customer information has forced the industry to accelerate its use of technology, by encouraging people to book tables online and order food and drinks direct to tables by scanning a QR code using their mobile phone. Simon Emeny, chief executive of Fuller’s, thinks booking online will become the new norm for customers, even in pubs.

Many pubs and restaurants are encouraging customers to order food and drinks electronically Credit: Jeff J Mitchell/Getty Images Europe

Fuller’s is currently developing technology that will allow people to view the floorplans of its different pubs when they are booking a table online. “Customers have got in the habit of booking tables electronically,” Emeny says. “In future, we’re going to let customers choose which table they want to have.

“When groups now sit down at tables, even if they’re there just to drink, they will want to order electronically rather than visit the bar.

“That’s a preference, particularly for women in pubs who may have been intimidated by going up to a bar.

“The ability to be able to order from a phone will be something that they might want to stay.”

A key benefit for restaurants and pubs reopening during the summer months after lockdown has been making use of outdoor space.

Socially distanced drinkers visit 
The Terrace at Alexandra Palace Credit: Peter Dench/Getty Images Europe

Al fresco dining has traditionally been a concept that most Britons have associated with eating out on the continent – but it’s one that has been quickly embraced by diners as social distancing forces companies to make use of all their space and local councils temporarily relax planning rules.

The Black Bull, a gastropub in Sedbergh on the edge of the Yorkshire Dales, has created a permanent al fresco option for diners, with an outdoor bar and barbecue.

James Ratcliffe, who runs the pub with his wife Nina Matsunaga, expects customers will continue to choose to sit outside even during the colder winter months. “We’re going to put some log burners and pergolas outside so the space can be used all year round,” he says. “In places like Germany, where the winters are a lot colder, people still sit outside and just dress for it; they’re just used to it.”

Al fresco drinking and dining has become more popular Credit: Dan Kitwood/Getty Images Europe

While the pandemic has encouraged the hospitality sector to accelerate the adoption of technology and helped firms to diversify, it has also acted as a catalyst for correcting the gap between supply and demand that has plagued the industry for years.

Pizza Express and Frankie & Benny’s owner the Restaurant Group are among the casual dining chains which have been forced to dramatically rethink their restaurant estate since the crisis hit.

Nicholls says the pandemic has forced many firms which were dealing with the ramifications of years of rampant expansion prior to the crisis to make some tough decisions they may otherwise have delayed.

“Undoubtedly, we will see a reduction in the estates in parts of the industry, within casual dining for example; it will be a market correction of oversupply,” she says.

“It could be deeper and harsher than would otherwise be the case if we hadn’t had the pandemic, but it’s probably a helpful correction in the same way that you had a short, sharp shock during the financial crisis, and you had a readjustment of the number of pubs operating.”

Zelf Hussain, a partner in PwC’s restructuring team, believes that while the crisis will continue to claim the scalps of more businesses, it will free up space for new players to enter the market. “What you were seeing before the pandemic was that some of the chains were going out of business but they were being replaced by new start-ups very quickly,” he adds. “This country loves going out to eat and the pandemic has shown that consumers are willing to get back out there.

“The challenge for the Restaurant Group is how do you keep yourself fresh, innovative, and keep those consumers attracted to what you’re offering?

“That concept of just rolling out a concept and hoping that it will last for a couple of years is fading away.”

Read more in this series: The new 'Zoom economy' brings winners and losers