Impact of COVID-19, The Food Service Industry Needs PR Now More Than Ever

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COVID-19 has been the worst crisis to hit the food service industry for the last half-century. In 2020, Asia’s food service market shrank 25 to 30 percent to about USD925 billion. Indonesia, similar to India and the Philippines, was severely impacted with a 35 to 40 percent decline. For their report Food for thought: evolution of food services post-COVID-19 in Asia, management consulting firm Kearney conducted an online survey of more than 900 representative Indonesian consumers to understand how their preferences have changed after the pandemic. 34 percent of consumers have switched to eat restaurant food at home via food delivery or takeout.  Health and safety take priority after taste and price for today’s consumers.

Moving forward, trust will no longer be an afterthought for food service companies but the top item on their agendas—driving the brand value proposition and pulling in larger investments. Companies will have to invest in trust-building with proactive PR and communications transparency as a prerequisite for success; food stories will become a significant medium through which they can earn consumers’ trust. Trust-building can manifest in different ways depending on the size and type of food service company, but most will focus on two functions to build trust with their customers: food sourcing and food handling.

This is especially true as the economic impact of COVID-19 and consumer preference continues to evolve, food service companies need to urgently perform a fundamental business reset and make a significant reinvestment.

According to the report, a fundamental business reset can reallocate 30 percent of current cost baseline into a new operating model, such as cloud kitchens, new store formats, along with organizational restructuring. Comprehensive cost optimization can capture more than 10 percent of cost savings, driven by improvements in staffing, rental costs, and kitchen material sourcing. These savings can be reinvested into the company to fund future waves of initiatives, such as digitalization and communications strategies to shape consumer trust and positive brand perception. Established chain restaurants need to shift to a hybrid network model combining smaller physical stores, cloud kitchens and dedicated takeout outlets.  Flagship stores will remain relevant to build brand presence, but less in-store dining by consumers will push established chains to reduce 15 percent in average store sizes and allocate 30 percent of store portfolios for cloud kitchens.

For smaller and standalone food service businesses, the report suggests they may need to close their physical stores, pivot to cloud kitchens, and depend on aggregators. About 15 to 20 percent of orders will be led by aggregators.  The food service industry will become more consolidated with food aggregators taking a large share of the business. Aggregators will continue to grow rapidly and dominate the food service ecosystem. Aggregators have successfully established customer loyalty because they provide unparalleled convenience and a variety of offerings to consumers, such easy ordering and payment and delivery tracking. In the consumer space, aggregators will continue to focus on improving the consumer experience by improving restaurant review platform and adding subscription or loyalty programs.

While the overall industry was suffering, Asia’s online food delivery grew 30 percent in 2020, compared with less than 20 percent growth the year before. Food aggregators experienced more than 30 percent growth, accounting 65 percent of all online food delivery orders. Cloud kitchens gained further popularity, with most established quick service restaurants adapting to the new format to fuel growth.


About Occam Komunikasi Indonesia
Our operations began in 2014 as an independent communications consultancy firm. In 2016, we became part of the Maverick Group with the Occam flag. Our clients and partners acknowledge the integrity we bring to our practice, tactical capabilities, and network among media and key opinion leaders.

 

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