Bertand Leseigneur, our Retail Innovation US correspondent, this month shares with us the dramatic situation for retailers in NYC since the Covid19.
The Covid19 crisis has seriously affected the US restaurant sector. This sector is one of the largest employers in the country. It accounts for more than 15 million jobs and nearly $900 billion in turnover was forecast for 2020.
Yelp‘s new report revealed that since the beginning of March, 23,981 restaurants listed on its platform have closed at some point during the pandemic. 53% of them have decided to close their doors permanently.
That’s more than other sectors of the service industry. Retail stores are expected to lose 35% of their retail locations while 24% of beauty salons and 26% of gyms do not plan to return to the market.
In this extreme situation, what are the restaurants and bars that remain on the market doing? A little review of what’s been happening in New York since the city reopened and the 5 major trends in the restaurant business.
Free yourself from the tariffs of online ordering platforms
During the crisis, many restaurants were able to continue to operate thanks to online ordering on platforms such as Uber Eats or Seameless. But these platforms also have a cost for the customer and the restaurant.
Some restaurants have therefore taken advantage of the shutdown to redesign their websites and move away from online ordering platforms to eliminate all intermediation fees. This is the case of “The Grey Dog“, a private chain of four restaurants in NYC.
They have totally redesigned their site to offer better options dedicated to online ordering.
Other restaurants prefer to play the proximity card. If you order your takeaway directly on the spot, you will automatically receive an advantage such as a discount or points on your loyalty card. The customer makes the effort to travel and should therefore be rewarded because it allows the restaurant to save on delivery or on the cost of using an online ordering platform.
In addition to cost reductions, these brands could face the question of a loss of flow and therefore of audience brought by these intermediation platforms. However, many restaurants have opted to play the social card. “By ordering directly from the restaurant: you save jobs”. In addition, many small restaurants have a loyal clientele and these will be even more interested in ordering at the restaurant or on its website to support it.
Client marketing is then done by emailing or on Instagram. During the confinement, customers were also offered to purchase vouchers (allowing restaurants to take cash advances), which can be used when the restaurant reopens.
Developing contactless payment solutions
The hygiene problems posed by the Covid19 encourage the shift to mobile payment solutions. Here too, in addition to reassuring the customer, it is also a way for merchants to save on expenses related to checkout management, storage and manual delivery of cash to the bank… Covid19 has therefore also accelerated the adoption or development of contactless solutions such as Square, Venmo (already mentioned) or the restaurants’ own mobile applications.
The Futurist Group recently conducted a two-wave study of 3,187 U.S. consumers before and after the spread of coronavirus. Approximately 38% of consumers now consider contactless as a basic payment need or feature, up from 30% a year ago. The percentage of consumers reporting no need for contactless payments increased from 41% in March 2019 to 33% in March 2020.
In the case of Square, customers pay by credit card without contact with the seller. Venmo allows payment from their mobile phone by sending the amount to be paid from the application. Finally, many restaurants of major chains have integrated the payment function into their mobile site: the customer orders online, pays from his application and just comes to pick up his order when it is ready.
Using the QR Code
What if the big winner in this pandemic was the QR Code? Indeed, this tool is perfect for today’s needs: it gives contactless access to a lot of content and allows different options for restaurants.
– The QR Code Menu: instead of holding a laminated menu, which needs to be decontaminated after each use, the customer can simply scan a QR Code which will open to a restaurant page presenting the menu of the day. The customer can then place their order online at the restaurant or by phone. The advantage of this solution is to avoid crowds of potential customers gathering in front of the restaurant entrance to read the menu!
– The QR Order Code: by scanning the code, you get an order form on the dish displayed on the window. The customer then pays online, once his order has been recorded or directly in the restaurant when he picks up his dish.
– The QR Gourmet Code: some restaurants wanted to go even further by offering “Gourmet Kits”. The idea is simple: you go to the restaurant to buy a complete menu to cook at home. In your “wicker basket” you have all the recipe elements of the different dishes, all you have to do is cook them. All you have to do is scan the QR code provided with your basket to get the complete video of the recipe. Simple, effective and it allows you to take yourself for the chef of your favorite restaurant.
Virtualize your restaurant interior
DoorDash (one of many restaurant order delivery sites) has partnered with Snapchat to create a new AR lens with popular restaurant brands such asBaskin Robbins, The Cheesecake Factory, Chili’s and Buffalo Wild Wings. Restaurants can only entertain customers on the patio and the DoorDash lens allowsfans to imagine that they are…inside!
On Snapchat, the user having fun with this new lens will also be invited to download the DoorDash application to place an order. A way for DoorDash to capture younger customers by capitalizing on their desire for fun. 64% of home delivery application users are indeed between 18 and 34 years old. Since 75% of Snapchat users fall into this age bracket, the DoorDash partnership could enable DoorDash to target its market more intensely.
It is also the desire to stand out from the competition. Indeed, the market for home delivery platforms is very dense (see diagram at the beginning of the article) without forgetting that now the restaurants themselves want to position themselves to regain their freedom of action! The market benefits from the consumer’s reluctance to go out: less than half of consumers say they are ready to go out to dinner for the moment. A behaviour that could continue over time and lead the restaurant sector towards a completely different business model.
The opening of new terraces
One of the sectors benefiting from this crisis is the carpentry sector! Indeed, the interior of restaurants is closed until further notice but the city has authorized the owners to open terraces on the sidewalks or even sometimes on the street. Many companies are therefore hired to build terraces to enjoy the summer.
It remains to be seen whether these terraces are not too dangerous as cars continue to circulate in the city, very close to these eating areas!