Despite the spring weather upon us, we remain amid a storm with the COVID-19 global healthcare crisis. Albeit a challenging and pressing crisis, the world continues to witness, yet there seem to be signs of hope with the decline of the vastly growing reported cases in some regions.With that in mind, governments are working hard to understand the shock of the healthcare crisis on SME’s including the restaurant industry, which was heavily impacted and administering some relief.As we continue to share insights about the restaurant industry and especially during COVID-19, we felt it is necessary to communicate on various effective cost-cutting viewpoints to aid your restaurant establishment from unnecessary expenses. We, at serVme, are going to help you understand these costs further and provide you with ways to cut your losses without affecting your quality while also remaining profitable.

Reduce Payroll

It is important to calculate the required number of workforce to carry on operations without compromising your restaurant, food offering, and/or staff’s commitment to carry their work. “Our staff are the most important component and blood life of our restaurant, and I had given my staff a commitment to keep them on board. Of course, we had to adjust the payroll salaries as labor costs were outweighing the sales with a 35% decrease in pay”, reported by a restaurant owner and an avid user of serVme’s products. Certain measures can be taken including adjusting/reducing employee shift timings and cross-training members to take on bigger and various job responsibilities without conceding your brand values and overall customer satisfaction.

Renegotiate Your Lease

Paying hefty rent is a major challenge in these times, especially when restaurants are closed. However, governments and real estate development companies are closely monitoring the situation and seem to be providing unique initiatives to relieve tenants from burdened rent. For example, Dubai’s real estate giant Majid Al Futtaim, which operates 27 shopping malls across the Middle East and North Africa, took an unprecedented approach by waiving rent fees for its tenants for the duration of the COVID-19. Moreover and according to PWC, the Dubai government announced a stimulus package as of 31st of March 2020, that provides a 20% rebate on rental values for the restaurant, tourism and entertainment sectors in addition to a 50% reduction in municipal fees paid by hotels.We expect to see more initiatives to support restaurants as it largely composed of SMEs and relates to the tourism sector. Here are some tips to keep in mind as well: Investigate options for extending the payment terms to 90+ days; Speak with your local bank to examine all credit facilities with zero-interest loans; andCommunicate with your landlord openly about your rent situation. 

Explore Government Initiatives

Governments are taking multiple measures to help businesses survive this pandemic. According to PWC, these measures include postponement of the filing and payment of taxes, reductions in taxes and government fees, loan repayment deferrals, and stimulus packages to support the local economies. Here are some initiatives carried by governments in the Middle East: 

• Lebanon:  The Minister of Finance has announced a suspension of the filing, payment, and other related administrative processes in respect of all taxes effective immediately and including any taxes previously postponed.

• Saudi Arabia: The Saudi Ministry of Finance (“MoF”) and General Authority for Zakat & Tax (“GAZT”) have announced various measures in respect of COVID-19 to support the local economy, including a range of corporate income tax, Zakat, VAT, excise tax, and customs duties related measures.

• United Arab Emirates: The UAE Federal Government has announced certain countrywide stimulus measures, in addition to measures taken by the individual Emirates of Abu Dhabi and Dubai to support their respective Emirates. The stimulus package includes AED 50bn in zero-interest loans for banks to support SMEs and urged banks to consider loan forbearance. 
  
  To stay informed about initiatives, we encourage you to regularly check government’s website.

Reduce Your Utility Bill

Electricity, water, gas, and heavy equipment utility play a significant role in potential cost savings. Ensure that your kitchen is only utilizing the minimum energy consumption to decrease unnecessary utility bills. Furthermore, the Abu Dhabi government announced a 16-point stimulus plan by allocating AED 5bn to provide subsidies for water and electricity for citizens, and commercial and industrial activities, and commitment to a 10% reduction in water and power bills. Restaurateurs and managers are mindful of shaving off excessive and unwarranted bills. “In Lebanon, we can only operate from 10:00 am – 6:00 pm ensuring our last food delivery order is by 5:30 pm time as per the government lockdown. So, we try to only keep the necessary ovens running to ensure that we are wasteful in energy and cost”, said one of the restaurant managers of a well-known dine-in Italian restaurant in Beirut. 

Vendor Contracts

Understandably, the health crisis has negatively impacted most if not all industries. With that in mind, restaurants should rely on their vendors to assist them by adjusting their contracts if the full value services are not being utilized. Previously signed vendor contracts can be re-evaluated in terms of value or paused if the value seems to be unbeneficial in the meantime. We continue to add value to our customers by supporting them with our marketing tools. As such, we have credited a two months subscription to our clients in sympathy for the current situation and especially that we care for every customer equally. We believe you should expect nothing different from other vendors. We have seen other companies create initiatives such as Zomato which offer commission and renewal fees deferral payments ranging from 50%-100% to some of its restaurant partners.

Marketing and outreach

Especially when times are difficult, restaurants should continue communicating with your customers. Spending dollars on social media platforms, on the other hand, should be given a second. However, you can always connect with your followers by sending them direct messages on Instagram and Facebook, engaging with the trending hashtags such as #UAERestaurantsUnite that started as a movement from the famous food blogger Foodiva and to promote restaurants. Moreover, collaborating with online communities will provide you with the advantage of sparking word-of-mouth to reshare your stories and increase sales.Another way to increase your communication to customers is by relying on email and SMS marketing tools. serVme’s marketing tools increase up to 5X returns of guest engagement. “We decided to share our new delivery menu in a viral email and SMS campaign by tapping into our serVme marketing tools and say a 12% increase in our delivery orders,” said the Operational Manager of a well-recognized food group in Dubai. Avli, a fine-dining Greek restaurant in DIFC, and a serVme’s client has now moved towards delivery. To get the word out, they used serVme’s marketing platform to send their new menu entitled “Avli At Home” that offers their guests the most requested items.r

Other clients such as The First Group which operate seven restaurants has tapped into serVme’s marketing platform to promote their new campaign, entitled “The Ultimate Delivery” where customers can now order from their various venues in one order with a 20% discount. 

Utilizing marketing tools such as serVme’s marketing platform, allows you to extend your voice to your guests in a personalized manner, not to mention spiking your sales orders!

If you wish to explore online delivery without investing in delivery apps and have your fleet to manage, you may customize your online reservation widget to online delivery requests instead. Simply change the text of the online reservations to accepting online delivery and benefit from receiving the email requests.

Other Costs to keep in mind

• Food Cost: Controlling Food Cost can be quite a hassle. A creative way of lowering your cost is by creating a special delivery menu with specific menu items. You can maintain this cost by conducting regular inventory checks and minimize food waste.

• Reduce Free Offerings – Go Green: Eliminate free cutlery, such as ketchup bags, plastic cutlery, or even napkins especially since customers are opting to use their items for sanitization purposes. 

• Partnering with Other Delivery Apps: One initiative that is worth looking into is spearheaded by Food Sheikh and Chat Food to enlist restaurants free of charge on their platform and allowing them to roll out online delivery for free.

  
  

  Overall, managing expenses is a daily battle especially when sales are tight. Yet, to come out stronger and resilient, post-COVID-19, one must think of how to adopt agile technology to stay afloat. How can you truly digitize your restaurant, increase your communication with your guests, and massively streamline your operations without compromising your data, brand, and invest deep pockets? Food for thought for all managers and owners willing to adjust their business during this critical time.

Did We Miss Anything?

We would love to hear your thoughts on how you can further optimize and cut down on expenses! Reach us at info@servmeco.com or on sales@servmeco.com to learn more about our marketing tools.

Sources:

Arabianbusiness.com
Pwc.com
Caterermiddleeast.com
Gulfbusiness.com
Chatfood.io
Toasttab.com