Perspectives

Making Pandemic Lemonade

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Making Pandemic Lemonade

It will take many years to assess and mourn the devastating and lasting effects Covid is having on our collective mental, physical and economic health. But we can already begin to understand the ways the hospitality industry has adapted for the better and created new opportunity,directly as a result of the crippling lockdowns that laid waste to so many businesses and livelihoods in the past year: 

1)    Locational Freedom: The conventional wisdom about restaurants and retail has always been “location, location, location.” But the effects of the pandemic have made buyers realize how much more freedom they now have in their lives, after businesses adopted new ordering, delivery, and communication technologies sooner than they would have without a forceful catalyst. Restaurants marketed meal kits and conducted virtual cooking demonstrations. Suppliers began selling directly to customers online to keep goods flowing. People attended more events and museums online. And the world learned that remote working was actually a legitimate option. 

There will be some recession to old habits in the coming months, but the paradigm has shifted permanently and there will be no putting the genie back in the bottle. Consumers know they can have almost anything they want from anyone, delivered anywhere, with the push of a button. Businesses have learned they can reach a broader scope of customers and expand their business model with new offerings, which leads us to…   

2)    Radical Creativity: Plato once wrote “our need will be the real creator,” and never was that truer than when people found themselves stuck in their homes, and businesses were prevented from welcoming customers through their doors. Crazy, radical workarounds ensued. High-end experiential restaurants sold takeout dinners. Other restaurants sold groceries and cleaning supplies, opened new “ghost restaurant” brands, and added outdoor seating capacity. Consumers learned how to adapt their homes to be a new hub for working, teaching, cooking, hosting multi-generational families, entertaining, and providing self-care. Pizza chains learned they need to mobilize a lot more drivers to keep up with exploding demand.  

 
Of course, not everyone survived this transition period of transformation. Tens of thousands of independent restaurants and chain units have closed permanently, and more closures are certain to happen before we will reach an equilibrium. But whether an operator threw in the towel last spring to cut their losses, or is only days away from permanent closure because recovery is taking too long, we’ve also seen the benefits of…   

3)    Hard Pruning: I attended a webinar early in the lockdown where a prominent research company suggested that the “good thing” about all the sudden restaurant closings was that the industry was overbuilt (i.e., too much capacity for the available consumer demand) by about 10% and would be stronger for it. The calculation felt a little too cold at the time, but it was absolutely correct: When there are too many locations vying for too few consumers, the entire industry suffers. Restaurants limp along, make unprofitable concessions, and delay decisions in the hopes that things will get better soon. We also heard empowering stories from business owners who admitted they were stretching themselves too thin but were afraid of making unpopular decisions. Covid gave them permission to focus and take action that strengthened their bottom lines and set them up for success on the other side.  

 
Pre-pandemic, all this fiscal tension was hard to perceive and address, because the world was accelerating and raising demands—not slowing down or lowering them. That’s changed, at least for a time, because now we are learning to live in a world of…   

4)    Tempered Expectations: Our economy’s continued growth has depended upon both monied and cash-strapped consumers opting for new things and experiences sooner, with the plan to pay for them later. In the pre-pandemic world, VIP treatment, upgrades, and world-class service were anyone’s to demand and optimize. But as Covid lockdowns left everyone wanting for toilet paper, indoor dining, and family reunions, America’s “Have” consumers became more sensitized to the hospitality sector’s “Have Not” realities of scraping by to earn a living on low tips and wages.  

Now, tipping has become a means for showing generosity instead of fulfilling an obligation. Longer table waits are an understood consequence of even greater labor shortages. And friendly service is accepted graciously instead of expected. We also are more tentative with travel plans, knowing a new disruption could wipe out another year’s worth of weddings, graduations, and holidays at any moment. 

How long these new mindsets – freedom, creativity, pruning, and grace – will continue to spur the creation and adoption of new technologies, products and services remains to be seen. But already it is clear that countless businesses and consumers not only survived, but also set themselves up to thrive and grow as hospitality recovers in the coming years.   

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