How can the hospitality sector recover from Covid-19? By Tsewang Wangkang
The coronavirus pandemic has had a devastating impact on the UK’s hospitality industry – this much cannot be ignored.
Indeed, the sector reported almost £30 billion in lost revenue during the lockdown period. Such figures will undoubtedly unnerve many professionals within the sector. Employers within this space will be worried not only about the sustainability of their businesses, but also the future of their staff. After all, the industry employs roughly nine per cent of the UK’s workforce.
In a bid to stimulate sector recovery, the Government has stepped in to offer support. VAT cuts, business rates relief and the introduction of the Eat Out to Help Out scheme have, to an extent, played their part in encouraging customers back to the high street.
However, these schemes and policies are temporary measures, and they do not guarantee the long-term survival of hospitality businesses. Therefore, businesses must review and innovate their existing operating practices, if they wish to grow over the coming years.
The onset of the coronavirus pandemic has meant that practices such as remote working, online shopping and social distancing have now become deeply entrenched in in our day-to-day lives. Localized travel patterns have also become commonplace overrecent months. Naturally, hospitality businesses must adapt to this, in order to survive.
Restaurants, bars and cafes will need to greatly extend their current health and safety policies. The Government has already introduced guidelines to help businesses adapt their premises; measures such as clearing tables and chairs to better facilitate social distancing, to introducing one-way systems and installing hand sanitizer pumps are likely to be adopted by establishments across the UK.
In addition to physical changes, many businesses will seek to change other business practices; and technology will play a big part in this. Contactless payments or digital loyalty cards, for example, will help to minimize contact between staff and customers.
Online booking systems have become central to eating out, as they enable customers to reserve space in an establishment that is unable to run at full capacity. Indeed, some bars and restaurants exclusively allow pre-booked guests into their spaces. Such systems also make it easier to gather client data to comply with the Government’s ‘Track and Trace’ efforts.
Optimistically, 96 per cent of customers who returned to restaurants in July were satisfied with the measures put in place, suggesting that hope is on the horizon for many bars, restaurants and cafes.
Whilst effective in settling potential health-related anxiety felt by customers, they still do not address the long-term hurdles the sector must overcome. If hospitality businesses are to develop and grow over the coming years, they must build and nurture customer loyalty.
The importance of customer retention
With increasingly localized consumer practices, bars, restaurants and cafes are largely dependent on their local client base for a steady stream of income. However, as it stands, many businesses are unable to identify such individuals and are therefore unable to entice repeat customers.
Even before the pandemic, hospitality businesses have turned to out-dated strategies to do this. They have relied on physically monitoring footfall, and the memories of staff to identify repeat customers. Paper loyalty cards seemed to be the go-to strategy to persuade customers to return to the premises, whilst online booking systems provided the main method of capturing customer data.
Needless to say, these systems are flawed and desperately require updates. Smart and efficient solutions will be vital if bars, restaurants and cafes are to encourage customer loyalty.
Indeed, we are gradually seeing more and more hospitality businesses adopting new, tech-based solutions to build a loyal following.
Loyalty apps, for example, are proving to be an extremely useful tool. They are able to link to a business’ customer relationship management (CRM) system – or the app comes complete with a CRM system – enabling staff to effectively monitor who has entered the premises and when. Thus, the process of identifying and rewarding repeat customers becomes much more streamlined.
Further, loyalty apps act as a useful prompt for consumers to re-visit a local haunt. Handily stored on mobile phones, they can provide pop-up reminders that one more visit to their local café, for example, will entitle them to a free cup of coffee or a slice of cake. This tailored approach to customer service will gradually change customer habits and consequently influence brand loyalty.
The coming months and years will be challenging for many hospitality businesses. However, it also poses a great opportunity to update their current practices. By implementing digital solutions into their long-term business strategies, organizations will survive, and indeed thrive, in the ‘new normal.’
Tsewang Wangkang is the co-founder and CEO of Embargo, a loyalty platform that allows restaurants, bars, and coffee shops to recognize and reward their customers through the use of pioneering technology. Launched in 2017, Embargo is helping hospitality businesses embrace digital transformation by connecting them directly with their customers delivering bespoke loyalty rewards and enabling communication.