On March 16th Romanian government officials announced that HORECA businesses would be closed in order to stop the spread of the coronavirus. As a result, some the restaurants have moved their businesses online – either through takeaway platforms or by delivering food themselves. BR talked to several key figures from the HORECA industry to find out what’s next for them.
Social distancing in the restaurant business: Cosmin Magureanu (ialoc.ro)
How many restaurants are using your platform for vouchers at this point? How many people have already supported these places by buying the vouchers?
More than 130 businesses are listed on CardCadou at the moment, out of which 49 are restaurants and 44 are coffee shops. In one month after launching, there are over 2,300 cards sold with an average value of ~10 eur.
What is going to be the greatest challenge after the social distancing restrictions will pass and restaurants can reopen again for the public?
Social distancing will most likely disappear in stages, either through government imposed regulation or due to plain old fear. If right now we’re at 100% isolation, I think it’s sensible to talk about what’s going to happen at 50% isolation (Stage 1), 25% (Stage 2) and 0% (Stage 3) . The main challenge posed by Stage 1 will be increased costs at no immediate increased revenue. Deliveries will slow down and be replaced by going out (though not necessarily in restaurants/ bars). There might be a peak in drinking parties during Stage 1. Stage 2 will probably come without any additional cost, but we expect a lot of the market to be affected by the economic slump. During the Great Depression of the 1930s, this brought forth Penny Restaurants. A lot of places will have to change their business approach to survive – some will migrate towards cheaper menus, some towards more expensive ones. There’ll be a gap in the middle for a while. Stage 3 won’t be visible to the consumer, but I’m expecting a lot of restaurants and bars to change hands to stay in business.
In your opinion, how the restaurants’ scene is going to change after this pandemic?
The market overall could contract between 15-20% if the lockdown brings about a recession as well. With less disposable income to spend on going out, consumers might become choosier in regards to venues and business owners should expect a more demanding clientele. ROBO (research online, buy offline) should also rise in prominence in HORECA, so that will be a challenge for us – helping restaurants attract more people and tracking whether we generated a reservation or a walk-in. I also believe owners will try to focus more on CPA (cost per action) marketing, so that they drive more business immediately. Despite this being part of our business model, my recommendation to them is to invest a portion of their ad spend (maybe 20-30%) in awareness campaigns and lean on their loyal customers to attract new ones.
Read also: Interview Ionut Ivan (Red Angus Steakhouse)
Editor’s note: since the close-down, ialoc.ro app has offered a series of buy-in-advance vouchers for sustaining small local business all over Romania, following the vouchers initiative of Beans&Dots Coffee Shop. The project was a real success, and from the beginning of May, VISA sustains the project by adding an extra RON 25 to each voucher of over RON 100.