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Restaurant chains gets inventive to cope with the effects of lockdown

Article written by Prithivan Pillay (Head of Client Value Propositions at Nedbank)

Since lockdown, survival has been the main focus of most restaurants, but with the recent ease of lockdown regulations, some have started thinking of growth prospects again.

According to Prithivan Pillay, Nedbank Head of Client Value Propositions, restaurant franchisors are looking to position their business models strategically during the pandemic.

‘In an industry dependent on clients walking through the door and filling up tables, many restaurants had to adapt to full-scale closures as a result of the lockdown. The creation of digital apps has allowed many restaurants to shift their business models to deliveries, where clients can order takeaways using an app and have their orders delivered at home. While a far cry from having clients in chairs to whom you can upsell drinks and desserts, it’s still a good avenue for franchises to stay in operation. However, it’s unlikely that this alone will make up for lost revenue.’

Pandemic-related changes in consumer demand and behaviour could have longer lasting effects, suggesting that a longer-term strategy for these alternative channels of distribution is warranted.

Franchise concept, Mozambik, is a good example of this. Manny Nichas, chief executive officer of Mozambik, says the restaurant chain has not only developed its own set of stringent protocols aligning with regulatory requirements, including no-touch menus to ensure comfort, wellness and safety, but also launched a full e-commerce website.

‘Pre-lockdown our takeaway and delivery probably accounted for only 6% of our turnover. Since lockdown and the implementation of a lot of new initiatives we’ve put into play, turnover has increased to between 18% and 22%. But that’s not enough to keep us in the black. We subsequently launched our own online grocery ordering system, and we aim to grow Mozambik Groceries into a key part of our business,’ Says Nichas.

Apart from changing the status quo through innovation, Pillay urges franchisors to think differently about marketing.

‘Naturally, digital and social media marketing will play a huge role during the COVID-19 recovery period, and franchises will need to be creative to bring people back into the fold. It’s not enough to have a physical standing at your old address. Franchises will need to reach out to their clients and entice them back, without scaring them off. This means letting them know that social distancing will remain in effect (if operating at reduced capacity), enhanced cleaning is top priority, and the wellbeing of clients is the most important focus.’

With the country reeling from a lockdown initially planned for only 21 days, but now lasting more than 100 days, there is uncertainty everywhere. And with infection numbers spiking throughout the main cities, consumers are reluctant to go out for essential needs. One-stop e-commerce platforms, such as Nedbank’s new Avo application, are due to take centre stage. ‘Avo is our new super app, offering users everything all on one platform – from groceries and home services to prepaid purchases and mobile payments from the comfort of their own home’, says Pillay.

Many franchises, including Ocean Basket, have taken advantage of the lockdown to reassess their business approach. Grace Harding, chief executive officer of Ocean Basket, says at the beginning of lockdown they had to think of ways to help their franchisees stay afloat. ‘One area was negotiating reduced rental fees with landlords. The relationships we built with landlords before COVID-19 stood us in great stead, and allowed us to help 80% of our franchisees with negotiations with their landlords.’

Everyone has had to come to the party during the lockdown period, even the country’s major banking institutions. South Africa’s banks have had to step into helping government distribute funds to individuals and businesses in need, and according to a statement from the Banking Association of South Africa on 7 July 2020, South African banks have so far approved more than R30,6 billion in relief to individuals and businesses affected by COVID-19 and the national lockdown. Additionally, over R10,6 billion has been extended to distressed businesses under the COVID-19 Loan Guarantee Scheme.

At Nedbank, we know that success in business is all about partnerships, and our bigger-picture approach starts with immersing ourselves in a client’s business and sector. This enables us not only to understand their franchise management requirements and offer solutions, but also to give them a bigger-picture view of complementary products to maximise every facet of their business and beyond.

Nedbank is a proud Partner of the NSBC

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