Vietnam’s food service industry is facing a rapidly shifting landscape amid the COVID-19 pandemic. To ensure business continuity and long term recovery and sustainability, food service players should consider operational optimization, robust cash flow generation, and adoption of digital tools.
Real Impact of the Pandemic
Over the years, Vietnam’s growing urban population and increasing disposable income have contributed to the healthy growth of the consumer food service. Before the COVID-19 hit, the industry was expected to grow at 13% per annum until 2024.
Since Vietnam reported its first two cases of COVID-19 in January 2020, the government has stepped up its efforts to curb the spread of the virus, including the closure of eateries with more than 30 seats. With social distancing orders being enforced, many businesses are impacted as revenues from dine-in customers are plummeting.
Things look different now as the industry grapples with the global pandemic, affecting chain restaurants, upscale restaurants, drinks (cafe, teas, bars, pub), single-family business, street food, as well as delivery-only services, at least across four segments; customer demand, supply of raw materials, premise, and workforce. The following infographic summarizes some of these key points:
Ensuring Business Continuity and Sustainability
Based on our analysis, the following infographic highlights key measures necessary for food service players to survive the pandemic, including cost-cutting and sales initiatives to help them stay in business and mitigate similar disruptions going forward.
To ensure short term business continuity, operations need to be optimized. Businesses can maximize efficiency by streamlining their workforce, as well as downsizing the menu to key offerings. Meanwhile, to minimize expenses during this time, try to negotiate with landlords and suppliers on payment terms or consider closing down unpopular branches to avoid abnormal costs.
Another critical aspect is to generate cash flow with an improvised strategy, for example by shifting operations to delivery channels with a hotline, discount, brochure, or other promotional methods. The COVID-19 situation has forced businesses to bring innovation to the table and create new offerings, therefore many are doing takeaway counters and other services such as family catering, or ready-to-cook packages.
For long term recovery and sustainability, businesses should take initiatives to enhance efficiency and mitigate future risks. Partnering up with online food ordering services can be a great option to leverage their customer pools. Also, consider opening new market channels, including groceries, convenience stores, and/or supermarkets.
With the increase of demand for delivery during the crisis, it is worth considering to digitize your business through the development of food delivery apps, as a way to automate the ordering process and attract more customers through digital channels. If you are in the industry, how is your business tackling the situation? What measures have you taken, and how has it been working so far?