THE DEVELOPMENT STRATEGIES AND TRENDS OF CATERING INDUSTRY UNDER THE INFLUENCE OF COVID-19

Overview:

COVID-19 is one of the biggest threats the restaurant industry has ever faced. Before the outbreak of COVID-19, the development of the restaurant industry was very stable. However, due to the outbreak of COVID-19, more and more restaurants have closed down or directly liquidation, while the remaining restaurants are also struggling to survive and seeking various ways to operate. This paper uses literature review and interview to collect and summarize information, and evaluates and summarizes the future development trend of the catering industry and some feasible strategies.

Research:

The information of Chinese catering comes from the interview with the manager of Beijing Yu Xian Du Chinese Royal Gastronomy Museum(A relatively high-end restaurant, and at the same time adhere to the dissemination of Chinese royal cuisine culture, its characteristics for the establishment of the royal cuisine museum in the restaurant). The questions and answers are as follows:

1. What are the trends in the hotel business today? (such as group buying and other trends)

Answer: On the basis of food color, taste and beauty, the dining environment and atmosphere are good, distinctive and guests have face.

2. What are the “cutting edge” trends in the future? (What changes are likely in the future)

A: Strict epidemic prevention measures, social distancing, the implementation of separate meals, online sales and publicity are more important than traditional sales, eating a special catering culture has become the development trend and pursuit of the majority of consumers.

3. Does this industry trend fit your company culture and direction?

Answer: Very fit, and we are still constantly innovating service forms and etiquette content, highlighting catering culture and Chinese service, inheriting the broad and profound Chinese food civilization of 5,000 years to the world.

4. What do you think is the standard of a successful hotel operation?

Answer: First of all, to make profits, enterprises can become bigger and stronger, make characteristics, this is only the basic requirements of enterprise development; The most important sign of success is: don’t look at how much money your enterprise makes in the society, but look at what your enterprise has filled (created or dedicated) to the society, this is the most important sign of success.

5. What is your unique approach to staff management?

Answer: establish a set of scientific norms, in line with the requirements of laws and regulations of the enterprise management system, with the system to manage affairs, manage people, before the system everyone is equal, all strict management, strict requirements, but the implementation of the system reflects humanistic care.

6. How do they complete daily tasks to make sure they’re looking their best?

Answer: people-oriented, staff first, staff life without small things, wholeheartedly rely on staff to do business, staff’s spirit of ownership, fully reflected in the work of every minute.

7. How to ensure that employees continue to provide high-quality online services?

Answer: Organize service skills and etiquette training. Under the serious impact of the epidemic, we grasp the revenue grasp epidemic prevention on the one hand, on the other hand, grasp the people, carry out “if I were the general manager…..” Speech competition, organizing “poker” competition, shuttlecock kicking, badminton and other cultural and sports activities to stabilize staff’s thinking and ensure service quality.

8. What methods do you use to increase the enthusiasm and participation of employees? (such as training; Performance management; Incentive mechanism; Etc.)

A: Every month in advance to each department, each region, each room revenue task assigned to go down, everyone head indicators, everyone has goals in mind, the number of tables to complete a prize, complete the revenue task has a prize, order and commission, policy mobilization of thousands of; The company holds a monthly work summary and commendation conference to reward outstanding employees and share experience, learn from each other, encourage each other, and improve together. The annual evaluation of advanced individuals held a conference to recognize and reward, learn to have goals, driven to have direction, advanced organization to foreign and domestic travel to study, greatly aroused the enthusiasm and creativity of employees to participate in enterprise management, and constantly put forward reasonable suggestions for enterprise management.

Evaluation

Human health has been the most devastating and apparent of all COVID-19 consequences, and it is the most important. In contrast to previous tragedies in recent memory, the rising economic devastation produced by this disease differentiates it from all other tragedies. Because of the commencement of COVID-19 towards the end of 2019, several companies, notably those in the tourism and hospitality industries, have been plagued by uncertainty (Deconinck, Avery, & Jackson, 2020). A co-creator and principal beneficiary of the pandemic, the catering sector, as an industry predicated on human movement and personal interaction, plays a dual role in the spread of the disease and its ramifications (Verma and Saini, 2020). While this seems unfair to the entire catering industry, it remains true that movement, contact, and interactions are the largest spreaders of the virus.

The current COVID-19 issue has the potential to be one of the most significant and unexpected events in recent history for the catering market participants. In addition to the disease’s global expansion, it has also expanded economically to important financial markets and industries, resulting in a decline in the performance and stability of the catering industry (Gursoy et al., 2021). The COVID-19 conundrum is mostly affecting service-oriented companies, such as the hospitality industry, which are particularly hard hit (Alonso et al., 2020). The latter acts as a powerful engine for global economic development and job creation, particularly in developing countries. It serves as the foundation for a wide range of economic activities and is both directly and indirectly responsible for regional growth, many types of employment, and the development of industries and sub-industries. The impact of travel and tourism on the Chinese economy, as well as the global economy, has been highlighted by the COVID-19 outbreak in Southeast Asia and China.

A number of health, public health, and economic activities were taken by governments from all over the world during the ongoing COVID-19 period. In China, efforts have been made to control the spread of the virus in order to mitigate the impact of the COVID-19 outbreak on both the health and economic fronts (He et al., 2020). According to a brief evaluation of such initiatives, governments took a variety of steps, including prohibiting public meetings, closing businesses and schools, enforcing social separation, as well as providing economic assistance, developing contact tracing, and offering COVID-19 assessment regulations, among other things (World Health Organization (WHO), 2020). The hospitality and catering sector have had the short end of the stick as the measures implemented have meant reduced business for companies operating in the industry. For example, the reduction in number of visitors in the country means that hotel rooms are empty and that the running costs continue to be high. As a result, said businesses are struggling just to keep their doors open, despite the recent return to normalcy.

A thorough review of the literature reveals that a large number of articles give evidence that COVID-19 has a negative impact on the performance of the hospitality industry. Hotel occupancy rates dropped significantly, resulting in a loss of more than $9 billion in revenue for the company. It is estimated that around 74 percent of China’s hotels were closed between January and February 2020, for an average of 27 days (Norris, Taylor Jr, & Taylor, 2021). Additionally, from January 14 to January 28, hotel occupancy dropped from around 70% to 8%, and stayed below 10% for the following 28 days after that (Deconinck, Avery, & Jackson, 2020). As a result, massive personnel cutbacks occurred in the hotel and tourist industries, resulting in huge cash flow and revenue losses for these enterprises. In China, there is also a significant fear of traveling (Kim, Kim, & Wang, 2021). Increased psychological resilience and the development of careful travel behaviors are among the responses to “travel apprehension” that have been seen. When making travel decisions in the case of a pandemic, individuals examine their level of trust in local government signals concerning personal safety and security. As an analogy, the increasing level of uncertainty surrounding the COVID-19 epidemic has enhanced both China’s stock market’s volatility and predictability.

Synthesis:

The traditional catering industry has experienced significant growth in recent years, owing to the introduction of internet ordering platforms, increased consumer income, and rising consumption levels, among other factors. While it has established itself as a vital role in the development of China’s economy, the country’s future growth prospects are also promising. More than 26 million people are employed by the top 100 catering companies in China, which earned operating income of 327.38 billion yuan in 2019, an increase of 9.6 percent year on year (Dube, Nhamo, & Chikodzi, 2021). The conventional catering market, on the other hand, has shrunk dramatically as a result of the impact of COVID-19, with market turnover days decreasing and financial pressure increasing as a result. According to a variety of situations, the reorganization and upgrading of the conventional catering company has become crucial as a result of COVID-19.

By the beginning of 2020, practically everyone in the nation was cut off from the rest of the world as a result of COVID-19 (Brizek et al., 2021). During the Spring Festival, all social gatherings between families were cancelled, as were all parties, dinners, and wedding banquets, among other things. Catering businesses that rely on the Spring Festival as a major source of revenue have experienced financial challenges in recent years. The operational income of catering businesses has dropped drastically. During this time period, a large number of chain stores were also severely financially damaged (Guan et al., 2020). Several well-known food and beverage companies have incurred considerable losses as a result of the current economic downturn, mostly due to the growth of chain food and beverage outlets, increasing personnel expenditures, and higher rents.

There can be no debate about the pandemic’s catastrophic impact on the global hotel industry, which is well documented. Across the globe, occupancy rates are dropping, with Europe and North America bearing the brunt of the decline in occupancy rates. Statistics from Dube, Nhamo, and Chikodzi (2021) say that the unemployment rate for leisure and hospitality employees in the United States has hit an all-time high of 28.9 percent, which is an all-time high. Similar damage has been seen in China (Deconinck, Avery, & Jackson, 2020). Occupancy rates are expected to fall from 75.4 percent in 2019 to 37.6 percent in 2020, before rising to 59.2 percent in 2021 in the United Kingdom, where the situation is no better (Deconinck, Avery, & Jackson, 2020). Even worse, even if the Coronavirus vaccines are properly applied, research shows that it might take up to four years for occupancy rates to return to levels prior to the Covid 19 outbreak (Verma and Saini, 2020). However, despite the ongoing destruction caused by the virus, hotel sales and marketing teams are stepping up their efforts and doing everything they can to maximize revenue today, knowing that an end to the pandemic may be in sight.

Figure 1: Demand of retail food in the United States

Source: IRI (2021) https://advantage.iriworldwide.com/Engineering/covid19/

During the COVID-19 outbreak, food retail demand soared as shown in figure 1 above. As a representative of the catering sector, the hotel industry can be used to illustrate the extent of the COVID-19During the second half of March, frozen food sales in other countries such as France were up 63% year-on-year, while packaged food sales in Germany were up 56% (Kim, Kim, & Wang, 2021). Demand has risen in other countries including China as much as it has in the United States (Kim, Kim, & Wang, 2021). After a brief spike, retail demand for fresh, frozen, and packaged items has remained 15-20% over usual. This change in demand is significant. In the United States, “take-away food” accounted for 10% of fruit, 32% of vegetables, 25% of dairy, 31% of cereal, and 33% of protein food intake (Kim, Kim, & Wang, 2021). Transferring these quantities to retail is not easy. Aside from practical issues, households’ spending patterns change while they are at home versus traveling (Xiong & Yao, 2021). These elements have also had an impact on the catering industry, reducing their sales and causing an increase in demand for home delivery and take-away business structure.

Following the conclusion of the outbreak in mid-March, the hotel business began to show signs of resurgent activity and profitability. One-day trips were included in many Qingming vacation packages, and lodging demand was relatively low throughout the period of the festival (Xiong & Yao, 2021). The five-day Labor Day vacation, on the other hand, served to draw attention to the outbreak’s initial peak season. In this era, according to the Ministry of Culture and Tourism, domestic tourist receipts were around 47.5 billion Chinese Yuan (Xiong & Yao, 2021). Luxury and independent hotels suffered the most from the decline across all seven hotel grades, while midscale chains and economy chains fared the best. However, while the long-term resuscitation of China’s hotel business is a source of hope, it is not without difficulties. 

Figure 2: China’s Hotel Occupancy per Sub-Sector

Source: (Hao, Xiao, and Chon, 2020)

While operating under COVID-19, catering enterprises will face several obstacles, the most of which will be caused by the burden of lower operational income, employee pay, and store rental costs. Catering establishments were forced to close, resulting in a large number of clients being forced to stay at home. Furthermore, fixed costs like rent and personnel continue to be expensive to maintain (Alonso et al., 2020). Retailers and restaurant owners are constantly finding it difficult to function on a regular basis at the same time, and online purchases plummet. Catering enterprises who do not have a continuous source of income are forced to operate under severe financial restraints. Additionally, the COVID-19 pandemic has uncovered several flaws in the traditional catering sector in China.

One of the main findings from the COVID-19 pandemic is that traditional formats used in the catering sector in China are ineffective and do not offer sustainability (Kim, Kim, & Wang, 2021). Online ordering is very new to the catering sector, which has traditionally focused on in-store consumption rather than online ordering. According to economic study forecasts, just 14.9 percent of catering firms operated exclusively online prior to COVID-19, with 46.4 percent operating both online and in-person before COVID-19 (Hao, Xiao, and Chon, 2020). A limit exists to the ability of the conventional firm model to acquire clients since it can only function passively, and there is also a significant level of operational stress associated with it.

A pandemic is not a novel occurrence in human history. In the history of mankind, there have been several different pandemics that have brought severe consequences. Pandemics are distinguished by the tremendously negative influence they have on the global economy. COVID-19 has been discovered to have an impact on the whole food supply chain, from farm to fork, in one of the most crucial areas of the economy, and this has implications for the entire food supply chain (Norris, Taylor Jr, & Taylor, 2021). As a result of recent supply chain disruptions, there is widespread anxiety regarding food production, processing, distribution, and demand at the time, which is understandable. COVID-19 resulted in limits on labor travel, shifts in consumer demand, the closure of food production facilities, restrictive food trade regulations, and financial constraints across the food supply chain, among other consequences. As a result, governments should make it easier for people to travel around and for agricultural goods to move around. Additionally, financial support should be made available to small farmers and other underprivileged entities, a case that has been evident in the United States (Dube, Nhamo, & Chikodzi, 2021). Facilities should modify working conditions and implement safety measures in order to protect the health and safety of their personnel. Food protectionist measures should be resisted at all costs in order to keep food prices from rising. Finally, each country must recognize the gravity of the issue and decide whether to strengthen or loosen protections in response to the pandemic’s advance. Furthermore, the food supply chain’s supply network should be capable of adapting to changing conditions.

Without a question, the previous year pushed the sector to innovate in order to adapt and survive, not only on the basis of our own experiences but also on the basis of the experiences of other hospitality experts from across the world ((Hao, Xiao, and Chon, 2020). Tourists who seek to limit their interaction with other guests have developed as a widespread trend in the hospitality sector. These destinations, which range from Swiss ski resorts to Maldives luxury villas, have attracted tourists seeking a way to avoid connection with other people. The reasoning for this is straightforward: the less human interaction, the lesser the danger of contracting the virus. The provision of open-air areas by hotels is another popular alternative, since it allows them to extend their gardens while simultaneously reducing the risk of contamination (Hao, Xiao, and Chon, 2020). Hotels that are unable to do so have maintained their social distancing pledge by offering more room service alternatives. Consumer participation in the industry must be rethought and reimagined. In order to attract in-house visitors, it has become necessary to provide additional room service alternatives. Due to restaurant capacity restrictions, most hotels are unable to accommodate all of its in-house guests and are forced to seek other lodging. Although room service is available, it is not the only option; takeaway has become increasingly popular. As a result of this possibility, hotels and restaurants have expanded their takeout services to include customers from beyond the premises.

The catering industry has been forced to become innovative in a short period of time in order to stay afloat and sustainable especially with the effects of COVID-19. The following suggestions have been brought froth by various research studies (Norris, Taylor Jr, & Taylor, 2021: Guan et al., 2020: Deconinck, Avery, & Jackson, 2020).

Expanding the catering business online

Following the implementation of COVID-19, several industries have begun to improve their online presence. The primary concern of the populace is food. When compared to other firms, catering has a larger online sales market than the average. Service platforms like as WeChat have also announced that they would provide free takeout mini-programs to catering firms around the country, aiding the catering industry in its takeaway and e-commerce retail operations, among other things.

Change marketing approaches and exploit uniqueness

Change is an unavoidable fact of life in today’s world, and it affects every company. And the ability to manage and profit on change has risen to the top of the list of the most sought-after management skills. For example, the marketing industry is characterized by a rapid rate of change that is rising all of the time. In today’s business world, the CEO is faced with an unfathomable conundrum. With each passing day, the cost of change rises; nevertheless, the cost of remaining the same might be far higher. Furthermore, even as it adjusts to change, a company’s marketing activities must represent both internal and external continuity in terms of purpose and brand image. Of course, not all marketing tweaks are equally significant in their impact on sales. Some are exclusive to a certain industry. Others are more all-encompassing and valuable in terms of personality.

Adjust the catering industry business model

It is threatening the ability of catering enterprises all around the world to continue operating as usual, and in certain circumstances, it is affecting the profitability of some businesses, particularly small ones, in the long run as a result of the COVID-19 situation. It was necessary for the catering industry to change its business model in order to succeed in the United States and China. Many restaurants who made the conversion to delivery/carry-out only models were forced to close their doors for a period of time for a variety of reasons, the most prevalent of which being the safety of their employees and customers. Those who have remained loyal to their previous company practices are at risk of going out of business altogether.

Enlarge the scope of the sector

When it comes to the food supply chain, COVID-19 has caused mayhem, causing disruptions in agricultural output, food processing, transportation and logistics, as well as final demand, all at the same time. Different items have experienced supply chain interruptions at different places throughout the supply chain, and not all sectors and products have been equally harmed by the situation. The sector must expand to incorporate other industries that have not been adversely affected in order to recover from the pandemic and retain sustainability.

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