The COVID-19 restaurant landscape: Q-and-A with Mike von Massow
By Canadian Pizza
By Canadian Pizza
The restaurant sector has been hit hard by the COVID-19 pandemic and its challenges of social distancing. What does the future hold? Canadian Pizza got a bird’s eye view of what’s happening with restaurants these days – including the shift to takeout and delivery – and a peek at future trends from someone who watches the food industry closely.
Mike von Massow is an associate professor in food, agricultural and resource economics at the University of Guelph and the Ontario Agricultural College chair in food systems leadership. He studies how people make decisions about food in restaurants, grocery stores and food service.
Canadian Pizza: What are you hearing from your contacts about how pandemic restrictions are affecting restaurants and foodservice businesses?
Mike von Massow: If you look at the context of the situation, we have over a million people employed in food service in this country and according to the last estimate I saw, 800,000 of them are now unemployed. We’ve seen a significant reduction in food service overall. For businesses like pizzerias, who are primarily geared to takeout or delivery, in many cases, they’ve managed to continue. But the restaurant industry has really been hit hard. I think of any industry in this country, probably the toughest hit – or at least the one with the largest impact across the economy – has been food service. Because of the number of small, independent businesses and because of the number of people employed, this has been very, very tough on the hospitality industry.
Is the uptick from takeout or delivery at all offsetting the sales losses?
It depends on who you are, where you and what you were doing before. If a restaurant was a pick-up or delivery-oriented business, in some circumstances, they’ve maintained some business because they can do it while maintaining physical distancing. They can drop things off and they can take payments over the phone. In those circumstances, people are managing to keep the business going. If you have infrastructure to deliver, like many pizza places do, that’s much easier than these companies that are now trying to do delivery with SkipTheDishes and Uber Eats and some of these services that take significant margin away and make it tougher to make ends meet on delivery.
How will third-party delivery fare in the future?
There’s no doubt there are more people using third-party delivery right now. People like some variety in their menu and they like a connection too. Is it a sustainable model? To a degree, these delivery companies, even before this, struggled to make money. Some of the restaurants that are using them are saying that it’s not a profitable business model. I think many operators are counting on the fact that, as volume goes up, maybe this business model works a little bit better, though that remains to be seen. It is pretty clear that delivery, overall, is up. Whether it’s sustainable remains to be seen.
Is selling groceries a promising income stream for pizzerias?
There may be some potential for that. My thinking is that it’s a way to generate some cash flow. It might also be a way for operators – and distributors – to move some inventory. People are looking for ways to get groceries that minimize their risk of exposure to others. Wait times for click-and-collect and delivery at grocery stores are long, so if I could get some products from a restaurant where I don’t have to go in and if I can get it relatively quickly, I think it is something that could work. I don’t think it’s a long-term alternative for most restaurants, but in crisis times, I think this is a short-term opportunity that has some potential.
How do you see the future for restaurants in terms of social distancing?
Delivery was growing but not at a significant rate, and grocery delivery was growing but not at a significant rate. Now lots of people are trying these services. They might have been resistant to trying them before but now circumstances have changed and either they can’t get products at all or they’re looking for ways of getting them while maintaining social distancing. We’re seeing an uptick right now.
My expectation is that it will bounce back a little bit but probably not to historic levels. There’ll be people who say, ‘Hey, this works. I like the experience and maybe I’ll do it a little more frequently even after things change.’ For some people, they’ll be happy when they can go out again and have that dine-in restaurant experience. I don’t think that’s going away. In the short term, after things open, going back to restaurants will be an option for some people and others may wait until there’s a vaccine and there’s less risk to going out to restaurants. Restaurants might not come back as quick as some other sectors because people are concerned about the virus. In the long term, there will be a higher level of demand for takeout and delivery.
In the near future, we might see less choice out there for Canadians as some of these restaurants don’t recover. I think we were seeing a trend to increasing the amount we eat out and that’s clearly halted and gone back. The trend towards eating food prepared outside the home will start again – we’ve just taken a step back. But in future it will likely split a bit more between takeout and delivery and dine-in.
Where do you see the sit-down dining room of the future?
I’m not a layout expert, by any stretch. I think the dine-in experience more and more has been about the experience. The restaurants that are going to do this well are going to provide a relatively unique experience. The dining experience will not only have to be safe, it will have to be fun, it will have to be novel and it will have to be value-added. We’ll have to continue to find ways to ensure people enjoy not just the food but the entire environment of eating out.
I think it will continue to be tough beyond this acute phase because we will see people either required to or choosing to minimize their risk. Many of us won’t be running back to restaurants immediately. There’ll be some physical restraints in that we’ll probably have less capacity in a restaurant because tables will have to be farther apart. I think there’s real pain in the industry right now and restaurants may be a little bit slower to get back to where they were before, because of the physical distancing in between tables and customers.
What creative ways have you seen restaurants respond to this crisis?
One thing I have to say I admire is the number of restaurants, even though they’re struggling, that have been amazing corporate citizens, which highlights how important they are in the community. We’ve seen pizza places delivering pizzas to front-line health-care workers. We’ve seen companies providing product to people who don’t have the money to get food. It’s really heartening to see Canadians pulling together as a community even when individual companies are struggling.
We talk about local businesses all the time, but restaurants really are local businesses. It is the nature of the business. Whether they’re part of a chain or an independent, they are integral to neighbourhoods. It’s sad to see restaurants hurting like it is, but it’s not surprising to see them do things as active members of the community even when they’re struggling.
Everyone is worried about what’s happening and their normal routines are disrupted, but I’m optimistic that, as we come out of this, people will go back to restaurants and people will see the value in their communities of many of these businesses.
This interview has been edited and condensed.