The ongoing global pandemic has left no sector untouched by its wave of impacts. While the number of people being affected by Covid-19 still continues to climb, it is needless to comprehend the pandemics grave impacts on every corner of the nations economy. With almost all the segments having fallen prey to the uncertain impacts of Covid-19, even the food and beverage industry in India is responding to the ongoing crisis by bracing itself for Corona virus impacts.
In light of the global outbreak, food and hospitality companies have been forced to make challenging decisions like transitory cessations of F&B operations to abide by the travel bans and social distancing norms and the impact just does not end there.
Companies are forestalling supply chain interruptions: Only a minor proportion of food ingredients in our country are sourced from China, but processors are still bracing for impact by scouting for substitute sources to avert supply chain interludes. Some beverage companies have had to navigate suspensions in their supply of artificial sweeteners that are usually sourced from China. This may marginally impact the sales of sugar-free and diet beverages. However, due to the current closure of restaurant and hotel establishments, this impact is expected to go unnoticed.
After closure, plants in India are slowly starting to reopen: Back in the month of March, several food industry giants decided to shut down operations in India to avert the spread of the virus. However, with the effective tackling of the ongoing crisis by the Indian government, the food facilities in India are gradually beginning to come back to life with some of the operations slowly starting shop, with their manufacturing plants being back in business with minimal staff. This is especially true in areas categorised under the green zone where things are returning to normalcy, retail business in these areas is robust and the food service business is certainly preparing to bounce back, although with reduced footfalls and sales numbers.
Robust supply chain infrastructure: Meeting the short-term requirements should not be a major challenge for most companies in the food products space, but industry experts and analysts expressed vagueness over the degree and extent of the outbreaks impact. As a result of this uncertainty, the F&B sector has been experiencing delays in the product supply. Many companies have started contingency plans to arrange for profound supply chain facilities nationally. Food retailers are staying dedicated towards safeguarding local sourcing to combat the jeopardy of cross-regional transportation prohibitions. Food manufacturers with services in other countries have started working with local suppliers to keep products moving to overcome the potential ingredient scarcities.
As per the researchers, it has been studied that the food services sector in our country employs over 7,00,000 people and its valuation is estimated at Rs 4,23,865 crore. There is surely going to be enduring modifications in the way we live our life, work and eat after we outshine the Corona virus pandemic. The F&B culture that had been flourishing over the past decades will have to perceive novel challenges with the Corona virus-led slowdown like recovery of losses and preference towards ordering food online. Furthermore, the condensed traffic to the hotels will have an understandable cascading effect on returns from the F&B sector, thus affecting the entire ecosystem of hospitality services.
Food delivery: The food delivery business by cloud kitchens and restaurants continues to exist, although there is a drastic drop in sales. This is just the silver lining for F&B outlets in the wake of this pandemic. The food delivery option serves as a means to cater to customers on a limited scale, with the adoption of contactless delivery, a term that has seen the day of light after the outbreak of the Covid-19 pandemic. Only a selected number of outlets are providing the delivery option, especially in red zones like Mumbai, keeping in mind the health and safety of their staff and customers coupled with logistic constraints. Going forward, the delivery business will need to become a part of every F&B outlets business model and a revenue stream to enhance the chances of bringing the business back to a commercially viable and sustainable model.
Contactless dining: There is a phenomenal amount of effort being placed by establishments to prepare for contactless dining (more of a less-contact dining experience in real terms). The efforts on the technological front with the usage of QR codes, non-human interference except for service of food at the table, higher levels of hygiene for staff as well as customers will become a reality in the post-Covid operational world for hospitality enterprises. Hotels and restaurants are already in the process of updating SOPs to include the new-world health, safety, sanitisation and contactless aspects for their post-Covid operations.
Manpower: The uncertainty towards employment is increasing, with there being a likelihood of outlet that one was employed at the shutting shop. The outlets that will continue to exist will do so with considerably lesser seating capacity and overall reduced demand due to public perception and reduced number of unwarranted outings, further putting a strain on the required number of employees. The return of migrant labour to their native places will also impact the availability of skilled manpower and there may be a dearth of persons well suited for the limited jobs available. This will be a two-faced problem, both for the F&B operators and employees.
Survival instinct: As per the industry experts this phase is the survival of the fittest. Thus, while many trades will go belly-up, some will combine with larger companies. Today with the entire nation having to face the issue of a global recession, all the sectors are finding themselves in an unprecedented situation where they are bound to make some challenging decisions that might have colossal fiscal effects on their businesses. Being compelled to endure this challenge, the F&B sector is doing so in the larger benefit of the entire community, although it will take a while to recover from the losses occurred during the shutdown phase. While robust performance in the recent quarter will be austere, expectations of a sharp rebound in post-lockdown days are not foreseeable and will be an uphill task. The road to profitability will not be an easy one and enterprises will have to adopt innovative and more efficient ways of doing business and create new revenue streams to maintain a foothold in the marketplace.
(The author is CEO & co-founder, SJI Hospitality and Foods Private Limited, Mumbai)