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Why Do Restaurants Fail Regardless of the COVID-19 Pandemic

COVID-19 pandemic has surely changed our lives. The whole world faced a global emergency that resulted in several limitations that governments ruled in order to try to limit spreading of the virus. Business activities suffered from these limitations and especially a category has been challenged by the pandemic: restaurants and cafes. Limitations imposed by governments limited the number of people allowed to stay inside a shop at the same time. In the worst cases, the limitations affected entirely the ability to dining at a restaurant or to drinking something in a cafe. Business owners had to reinvent themselves by enhancing food and drinks delivery and, for physical shops, by trying to add an e-commerce channel in order not to lose much money during the most severe lockdowns.

The window of a shop

The window of a shop

The Role of COVID-19 Pandemic in Business Failures

COVID-19 restrictions represented a big difficult for the business realities mentioned before, still, it often happens to read newspaper headings or to hear people stating that specific restaurants or cafes ran out of business due to the restrictions. These statements may often be misleading, as they may try to convince that COVID-19 is nowadays the only challenge that makes restaurants close forever. By looking around, you will not see all restaurants suddenly disappeared: you will see some of them effectively not existing anymore, but several others are still running like in the past. Is that COVID-19 pandemic has killed only certain restaurants and left alive all the other ones? The most evident answer is that restrictions have surely represented a challenge for these business places, but they are not automatically the reason why some places have closed forever. Everything lays in the ability of the single restaurant or cafe owner to deal with economic challenges provided by the pandemic. A good entrepreneur is able to face critic situations and stay open, while other else will be more than probable to fail.

A Personal Experience

Who is writing is someone who decided to open a bubble tea shop and cafe directly after the first and most severe lockdown. Opening this kind of place during summer and when restrictions managed to get less heavy has made me able to let people know about the existence of my shop: a proper marketing activity has done all the rest. In this situation, my business has known ups and downs provided by the next restrictions and by other factors that impacted my earnings (for example winter periods, as during winter sales of bubble tea drinks are lower, despite the availability of hot tea drinks too). The most important thing is that my shop has been impacted by pandemic in some periods, but it never went near the danger of running out of business. Magic? No: just careful management.

Dealing With Debt

Being able to properly manage finances is important in order to run a business

Being able to properly manage finances is important in order to run a business

One of the biggest ruins of economic wealth is surely the modern attitude to make debt for almost everything. While it is okay to make debt because you need to (for example, in order to open a shop if you don’t have already the money), it is surely unacceptable to make debt for everything. I have grown with the idea that ’you should buy only what you can afford’. This means that, neither me or my shop, have to pay lots of installments at the end of the month. If I do not need something and I cannot afford it, I give up and wait: this philosophy of life is the only one that really puts you safe against economic difficulties like those produced by pandemics. Actually I make debt only when I am offered a ’zero interest’ installments option and only if I have the corresponding value on my bank account: in this case I am making debt in order to benefit from an extra availability of money I can invest in safe ways and, in general, save for any other reason. I use the same philosophy when dealing with credit cards (this essentially means using them like if they were debit cards) and, in general, I definitely avoid to spend more than what I have. This results in less financial stress, especially when a pandemic is hitting my ability to earn money. Plus, managing well the debt or avoiding it totally leads to being able to save more money: saving money is important so that you are ready to afford also situations in which earnings are reduced. It is certainly wrong to spend most of your money and think ‘it’s okay, next month I will receive salary’ and certainly it is even worse for people managing a shop, those who cannot rely on a guaranteed income. Having some savings ready to be used and giving up the idea of ‘If I don’t have money I’ll borrow them from the bank‘, in addition to not taking for granted the same income every month, is the best way to deal with difficult situations like those produced by the pandemic.

Dealing With Customers

Nowadays cafes and restaurants are essentially managed by two categories of people: those who have realized a personal dream and who put passion in their work, then we have the other ones, those who opened the cafe or restaurant just because they have not found other jobs or just because they believe being able to cook or make some cocktails is enough to run a company. It is not much difficult to see the difference among a cafe in which tables are cleaned rarely, the coffee machine is always dirty and opening hours are never updated on Google Maps and a clean place in which quality products are served and in which you are sure you can go just by looking at opening hours on Google Maps because the owner is respectful enough towards customers not to let them go out of home for nothing. It is not difficult to see the difference between a place in which the owner - maybe wearing all the time a mask with the nose uncovered - treats you like if he is doing you a favor by serving you and another place in which the owner is polite and is showing you he is happy to deal with you and is not in that place just ‘to make money’. Finally, there is a difference between a place in which the owner knows nothing about business and - for example - refuses to accept electronic payments because of ‘high commissions’ (like if it was fault of the customer if the owner was not able to choose a good banking offer for accepting electronic payments) and someone who accepts electronic payments with no problems (this is, for example, an issue we have in Italy, and in fact many customers are wondered I accept their debit or credit cards and without yelling against them like it happens elsewhere). During a pandemic all business places earn less: in this situation it is even more important to offer a stellar customer service and be better than the others.

Coffee drinks carefully served

Coffee drinks carefully served

Being Able To Innovate

When situations like the COVID-19 pandemic happen, being able to adapt is the key to survive. For example, restaurants who never delivered food should adapt and start a delivery service, even by just joining a specific platform providing their riders. Despite this, it happened to see restaurant owners with very conservative mentality and who never wanted to deliver their dishes. They are those who don’t trust new technologies and who believe a restaurant is only a place where people go to eat, otherwise they cook at home. They are those that refuse to use social media because they think like if they are managing an old tavern in which ‘only people who know good food‘ go to eat: those who hate people who take pictures to food because ‘food is meant to be eaten’, who believe only traditional food is good and all the rest is trash, etc. We are talking about people with old mentality: in a changing world, made of changing people and habituates, sticking to old preconceptions and not being open minded is surely not an advantage, especially when you are dealing with the customers of today.

Some tablets used to manage delivery orders

Some tablets used to manage delivery orders

© 2021 Alessio Ganci

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