By: Lamia Hassan
The novel coronavirus (Covid 19) pandemic has shown the true face of the entrepreneur; Who is working on creating opportunities, and comes out of every adversity with a new opportunity, which helps him to succeed. The restaurants and cafes sector was one of the sectors most affected by the pandemic. In our interview with Mr Musa Al-Amri; The CEO of Babel Restaurants Co. Ltd. and an investor in the restaurants and cafes sector confirmed that the sector was affected by the crisis; however, it is considered one of the most promising sectors in the Kingdom of Saudi Arabia.
- What attracted you to investing in restaurants?
Investing in restaurants and cafes is one of the things that is endearing. Each of us likes to own a restaurant or a café where he meets his friends. Also, it is one of the sectors least affected by economic crises. But this field is a profession, and every profession has its secrets and rules.
Studies have indicated that the size of the restaurant market in the Kingdom of Saudi Arabia is SAR 80 billion, and constitutes 25% of the gross domestic product (GDP), according to the Qoot Association.
The restaurants and cafes sector is one of the sectors with the highest profitability, as profitability reaches 25% and 30%, and the return on investment in this sector is faster than others.
Some restaurants return the capital in 6 months, some in 11 months, and some after 14 months, knowing that it all depends on the right start for you in this field.
The number of commercial records for restaurants and cafes is currently more than 64074, and reports confirmed that the Kingdom controls about 38.5% of the total investments of restaurants in Arab countries.
If this indicates anything, it indicates the purchasing power in Saudi Arabia.
According to the Quality of Life Program, one of the quality programs of the Saudi Vision 2030, the Kingdom is in a relatively late position in terms of the ratio of restaurants to the population (2,000 restaurants per million people).
The program aims to raise the rate to 2,100 restaurants per million people during the current year; This indicates that there is a need for this sector. In short, the restaurant sector is considered one of the promising sectors in the Kingdom.
- How have restaurants been affected – in your opinion – by the coronavirus pandemic?
Unfortunately, the restaurant sector is the most affected by the coronavirus pandemic. As all categories of restaurants were affected, including luxury restaurants, fast food, cafes, and others.
The turnout witnessed a sharp drop of more than 70%, while the restaurants of the malls were affected by 100% after malls were shut down as part of coronavirus precautionary measures, because it was benefiting from a large number of visitors, to activate its sales.
How to survive the crisis:
- How can the restaurant sector overcome this crisis?
Some plans can alleviate the financial crisis that restaurants are going through, and they are:
1. Cach keeping; which is can be done through:
• Negotiate with suppliers to extend the payment period.
• Suspension of all allowances and benefits provided to senior management and employees.
• Stop maintenance work unless absolutely necessary.
• Stop working on new projects.
• Freezing existing contracts.
2. Focus on the delivery service, through:
• Subscribing to all platforms of delivery companies.
• Create or strengthen and support your delivery department.
• Create a restaurant application for delivery service.
3. Cancellation of side items that are provided free with the order provided that it does not affect quality, such as not giving ketchup with the roast, which is rejected by the customer.
4. Minimize the menu and focus only on the most profitable items.
5. Meeting with employees and explaining to them the conditions the sector is going through. You should take care of your employees, as they are one of the most valuable assets owned by any company. If you fail to pay their dues, give them an unpaid leave.
- What are the ideal ways to manage restaurants in order to achieve success?
Studies say that 60% of restaurants close their doors in the first year, meaning 6 out of 10 restaurants leave the market in the first year of their opening. One of the main reasons for this is the poor management of the restaurant.
Restaurant management is one of the things that affect the success of any restaurant.
Therefore, restaurant owners must adhere to the following steps:
1. Starting with a well-thought-out work plan built on firm foundations.
2. Hire an excellent accountant.
3. Take advantage of technological advances in point of sale programs, accounting programs, and customer loyalty programs.
4. Training employees on food health and safety, in addition to customer service, taking into account the training of each person in his speciality.
5. Continuous development, both in terms of product and packaging.
6. Motivating employees.
7. Attention to the customer experience.
8. Cost control.
9. Paying attention to the golden triangle of the restaurant, which is: quality, service, and cleanliness.
- How do you maintain a good relationship with customers?
The customer is the ultimate target of any marketing process, and the relationship between the restaurant and the customer must be built on trust. Because the customer is the primary goal for which this project was created.
Attention should be paid to the customer’s experience from entering the restaurant to leaving it and motivating him to express his opinion. This can be done either by contacting them directly or through a paper or electronic questionnaire.
The best way to address a problem with a product or a drop in sales is to go back and hear the customer’s voice. Customer comments on social media or their review on “Google” can also be taken seriously. Studies show that 81% of travelers search Google ratings and reviews.
In this case, if your rating is high, you will earn 81% of them, knowing that 97% of customers read reviews before going to the restaurant, and 85% of them believe these comments. The higher the number of stars in Google reviews the more visitors to your restaurant.
- How can restaurants or cafes increase their sales?
We can increase sales without costs and marketing, using the word of mouth of the customer who enters your restaurant.
This can be done through:
1. Training and educating the cashier and waiters, because they are the two people the customer encounters and talks to.
2. Attempting to maximize the value of the customer’s bill by presenting side items, such as salads and sweets, to the customer.
3. Raising sales by up-selling. Instead of the customer taking a small meal size, we make him take a large size, and we note that this method is widely used in fast-food restaurants; When you ask the cashier for a specific meal, the cashier responds to you a medium or large size, and in this case, you respond to him intelligently “medium”; But all the cashier did was he narrowed your thinking between these two sizes, and never touched on the small.
4. Confused customer; He is the one who asks the cashier to suggest some items to him. So, the cashier’s advice to the customer doesn’t have to be random. Rather, it must be thoughtful so that it displays the items that have a high profitability rate or the items in larger quantities in stock, and this does not mean that we cheat the customer, but rather the item is sold according to the customer’s convenience and understanding of it.
- When can an entrepreneur think about franchising?
As the first project in the field of restaurants and cafes, and in the event that the entrepreneur does not have sufficient experience, we advise him to start through the franchise. Because through the franchise you gain training and education, as you work within an integrated system of operation, training and planning.
What do franchisees need in the Kingdom?
The Saudi market is promising in the field of commercial franchising, and what the Saudi market needs is the presence of specialized and capable consulting offices in this field, and increasing public awareness of the franchise system.
- What are the most important advantages of franchising in the restaurant sector?
One of the advantages of a franchise is that the risks are low compared to other projects. It provides you with the possibility to start a new project, and you know that it is an experience that has proven successful on the ground, and the grantee wants to reproduce this experience.
The franchisor also gives you enough experience to learn how to succeed, through training, operational manuals and construction manuals. It also guarantees you product quality, correct marketing and continuity.