COVID-19’s effect on the food industry

7 October 2020

Written by: Peter White

The COVID-19 pandemic has delivered a massive blow to restaurants and food delivery companies across the country.

The COVID-19 pandemic has delivered a massive blow to businesses across the country. According to statistics by Aaron Allen & Associates, the pandemic caused restaurant traffic to drop up to 89 percent globally. The pandemic has seen restaurants and food delivery drivers especially facing huge debts and losses in business due to lockdown restrictions and having to accept take-away options only.

The Australian Bureau of Statistics (ABS) business Impacts of COVID-19 survey found that 78 percent of businesses in accommodation and food services experienced adverse business impacts in March. According to industry market researcher IBISWorld Australian restaurant revenue has declined by 25.1 percent this year.

Frank Versace, owner of restaurants The Groove Train Plenty Valley, Scusa Mi Italiano and food distributions centre Quality Foods said that one financial challenge was that he was still required to pay his weekly rent at The Groove Train despite being shut down in March.

“The rent’s not cheap there, it’s $9,000 a week, so you could pretty much say that’s financially strapped me,” he told upstart.

The virus’ impacts hit Versace’s businesses in the first outbreak during March, and they saw more devastating results during the second wave.

Although he was supported by businesses such as Uber Eats and Menulog, it created further problems for his companies.

“Uber takes 30 percent of your sales, so it pretty much left me with nothing,” he said.

Between his two restaurants, Versace says he was close to $100,000 in debt. To top it all off Versace’s distribution centre, Quality Foods, was also majorly affected.

“We distribute to restaurants and cafes and some pizza shops, and when all the restaurants shut down, that reduced my sales by 75 percent,” he said.

The pandemic not only affected him and his businesses, but it also had a severe impact on his employees.

“One of my guys actually called me at Quality Foods and said, ‘listen, is there any chance I could do some work over there, because I’ve got $100 left in my account. I’ve got two kids to feed’,” he said.

“I got him over here for a couple days a week, gave a couple hundred dollars into his account so he could actually feed his kids.”

Similarly, food delivery companies such as Menulog have also been affected by the pandemic. Yet they still managed to help the restaurants in need.

Lisa Brown, Head of PR and Communications at Menulog said that they continued to support restaurants in these tough times in ways such as investing $3 million in a large-scale local marketing initiative for Menulog’s 21,600 restaurants.

Brown says Menulog has helped the food industry by providing a self-delivery system for restaurants that use their services which allows employees to be redeployed instead of being let go.

“[We] utilised Menulog’s self-delivery service to give restaurants the opportunity to redeploy existing employees as drivers and use Menulog’s online ordering system and delivery integration technology to reach a large number of customers across Australia,” she told upstart.

Brown confirmed that there has been a higher demand for online ordering and delivery solutions as Menulog saw a 50 percent increase in online orders in Melbourne since March.

“Since the start of the pandemic, we have been working very closely with restaurants and industry organisations to support businesses during this time, particularly those restaurants who have been impacted by restrictions,” she said.

Due to careful restrictions being put in place by the government, Brown said Menulog are monitoring guidance from health authorities and government organisations.

“We rolled out Contact-free deliveries as a default on all orders, to help restaurants, couriers and customers maintain appropriate social distancing amid the COVID-19 situation,” she said.

COVID-19 has created massive strains on restaurants across the globe, as well as other food businesses. These companies continue to suffer, and despite utilising food delivery services like Menulog, they may continue to be affected until they are able to fully re-open again.

Peter White is a second-year Bachelor of Media and Communication (Media Industries) student. You can follow him on Twitter @peterwhite0

Photo: Photo of pub set in room during daytime by Jason Leung available HERE and used under a Creative Commons Attribution.