8th May, 2020

Restaurants, cafes among first to benefit from eased COVID-19 restrictions

The Prime Minister has detailed a 3-step approach to easing lockdowns, with the first winners in the hospitality sector. But it’s not necessarily good news for all café owners and restaurateurs — here’s what you need to know.

Today the National Cabinet met to discuss plans to ease Australia’s COVID-19 lockdown restrictions, resulting in a three-step plan announced by Prime Minister Scott Morrison this afternoon.

The good news for the small business community is that many hospitality businesses will be able to open once more, along with a number of other businesses, however the exact timing of when this will occur is being decided by the state governments.

Key takeaways:

  1. 3 stages to easing restrictions announced –– The PM has highlighted we’re entering the first, ‘cautious’ stage
  2. Some businesses and non-profits to begin trading under relaxed restrictions — these include restaurants, cafes, libraries, community centres and bootcamps
  3. People will be allowed to undertake local and regional travel in the weeks to come — there will likely be positive impacts for travel businesses
  4. Businesses should take care when considering when and how to reopen — international examples show this isn’t as straightforward as could be hoped

“As I said, it’s our aspiration as agreed among premiers and chief ministers and myself that in July, we will have moved through these three steps across the country,” said Morrison in today’s press conference.

“The pace, though, will totally be up to the states and territories. They’ll be responsible for setting their own timetable and communicating that to their citizens and residents in their own states and territories.”

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The Prime Minister’s 3-stage plan in brief

Morrison has announced he hopes Australians will enjoy something much closer to ‘normal’ by sometime in July, and has described three stages by which we may get there.

In step one, which in some areas may begin next week, the states and territories will allow public gatherings of up to 10 people, which also means hospitality businesses may serve up to 10 people at time.

The first step also allows people to travel within their region, and working from home will continue to be encouraged for any workers who can reasonably do so.

Step two is predicated on the success of the first stage, and will allow gatherings of up to 20 people, which will also allow businesses like gyms, cinemas, galleries and beauty therapists allowed to reopen.

Interstate travel will also reopen once it’s decided we move to level 2, which will coincide nicely with the reopening of caravan parks and campgrounds.

Finally, step three will see Australians achieve a state of ‘life much closer to normal’, by which time we should also have a better idea of what the ‘trans-Tasman bubble’ might look like, allowing for travel between New Zealand, Australia and other Pacific nations.

At the same time, gatherings of up to 100 people will be allowed, allowing for food courts, nightclubs, saunas and a range of other workplaces to restart operations as usual.

Hospitality business owners to consider how to reopen with caution

While the news is mostly positive for café and restaurant owners, some of whom have faced enormous challenges in the face of the lockdown restrictions thus far, that doesn’t mean the entire industry can look forward to reaping the benefits.

With restrictions on gatherings of up to 10 people, it’s likely the micro end of the hospitality market will be rewarded by quickly getting back to business. That’s food trucks, coffee carts, and small cafes or restaurants.

But even the chief medical officer, Brendan Murphy, had to admit that the stage one gathering limit would still prevent a large percentage of hospitality businesses from reopening.

“We know that means many cafes and restaurants won’t be able to open, but many that are doing takeaway may want to put up enough distant tables to start just gently serving 10 people at a time,” said Murphy, according to ABC News.

For those who are considering whether or not to reopen, there are a few key considerations to make before doing so:

  1. What’s the likely benefit in reopening? — Given limitations on how many people you can serve, will you realise a net benefit for the amount of cost it might add?
  2. Have you considered all the costs? — It’s not just the standard costs of running a hospitality business, there’s a higher compliance burden than before. You’ll need to keep yourself and staff across all guidelines, and potentially invest in protective clothing and equipment
  3. How will you communicate the current state of affairs with customers? — You want to encourage the right customers to return and support your business without overwhelming your staff. How can you get the word out?

Ken Burgin from Silverchef, a restaurant advisor, business trainer and former hospitality business owner, said many hospitality owners need to be very thorough in ascertaining their ‘break even point’.

“A lot of operators need to calculate their break even point before considering how to widen their services or reopen under the first stage of eased restrictions — that is, the volume of sales they need to make to cover their fixed costs,” said Burgin.

“For the vast majority of business owners who have already performed severe cutbacks in order to continue trading in takeaway and deliveries, the addition of just ten dine-in seats at any time wouldn’t provide sufficient value to justify putting on the required staff.”

Those business owners who can think of novel solutions for adding reasonable sales without an equivalent increase in overheads, may find a competitive edge to be gained as restrictions begin to ease.

But there are other good reasons for taking all of this into account. As one recent example shows, it won’t take much for consumers to blow the whistle on any business operator that’s perceived to be doing the wrong thing.

When New Zealand recently relaxed its strict lockdown restrictions, the nation’s consumer watchdog was almost immediately flooded with hundreds of calls relating to businesses breaking the rules.

READ: How business owners can avoid complaints under as restrictions ease [New Zealand]

In a line of business where reputation and trust is everything, reopening your hospitality business at the wrong time, or without adequate preparation, could spell disaster.

“Consumers are becoming very sensitive about how their food is prepared as a result of the pandemic,” explained Burgin.

“Reputation is now not only about friendly smiles and tasty food, but being incredibly mindful about hygiene practices and how they’re communicated — after all, hospitality businesses were expected to be on top of these things well before COVID-19 broke out.”

Finally, Burgin also highlights the fact that we’re yet to have real clarity on how hospitality businesses will need to comply under the new restrictions.

“Does the 10 people include staff, delivery drivers and other incidental walk-ins? The answer to that may dictate which businesses will even consider changing their current activity.”

Further updates on how the states and territories will choose to ease restrictions — and when — will follow.