It’s been over 8 month since we first heard about the Coronavirus, an unexpected twist to what otherwise would have been a transformational year for all businesses in UAE. With the Expo-2020 sitting on the horizon and major infrastructure projects reaching completion, a lot was expected from 2020. What we instead have had to do is to face some of the toughest times for businesses in the country and around the world. The pandemic has caused severe disruptions across sectors and industries. But, the most affected businesses have been those that depend on direct human interactions and experiences.
In the UAE this was bad news for the vibrant F&B sector. The pandemic and the lockdowns have led to some temporary and some permanent shutdowns. They have also changed how most restaurants operate. An urgent shift of focus from dine-in to deliveries has created new opportunities for some business but has also completely changed business models for some restaurants operating in the city.
By April this year, around half of United Arab Emirates food and beverage units had temporarily closed, as per industry consultancy JLL’s estimates. Even the UAE food delivery revenues fell 19% year-on-year in March and 7% in February as coronavirus restrictions increased, including a month-long 24-hour lockdown in Dubai that began mid-March. Dine-in revenues fell 16% in February and 52% in March too. A Dubai Chamber of Commerce survey in May revealed that 47% of restaurants expected to close in the near future, a sentiment backed by many industry experts.
Haji Sahab is one such restaurant that was hit hard by the lockdowns and restrictions early this year. An up and coming brand that serves customers looking for taste but also keeping an eye on their wallets, for Haji Sahab 2020 was marked as a year for growth and expansion. Their first branch in Discovery Gardens was now successfully established as one of the busiest restaurants around, operating in the locale for almost 4 years. On the back of this success they inaugurated their second branch in Satwa in early 2020.
We caught up with Anis Sadiq, first time entrepreneur, manger and owner of Haji Sahab to understand firsthand the challenges the restaurants faced this year and how they coped with them.
In their endeavour to expand the brands footprint, Anis and his partner made the decision to setup up a second branch, launched in February 2020, just when the Covid-19 virus had started travelling around the world. For Anis though, the pandemic was not so much of a surprise, “I was keeping track of what was happening earlier, I’d made my partner and my colleagues aware that this is coming. It was easy for a guy like me to understand that this was going to peak at a certain point of time in this part of the world, I had spent a lot of time understanding what exactly is happening, how the curve goes up and comes down, how many weeks it takes to recover. So I had been doing the research and understanding the situation right from the beginning”.
This pandemic might have snuck up on many other unprepared businesses in UAE. In the F&B sector most major high-end restaurants completely focused on dining-in and thus lacked smooth running logistics operations, an important tool in the bid to ramp up deliveries.
Due to the Covid-19 related restrictions there has been a shift in how people eat. But this change was not instant.
“The thing to understand is that you had Ramadan in between, in general during Ramadan the sales are less, both dining in and delivery, so I knew that whatever exercise I do there was going to be a dip because most the community will be fasting so orders won’t be there, dine-in won’t take place, so I was expecting a 1-1.5 month of dip. The deliveries though picked up very fast post Ramadan.”
“For dining in, for a few weeks we had only 10% or 15% of the full capacity. We were open but nobody would really come due to Ramadan and the curfew. Also since we are the busiest, we had to be very careful with rules making sure we followed all rules. It went well, the government and all customers were cooperative but dining took a hit, yes.”
Opportunity in food delivery
For Haji Sahab the impact of the lockdown also became an opportunity. Not only did Anis expect what was to come, he and his staff were prepared too. “When someone says pandemic, you can’t just close your eyes to reality and think that you’ve never heard of this, it shouldn’t happen be this way. So I did my work, I investigated online, found a lot of things and I was getting into the zone already, I understood that this is going to happen. Luckily for me, our delivery business is very strong, so Covid actually helped me expand my delivery business, my number of deliveries increased, though the dine-in decreased. I was able to keep my delivery team ready, I had people onboard, both in terms of packaging and logistics”
Keeping Informed and Managing Morale
With the many problems SME’s have faced this year, managing employee expectations and morale becomes an important exercise. The impact on any business also trickles down to its employees and in such uncertain times it’s important to be as clear and honest as possible, per Anis. His staff and most of their families back home depend on the monthly salary, like most expats in UAE, and so it was necessary to set their expectations. It was also important to educate them so that they would be better aware of the challenges.
Anis insists on promoting and encouraging his staff to embrace measures related to hygiene and social distancing, especially as these are extremely important in their workspace. But it’s not just the health aspects of the virus that are discussed, Anis has been frank about the challenges the restaurant would face too.
“I made them very much aware that we will get a hit and they need to understand that things won’t be like before. Like say the previous month, they all could see that there was a fall in revenue and they knew that this would affect us and it was planned in advance so there was no panic, I always try to be very honest with everybody, I keep stating the facts so they aren’t in the dark, they do not expect something that isn’t there, so I’d given them a advance notice that this is going to happen in the next one-two months and you can expect this to happen.”
What does the F&B space to look like over the next 6 months? “The way I see is first if the restaurants don’t start working to their full capacity we will see lot of closures happening. To rely on delivery model to bring that revenue to sustain the entire business will be nearly impossible just because the costs that go in the whole delivery model. However having said that if things go back to normal there will certainly be more than enough market share to play with, though at full potential it would still take 6-10 months to get back to where we were before the pandemic started.”
Haji Sahab has not come out of the crisis unscathed, but they are a leaner, well-oiled and primed operation with clear priorities now. Though Anis had to lay off some employees for a short while when the restrictions were at the peak, now not only is the chain back to full strength, they have also hired a few new employees to fill long vacant positions.
Haji Sahab shows how, like in any other crisis for SME’s, during this pandemic too, preparation and adaptability are key as we all react to the changing circumstances and challenges. But, it is also equally important to be honest in setting expectations with all the stakeholders and employees for a smooth ride out.