ARE you ready for more burgers and cakes?
With the transition of Luzon and many regions into less restrictive quarantine levels, Eight-8-Ate Holdings Inc. will be reopening more Wendy’s, Conti’s Bakeshop and Restaurant, and FamilyMart by the week of May 18. Eight-8-Ate is a subsidiary of Udenna Corp., owned by Davao businessman Dennis Uy.
In a Webinar on Rebooting in the New Normal: Impact, Insights and Innovations in Restaurants hosted by Enderun Colleges, also owned by Udenna, Eight-8-Ate President and CEO Joey Garcia said, “Right now, we’re operating close to about 35 stores, we have 50 plus in total. So that’s almost half [of the total]. Next week, we should be very close to that when malls will reopen. There will be more when provincial stores in Pampanga reopen. And so I’m gonna say that more than about 70 percent of our stores will be open next week.”
But he was quick to add that not all stores will reopen, as they study the revenue generation capability of these stores. “What we did is we simulate the revenue target if we open a store. We need to make sure it generates this revenue. If it doesn’t generate this revenue target, if we cannot generate for a week that sales average that we’re targeting, we will not continue to operate. We will close it.”
He admitted that the “new normal” post-Covid would change the business model of the entire restaurant industry, so he advised restaurateurs and chefs against reopening their dining establishments until they’ve figured out their cost structure. “Your sales mix will remake your cost structure. An increase in delivery will impact on other costs. Packaging will be part of the additional cost. If you have dine-in, your biggest cost is your margin on overheard. If it’s delivery and takeaway, the most profitable is takeaway. It doesn’t require you additional costs. You don’t have costs on aggregators (i.e. third-party delivery service), or riders cost. If landlords ask you to open, figure out your costs. Go for the lowest model you can and talk to your landlord, be transparent.”
He said in Wendy’s case, for instance, they’ve requested their landlords to take 5-percent off the percentage of store’s sales, and if they don’t agree, then the store will not reopen.
Aside from landlords, Garcia encouraged restaurateurs and chefs to reach out to their suppliers and talk to their employees to explain their restaurants’ financial straits as they prepare to reopen. “It’s a difficult situation but if everyone tries to collaborate, I think somehow we can get out it.”
According to a briefing paper from the US Department of Agriculture Foreign Agricultural Service, “the Philippine food service sector will continue its steady growth over the next three to five years, propelled by consumers’ stronger purchasing power, a larger middle class, higher urbanization, and increasing dining options.” Prior to Covid-19, it projected local food service sales to rise by 8.6 percent in 2019 to nearly $15 billion (P765 billion), “and reach a record $16.1 billion (P821.1 billion) in 2020.”
There are over 92,000 establishments in the Philippine food industry, which includes restaurants, fast food chains, kiosks and counters, cafeterias, and food service in hotels, bars, cafés, and catering services. Sales in the hotel restaurant institutional sector “increased steadily over the last 10 years, with sales in 2018 growing of eight percent to $13.73 billion (P700.23 billion).”
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