How Covid Changed Food StartUps
Nearly three years on from a covid fever dream, the food and beverage industry has awoken to a new reality where nothing is the same, but everything is possible. Covid led to a meteoric fall from grace for the traditional paths of food entrepreneurism. A new reality showed vulnerabilities in the brick-and-mortar model, which had ruled the mainstream, and Covid changed food startups forever.
Not only did in-house dining disappear in 2020, but gone with it were the traditional ways of marketing and the kinds of services people were looking for (goodbye fine dining, hello comfort food.)
This compelled food entrepreneurs to get creative, strip down to the basics, and protect their employees. There was no contingency plan for a worldwide pandemic that would take down what most considered an untouchable industry.
Ingenuity was required, stamina was not optional, and business owners had to squeeze optimism from their food waste to navigate a new edible landscape. Where once a restaurant was a given necessity of life, it was now a wide-open race to meet the consumer demand within a new set of lifestyle habits and government rules.
The Great Food & Beverage Pivot
You were out of the game if you couldn’t adapt or pivot fast enough to a new, unfamiliar consumer landscape in 2020. Fortune estimates that over 110,000 food and beverage establishments closed that year’s end due to the Covid choke, which saw every food service segment affected. This astonishing number amounted to nearly 17% of all United States restaurants temporarily or permanently closing before 2021.
Today, the restaurant and cottage food industries have adjusted and made great strides in weatherproofing their existing businesses and starting up new ones more innovatively. Doing so is prudent insurance for the future. Whether you are a Michelin Star fine dining restaurant or a celebrated neighborhood food truck, agility is the magic ingredient to longevity in a worldwide pandemic or just your average Wednesday.
Top Lessons The Food Industry Learned From Covid
There were a few key lessons learned and pivots made that kept existing businesses afloat after 2020 and gave new startups their baseline survival guide after that. Below we list what worked when both small startups and big commercial restaurant machines were on the ropes.
1. The Cloud Kitchen Solution
Cloud kitchens or ghost kitchens were not new pre-pandemic, but if you had one already established in 2020, you were patting yourself on the back.
A cloud kitchen is a centralized licensed commercial food kitchen where a business can run its model entirely or as an extension of a brick-and-mortar business. They are essentially a scaled-down version of food service using delivery, catering, or fast-moving consumer goods models to get their goods to the public without the burden of full rent, staff, and greater liability.
You were in a good spot if you had already adapted a cloud model in 2020. You had fewer or no employees to lay off, less overhead to worry about, and most of all, the magical pathway to consumers was already built-in: takeaway or delivery.
Some savvy startups are moving straight to this agile model to assume less risk, investing more on social media and takeaway packaging design than on fancy menus and table settings.
2. The Birth Of The Digital Kitchen
Before the pandemic, social media had deeply entrenched itself into human psyches with foodies filming every meal on Tik Tok, spouting armchair reviews of restaurants on Twitter, and tagging a favorite food truck check-in on Facebook. Statistics reveal that social network users spent 82 minutes a day on social media in 2020, a 7-minute jump from the previous year, an escalating use that translated to new marketing approaches for food businesses.
When the great “stay home” period morphed into the “you can go out, but it’s uncertain out there” period, social media became one of the only places where people could connect. In a closed-down nation, social media was open 24/7.
Some business models converted partially or entirely to cloud kitchens that required heavy tech backend, reliance on established APP partnerships, and in some cases, the creation of bespoke APPs to connect with customers in a newly automated way.
In addition, marketing efforts became an entirely digital game. What was the use of a giant billboard or beautiful storefront when no one was strolling the streets? Social media became the new storefront, and an able graphic designer and copywriter became vital employees.
Lastly, when reopenings were led with menuless tables and drive-through pick-up windows, QR codes became the scan everyone got used to making. A smartphone became mandatory for those hungry souls looking for normalcy. A few years in, QR codes have evolved past only offering a menu. They are now our voiceless spokespeople sending new customers to informational landing pages, promotions, and social media platforms.
3. Omnichannel Restaurants
An Omnichannel refers to various ways that goods can be moved via multiple distribution channels. In the food landscape, this refers to all the models businesses use to move consumables, including delivery, takeaway, and third-party apps. As a strategy was growing pre-pandemic, it became fully formed after that.
Businesses that were able to pivot to third-party platforms seamlessly, or better yet, create their own sleek interface, became the easy, think-free go-to for those stuck at home. Innovative companies got creative, offering to-go cocktails, meal kits, and family sets to appeal to customers.
Now removed from the worst of the pandemic lockdowns, consumers have developed a taste for this convenience. Many of the APPs and omnichannels formed during this period have remained to keep up with new consumer behavior, with new startups adopting multiple channels from the first day.
4. Food As Thy Medicine
One interesting development that could only be brought on by an abrupt unknown virus, was a shift to healthier eating. Covid became a huge food disruptor, with many people now able to cook from home and take more time to consider the healthfulness of their choices. Knowing nothing about a virus except that a robust immune system might help, led many Americans to drop the cheeseburger and reach for the salad.
Besides a shift in considering our natural defenses, people had a lot of time to think about personal wellness, which led many to become active and become their “best self.” In addition, healthy food saw burgeoning popularity that led business models to shift to accommodate their consumer’s new vision of themselves and goals for their health.
This trend has continued leading to the adoption of more vegan, vegetarian, and gluten-free options as consumer demand during the pandemic reinforced their importance.
5. Budget For Higher Wages
The pandemic brought to light an ugly corner of the F&B industry; undervalued and underpaid labor wages. Over two years into the pandemic and 83% of restaurants in 2022 still report having trouble with staffing.
A lack of staff has a roll-on effect that impacts service, quality, and ultimately a restaurant’s reputation and bottom line. Beyond pay, the newly leveraged worker asked for a more equitable workplace with respect at the core.
The pandemic led to a food industry labor revolution with existing businesses building in a budget for increased wages, increasing benefits, and adding equity access.
Startups entering the food and beverage industry are also building in these factors before opening day. They also prioritize a healthy and respectful work culture that will retain valued employees.
If you are considering starting your own food business check out the Jumpstart Your Food Business course.