Restaurant owners pivot, as pressure grows for more help for the hospitality industry

As cafes, bars, restaurants and nightclubs are forced to close by law, there's growing calls for a formal package of support for the hospitality industry, even as businesses try to pivot to new working models.

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File picture of sign at closed restaurant, April 2020 / Credit: News Now Finland

Finland’s bars, cafes, restaurants and nightclubs shut their doors to customers at midnight on Friday, as new rules came in to slow the spread of coronavirus, which keeps businesses closed until at least the end of May.

But for many outlets the sudden drop in customers, as many people avoided public places, had already forced them to lay off staff, stack the chairs on top of tables, and turn out the lights.

Businesses can still offer a take-away service or delivery options, but there’s a cost benefit analysis to be done on how long to open for, how many staff to hire for shifts and how much food sales there will actually be.

“It just comes down to maths” says Petter Larsen, the owner at One Bar & Restaurant in Porvoo.

Last month Larsen told News Now Finland that he’d had to lay off nine employees when customers vanished. Now the restaurant kitchen is open again on a limited basis as he pivots the business from dine-in to delivery.

“My Head Chef called and said let’s try something out. He said he could go down to minimum salary and see what happens.”

File picture of One Bar & Restaurant, Porvoo

The restaurant’s new business model is based on the concept of meal boxes with several portions for a family, or for an older person isolated at home. So far, One is the only restaurant in Porvoo offering this service.

Orders are placed in advance, and deliveries come twice each week on Tuesday and Friday with family favourites like meatballs and mash, salmon casserole, lasagne, BBQ ribs and chicken stew. There’s also an Easter menu with three courses; and plans to add other celebratory meal boxes for graduation, Vappu and birthdays as the lockdown continues.

“We’ve made a concept that’s low cost, and low waste. We know what we’re going to make the next day and we go to the wholesaler and get just what we need and no extra. It’s simple and effective in that sense” explains Larsen.

The economics of the venture, however, are precarious, and the financial margins narrow.

“We need to make 30 boxes every day in order to break even. Our goal is to have 40 if possible. But if we go over 40 it gets harder because we need two people in the kitchen, and with two people in the kitchen that costs more, and we’d need to sell 60 or 70 boxes to break even” says Larsen.

These kind of new services could offer a lifeline to people who get sick and are forced to remain indoors.

“We want customers to know they’re not just paying for food, but also not taking the risk to get the virus” says Larsen.

File picture of Wolt delivery courier

Restaurants rush to offer delivery option 

Restaurants across Finland are also having to be agile – to adopt some much-used terms from the start-up community – and pivot to new ways of working, new business models to try and keep them afloat in the coming weeks and months.

Finnish delivery service Wolt says they’ve brought on 100 new restaurants in recent days – but 200 closed down.

“On the restaurant side, we are seeing an uptick in interest, and more restaurants are reaching out, wanting to sign up on Wolt” says Henrik Pankakoski, Wolt’s Finland General Manager.

“This includes various types of eateries from fine-dining to extremely local places that weren’t using the service previously. At the same time, we also see a large number of restaurants closing down due to the loss of dine-in customers and the overall uncertainty of the situation” he tells News Now Finland.

The change in circumstances means that fine dining options like Farang, Nude, Finnjävel, Pastis and Grotesk which would not previously have been found on a home delivery app are now options for Wolt customers.

And co-called ‘cloud kitchens’ – which don’t have any physical premises, but offer online-only ordering – have sprung up, including newcomers eKitchen, Cloud Kitchen and Munchies.

“The restaurant industry is going through an extremely tough time, and delivery is crucial for keeping the business running. We’re onboarding new restaurants to Wolt as fast as we possibly can, as each new venue requires plenty of manual work from taking dish photos to training the staff and creating menus” says Pankakoski.

Wolt is trying to ease the financial burden on these restaurants by investing hundreds of thousands of euros in Finland on advertising campaigns; paying businesses twice per week so they have faster access to cash; and lowering their takeaway commission for 30 days from the end of March as restaurants join the service.

File picture of Petter Larsen

More help needed for the hospitality industry

There is financial help available for small and medium-sized businesses, including in the hospitality and catering industry, but critics say that more needs to be done. And soon.

Opposition politicians and business leaders alike have been calling for more state support.

“The National Coalition Party wants to see, among other things, the return of VAT invoices to companies from the beginning of the year, and a three-month break from employer contributions” says former minister Kai Mykkänen.

And the Chairman of Scandic Hotels Aki Käyhkö says the crisis is not just limited to restaurants, but to the entire tourism industry.

“If movement and gatherings are effectively prevented, there will be no visitors to hotels or conferences […] roughly a third of a hotel’s turnover comes from restaurants, bars and meeting facilities which are now on the banned list” he writes.

To this end Wolt has been using its clout to lobby policymakers to put together a specific financial support package for the restaurant industry.

“It’s important to notice that delivery can keep the engine running, but the industry really needs help from the government to come out on top” says Wolt’s Henrik Pankakoski.

“We hope that the government, in addition to tailored support packages, could enable short or mid-term loans for the restaurant owners to overcome the crisis” he adds.

Any further help that comes from the government to the hospitality industry would have to be more efficient than now says small business owner Petter Larsen in Porvoo.

Upon applying for assistance, he was told he’d only get help if the restaurant had been financially profitable for the last three years – but One Bar & Restaurant just opened in December.

“I’ve tried to get all the financial support you can get, but it’s ridiculous when they promise no company would go under and then they give the whole responsibility to Business Finland and Finnvera, and these organisations seem to have the same criteria as before.”