UAE-based home-grown restaurants are weathering the COVID-19 storm in their own ways. Some are collaborating with like-minded home-grown businesses to together share the pain and stay afloat. Some are holding up, courtesy a loyal and repeat customer base. While a few are relying on third-party aggregators to widen the reach.
Overall, restaurants and cafés have incurred heavy losses owing to the lockdown in the UAE to prevent the spread of COVID-19. Even as businesses have started reopening, restaurants and cafés are yet to regain footfall at the pre-COVID level. Amidst an unprecedentedly challenging business environment, with predictions that 40-50% of local F&B businesses might succumb under pressure, some businesses aren’t giving up!
For instance, touted as a ‘hidden gem’, family-owned Thai restaurant Sticky Rice started doing doorstep delivery, listing itself on a commission-free ordering platform for restaurants called ChatFood very soon into the crisis as its daily dine-in footfall declined drastically.
Tania’s Teahouse builds effective partnerships
“Even for us, the biggest change was to pivot our business model almost overnight to become delivery-driven,” shares Tania Lodi, founder of local, Instagram-able café Tania’s Teahouse. “As we lost our dine-in footfall in March owing to the lockdown and lack of events – a significant revenue generator for our café – we had to quickly switch to delivery. We partnered with ChatFood to enable online ordering via our Instagram page and facilitate doorstep delivery. The partnership with ChatFood has been favourable for us, against a minimal monthly fee. Of course, delivery was slow to pick up, but it helped us to offset a portion of our losses.”
Tania’s Teahouse has recorded an almost 30-40% decline in sales over the last few months due to the lockdown, lack of events followed by operating at a reduced, 30%, occupancy even after the ease of movement restrictions. “Our sales are slowly picking up pace over the past two-three weeks, which is a good sign,” Lodi adds. “We are seeing our audience coming back to the café and will soon launch a new menu to keep them excited.”
Tania’s Teahouse has also developed interesting gifting kits with its own teas, customised mugs and other items. For this, the brand has partnered with other home-grown businesses like Protein Bakeshop to offer its teas with the latter’s healthy snacks. “In fact, the gifting kits and corporate gift boxes pointed us towards developing a new revenue stream, while also helping other like-minded home-grown businesses like Spontiphoria and Party Camel,” Lodi states. “The traction for the gift boxes has been so high that we have decided to launch our own e-commerce site by the third quarter of 2020. On the other hand, we have had to put our franchised-driven expansion plans in the region and beyond on hold.”
Delivery & DIY meal kits offset losses for Café Isan
March was one of the best months for Café Isan as the restaurant won a prominent award during the Dubai Food Festival. “We did phenomenally well due to our big win,” confirms co-founder, Lisa Knight. “It was only towards the end of March that we saw a slight decline in footfall. Our approximate break-up is 60% dine-in; and in April we lost the entire dine-in footfall, overnight. That was the worst month in the history of Café Isan, which we launched five years ago.”
In less than a week, the restaurant rolled out its own online ordering platform in April, allowing customers to order directly from the Café Isan website and avail doorstep delivery across most parts of the UAE. “That saved us money as we didn’t have to pay commission to third-party aggregators. As a result, we also managed to narrow down the losses incurred on dine-in to 35%, as we gained 25% on deliveries and our do-it-yourself (DIY) meal kits, which is a huge hit among our customers,” Knight points out.
Starting June, Café Isan started recording 22% on dine-in from zero in April. “However, we are still preferring to do doorstep delivery, ensuring the highest level of health and safety for our people and customers. In addition, a huge plus for us is the decent rent for our location that helped us to manage cashflow, besides voluntary measures like my business partner and our head chef, Chef New, and me not making personal earnings. Going forward, we will develop new products and build new partnerships to sustain our operations. One thing that we won’t do is deep discounting, which has the potential to take away from the value that Café Isan provides,” Knight stresses.
O’Pao widens reach with third-party aggregators
“We always wanted to develop a quick-service restaurant (QSR) concept, focused on deliveries and takeaways. This model on which our brand is built actually helped us to survive the crisis so far,” states Amol Dhote, founder, O’Pao DXB. Launched in 2019, O’Pao specialises in sliders, served with an Indian twist.
“Even before COVID-19 hit the region, we had already started focusing more on our delivery business starting from December 2020-January 2021. Alongside our in-house delivery fleet, we have collaborated with Zomato, Deliveroo and Talabat to offer delivery across Dubai. In fact, over the past three months, we have gained a significant number of repeat customers opting for doorstep delivery. We are also starting a dark kitchen concept in Jumeirah Lakes Towers (JLT) along with a few other restaurants, engaging third-party aggregators,” Dhote elaborates.
When asked how a home-grown business like O’Pao is able to afford the heavy commission, up to 35%, charged by the third-party aggregators, he says, “Against the high charges, we are able to gain scale, volume and widen our reach. It is really about the economies of scale in terms of high order volumes received from the third-party aggregator platforms against the high margin. Having that said, dine-in is our bread and butter, but delivery and takeaway have saved the day for us. In any case, dine-in footfall is expected to be low for at least the next six months.”
O’Pao DXB has also invested heavily in marketing initiatives, especially during the lockdown. “From maintaining the highest level of hygiene to offering contactless delivery, we have done several cross-platform campaigns in order to engage with existing and attract new customers as they spent more time at home and on their mobile phones. Despite being down in sales by almost 50% in March, 40% in April and 30% in May, we have been able to sign up new customers, who have ordered repeatedly, on the back of our marketing initiatives,” Dhote concludes.