KUALA LUMPUR, June 23 — The Covid-19 outbreak and the movement control order (MCO) have shaken up many businesses and industries, but it seems it has hit the food and beverage sector by massive revenue blows.
As a result, it was recently reported that over 2,000 coffee shops and mamak restaurants in the country have permanently closed down since the implementation of the MCO in March, with many more likely to follow suit.
However, as the country continues to ease more restrictions under the recovery MCO, many restaurateurs have started to see a glimmer of hope with more people slowly gaining back their confidence to dine out.
To better understand the challenges of the food and beverage operators, Malay Mail spoke to several neighbourhood restaurant and bar owners in Klang Valley.
Here’s how they had to rewrite their strategy to stay afloat during these trying times.
After about 19 years of running the business, restaurateur Christopher De Mello can confidently declare that 2020 will be his worst year running in business.
In fact, his only wish is to survive and keep the business afloat until the pandemic is finally over.
De Mello, who is a former banker, said he had sailed through various challenges running the family business over the past two decades, but the aftermath of the pandemic and nationwide lockdown was an overwhelming challenge he could never foresee.
Initially, when the first phase of MCO was put in place, De Mello decided to give everyone a paid break and restart after two weeks.
“We then entered phase two of MCO for an extended two weeks, which at that time we still could afford to just continue being closed.
“But after five weeks of complete closure, we felt the pinch and had to open up for deliveries to make some money,” he added.
The five-week closure cost De Mello over RM120,000 for rental of his three-lot shop, the salary of his 18 staff and other expenses required to keep the business running.
To stay solvent and keep the business intact, the senior said he had to force himself to be more tech-savvy and utilise technology to survive.
With the help of his nephew, who is an e-commerce expert, De Mello managed to gain back cash-flow by offering delivery options on food delivery app Beepit from April 22.
“Thankfully, the revenue wasn’t too bad and we had many orders for Mother’s Day,” he said.
De Mello said his business slowly started to gain momentum after the MCO was lifted and the restaurants were allowed to accept dine-in customers, but his revenue still remains between 40 and 50 per cent lower when compared to pre-MCO.
“I have noticed money spent per bill has reduced when compared to pre-MCO days as many people are now more cautious about their spending.”
Apart from the low revenue stream, De Mello said their operations cost is now about 30 per cent higher due to disinfection and extra hygiene practices, the Covid-19 screening for all his staff prior to opening as well as purchase of sanitisation products for daily usage.
Despite the challenges, De Mello — who runs the business with his wife Jennifer Tee, sisters-in-law and a business partner — remained optimistic and hoped the situation would remain under control until the disease is totally contained.
He also jokingly said his business now depends on the daily Health Ministry press conferences at 5.30pm when the number of new cases is announced.
“I’ve noticed when the number of new cases is down, the next day we see more people in the shop but when the numbers go up, I can expect lesser crowds.”
Foo Foo Fine Desserts — Taman Tun Dr Ismail
Known for their fine-tasting plated desserts, Foo Foo Fine Desserts owners Jack Lua and Chong Kin Foo faced a big challenge when the MCO was announced.
As most of their dessert options were curated for dine-ins, Lua said they had to close the shop for a week and quickly re-invent their menu to make it fit for takeaways and deliveries.
Although the swift transition caught them by surprise, Lua said the MCO and its circumstances pushed them out of their comfort zone to try out a new operation system that they had never experienced since they opened the café in 2016.
“Because of the swift changes we made on the menu, we manage to cover our monthly expenses and overheads throughout MCO.”
Although the shop now operates with reduced capacity to adhere to the social distancing measures, Lua said he was seeing the business slowly picking up.
“We are blessed to be full-house some evenings, but revenue-wise, a full-house now is about 50 per cent of the revenue we used to get,” he added.
Lua also admitted that they were more cautious now in terms of business and expenditure as they could not plan ahead in the current uncertain situation.
“At this time we just go along with what happens and try to adapt to the situation.”
He also pointed out that the reason they managed to sail through the challenges without much burden was because they only had four staff members and a lower rental commitment as the café was located on the first floor.
“Thankfully because of that, we were not over-burden by the operational cost.”
Knowhere Restaurant & Bar — Bangsar
Although many food and beverage operators have felt the financial effects of MCO, the nightlife sector seems to have hit especially hard.
Often located in upscale neighbourhoods, a big chunk of the overall expenses for bar operators was usually the rental, which comes at a hefty price tag.
That has been the case for Knowhere restaurant and bar in Bangsar.
Bar owner Kamaraj R said he has to pay RM18,500 rental monthly, which is a large commitment to bear when the business was slow.
“We have negotiated with the landlord to give us discounts but it was not given, except for March and April.”
Although they have now opened their doors for business, Kamaraj said the business hasn’t been too promising to cover his RM100,000 monthly commitments.
“The situation may prolong as long as people have the fear of going out because of the Covid-19 disease.
“About 60 per cent of my monthly commitment is the rental and the salary.
“But so far I have not received any support from the landlord or the government to be able to survive,” he added.
He said the lack of support has led many businesses and small brands to close down permanently.
Moving forward, Kamaraj said the situation still remains uncertain although many sectors have resumed operation.
“It’s not just about one business, it’s a chain of businesses and once the chain is affected, everyone will face difficulties.”
He also regretted that many illegal online shops are allowed to freely sell alcoholic beverages for about 100 per cent cheaper than a licensed liquor store or a bar.
“Such unlicensed online shops affect our businesses and are killing the whole industry.”
Locker & Loft Bar – Damansara Kim
Locker & Loft Bar was on the right track to celebrate its fourth-year-anniversary this year with a new revenue target after they outperformed during the Chinese New Year in January and February.
But everything went sideways after the sudden announcement of the MCO in March.
Deepak Gill, who is a business partner at the Bar, said although they could foresee some sorts of lockdown after observing the news about China, they never expected the MCO to be too lengthy.
“We were obviously not prepared for it and I don’t think anybody else was prepared for such circumstances.”
After a week of MCO, Deepak said they had to revamp the menu and partner with food delivery companies to sustain the business.
“We managed to earn a bit but it wasn’t enough because all the other F&B outlets had started doing that as well.
“So we had to reduce our operational cost, reduce manpower and turn off some of the chillers to bring down the electricity cost,” he added.
Deepak also said they were grateful that they got two months of rent-free, which was a relief for them during the MCO.
After they were given the green light to open recently, Deepak said he was glad that the business is slowly gaining its momentum as his regular bar-goers have returned to support him.
“Although we may not be able to earn as much as pre-MCO days, our target is to cover overheads and recover the losses over the last couple of months,” he added.