Karl, what do you think about the capacity at which the hospitality industry has been allowed to resume operations?
It is realistic to assume that a hospitality industry concept needs to have 70 to 80% occupancy in order to be profitable. And we’re not talking about the kind of profitability when you can buy a new Porsche, but just a level at which you can break even and then the few euros you have left over can be used to pay for repairs or for investment. Lots of restaurants will go down at just a 50% occupancy rate. And then there are also cases in which they don’t even get to 50%. A friend of mine can now, because of the restrictions, only have 12 covers instead of 60 – and there’s nothing unusual about his case. So even if he does 2 covers on each table per evening, he won’t even achieve 50% of his revenue, but perhaps just 30 to 40.
There are lots of restaurants like this one which are not just about the food but also the social side of things. Restaurants with less space are particularly affected by the situation. These premises are designed to create a cosy atmosphere and for seeing and being seen, as well as maximum efficiency. They squeeze in another table here and another guest there. But how are they supposed to operate profitably now?
On the German ‘METRO Gastro Hotline’ you provide restaurateurs with advice on exactly these kinds of questions. What are your recommendations?
There is no one solution which is suitable for every case. The hospitality industry is much too individual and diverse for that. However, what I can definitely recommend is that you rethink your menu and continue to focus on takeaway and delivery concepts. I recommend that you remain flexible. And be brave. It takes a great deal of courage to change how you have been doing something for years.
So what do you mean when you mention this kind of flexibility?
To provide an example, I spoke to a customer who has a tarte flambée restaurant. When lockdown was introduced, he realised that he was no longer able to sell these dishes. Collection or delivery just doesn’t work with tarte flambée because it would be cold when the customer eats it. So he started making pizzas and burgers since he already had the right oven. And this was such a resounding success that, even since he has been able to open up his restaurant and serve tarte flambée again, he has still been offering these new dishes. He says that he’d never thought about changing how he did things before and his new menu is now creating new revenue for him.
So is the crisis also an opportunity for the hospitality industry?
I prefer to use the word ‘situation’ instead of ‘crisis’. Because it is actually a situation which requires us all to adapt and rethink things. The restrictions won’t be lifted again particularly quickly either... I don’t have any illusions about that at all. In the hospitality industry, having a rethink is also about being better prepared for next time and, in this context, it is also about being resilient or at least more resilient to a crisis. Therefore, it is even more important that restaurateurs don’t just adapt their menu to the new situation. They also need to market their new menu in a way which generates revenue.
It is important that restaurateurs don’t just adapt their menu to the new situation. They also need to market their new menu.Karl Romboy
How might this be achieved in the upper echelons of the hospitality industry? The dishes in this part of the industry are much less suitable for withstanding transportation as a general rule.
I know that some restaurants are offering menus á la Maison, i.e. cooked dishes in vacuum bags that you can warm up and prepare at home. But who will be prepared to pay as much money for that in the long term as for a gourmet experience in a restaurant, which offers you the experience of eating in a space with the right ambience and enjoying a professional-looking plate of food? Perhaps a rudimentary kitchen could be the answer too. Just focus on what’s important. As well as providing really practical support, our consultation service is primarily about awakening the creativity in your mind and asking the question: how can you get to a place where it makes sense for you to reopen your restaurant? And perhaps putting your food in tins could be the answer.
You’ve got some experience of that, haven’t you?
I do actually, yes. (laughs) When I had my restaurant, it was famous for ravioli from a tin. And you can create this tin concept in the upper echelons of the hospitality industry too. You add a label with the best-before date because the dishes can only be kept for 1 or 2 days but the tin just adds a bit of fun to the whole thing.
It might sound strange but the actual ritual of going out to eat isn’t affected by this. Will going out to eat become more of a luxury as a result of coronavirus?
I think that lots of things will become more of a luxury. If a landlord wants € 30 per square metre for restaurant premises in a top location, in the future people will say: forget about it, I can’t afford that. I also think that the top levels of the hospitality industry will be more significantly affected by the situation and I really hope that lots of people in the industry will quickly decide to change, offer something new and be innovative. Now is the perfect opportunity to do that. And thinking about what you have to offer has never been a bad thing.
I hope that lots of people in the industry will quickly decide to be innovative.Karl Romboy
What will the situation be like with regard to opening restaurants in the new environment?
I think that people who really want to open a restaurant will still do it. Perhaps there will be fewer restaurants being set up but the new restaurants that are opened will bring more innovation into the market. Good concepts which can be adapted to meet a range of requirements. With entrepreneurs behind them who are aware that situations like this can happen and who are prepared for this kind of situation with sustainably profitable business models.
What does this fundamental change in the hospitality industry mean for companies like METRO since their main customer base is now having to reinvent itself?
We are all in the same boat. Including suppliers like us, 2.4 million jobs are dependent on the hospitality industry. The hospitality industry is one of the biggest employers in Germany. The hospitality industry alone employs as many as 1.5 million people, which is the same amount of employees as the automobile industry and the banking sector put together. People all too often forget that the hospitality industry offers jobs which have stability in terms of location, are truly regional in nature and contribute to purchasing power and standard of living in cities. To be honest, I would be perfectly happy in a world without cars but not a world without the hospitality industry.