Dine-in restaurants are suffering
When faced with a crisis like COVID-19, it is very difficult to make business plans accurately. “The current crisis has made everyone sit up and think, and businesses are restrategising their plans. There is a supply and demand shock. We have to wait and watch when the situation comes under control,” feels Sajan Alex, vice president, Tablez Food Company.
“It is very difficult to correct shortterm fixed costs. With this sudden shock in the market, the corrections come with a lag and it is very expensive – such as rent, labour and imported/long-lead inventories. We are confident of and look forward to what stimulus plans will be announced by the federal government. As for the rent relief announced by developers, it’s a welcome gesture and will help the businesses to ease some cost pressure. We are yet to read the fine print on the rent relief – announced by AlFuttaim – as they are evaluating ‘eligible tenants’ for this stimulus,” Alex points out. “We have written to the landlords to figure out what they can provide us in terms of relief.”
“The COVID-19 impact has forced industries to revaluate their business models and their purpose/relevance in the market. I feel this presents us a wonderful opportunity to reopen talks on demandsupply imbalances in certain sectors and what public-private partnership can do to address this and bring about an economically viable equilibrium,” he continues. “Businesses that have been purposefully built around the home delivery model – dark kitchens / small physical stores – with a good geographic delivery network seems to have been fairly insulated from this shock.”
Tablez Food Company’s portfolio includes restaurants like Peppermill, Famous Dave’s, Galito’s that are present in Dubai Festival City, Festival Plaza, as well as The Dubai Mall, among others.
In the UAE, many real estate developers have announced rent relief and stimulus packages to support retail tenants and partners amidst the on-going COVID-19 crisis that is severely impacting businesses around the world. While Abu Dhabi-based ALDAR has announced AED100 million as the stimulus package, International Capital Trading (ICT) has also announced a series of initiatives aimed at supporting all tenants, partners and suppliers across its real estate portfolio. In Dubai, Al-Futtaim Group – portfolio including Dubai Festival City
Mall and Festival Plaza – has announced a three-month rent-free period for retail tenants to ease the financial burden. Meanwhile, Dubai Holding and Meraas have announced AED1 billion as economic relief package to support existing partners across their portfolio. Nakheel and Ras Al Khaimah-based Al Hamra have also announced stimulus packages.
“Our portfolio comprises premium casual dining brands and is mostly located in the malls. The business dependency on the mall traffic is about 80% – i.e., dine-in component – and the remaining 20% comes from delivery or to-go. The latter has seen a marginal uptick. In a nutshell, a 5% aggregate growth in the delivery network will not suffice to offset the 80% revenue loss in dine-in,” Alex explains.
Among some of the measures that Tablez has taken to stay afloat is moving to ‘just in time inventory model’ lasting for up to maximum one week. “We also have made menu adjustments for some of our concepts reducing items, thereby limiting inventory consumption, energy cost and using fewer resources to man the kitchen, while beefing up hygiene requirements,” Alex shares.
“The Ministry of Labour (MoL) has come up with new directives on labour contracts and if the current business atmosphere continues beyond mid-April, we may be forced to ask some people to take some time off until business picks up again. But we are committed to not make anyone redundant,” he adds.
On the bright side, even prior to the COVID-19 outbreak, Tablez was already working on adding three more virtual concepts to the existing portfolio of four virtual brands – By The Biryani, Pinoy
HQ, Slider HQ and Pizzalito’s. The new ones include Salad HQ, Curry Processing Unit (CPU) and By The Chick. “We are in the process of onboarding them onto the third-party delivery service platforms,” Alex concludes.