Hospitality sector banks on food to bounce back from September
Building of trust among the customers will be the key for revival of hospitality sector given that the unprecedented nature of global crisis created by COVID-19 has jeopardized the sector to a large extent. Industry experts say its food and beverage segment may be instrumental for reviving this trust and a comeback as early as September 2020 is being contemplated, provided the spread of virus is contained by then.
Incidentally, food and beverage is the key segment in the hospitality industry as it contributes approx. 50% of the total revenue in a star hotel and approx. 40% of the total revenue being generated by the entire hospitality industry combined together. Therefore frequent customers to the hospitality sector are closely watching the segment’s readiness and performance to make their future plans.
Future plan of the customers include business and leisure travels including hotel stays, arranging social function in hotels and banqueting facilities, family get together at restaurants etc. All these activities are currently remaining suspended since the operation of the hospitality industry has been held up for the COVID 19 pandemic from March this year.
As serving of food and beverage (f&b) is the most important aspect in any business meeting, social function, family gathering etc, any development in this segment is also being closely monitored by prospective customers.
The most noticeable recent event of f&b segment was the distribution of food to the frontline workers like doctors, health workers and nurses who are treating the Covid patients. Any adverse impact on these frontline workers can be directly attributed to the safety aspects of the food distribution.
Initiatives such as #MealsToSmiles are therefore being taken up with utmost care by the f&b segment, hoping that it facilitates quick turnaround of hospitality sector.
Incidentally, such hashtag meals initiative are taken up by reputed brands of hospitality Network Chain and in one such initiative over 2 million meals has already been delivered in last three months. Through this, cooked food is served to not only the front line warriors of Covid-19 consisting of the doctors and nurses but also the migrant workers. The campaign has moved the frequent customers of hospitality industry and they have started to plan looking at the outstanding performance.
In fact, there are evidences of social gatherings being planned in hotels in next 3 to 4 months’ time. In a webinar on June 24th arranged by BW Hotelier; Veer Vijay Singh, CEO and MD of Trance Hotels said, he has already seen some wedding bookings as early as September this year in leading hotels. In the same webinar, Rajiv Kaul, the former President of Leela Palace, Hotels and Resorts admitted that brands are at work to create competitive advantage by winning trust of their customers early.
Deeper introspection reveals such hastag meals initiatives are often driven by reputed catering outfits under the guise of branded hotels. One such hastag meals initiative is run by a reputed airlines catering company which is a joint venture with Asia’s largest hospitality company and continent’s leading food solution enterprise. With airlines operation coming to a grinding halt from March end, this airlines catering company had gainfully moved their resources to such massive relief effort. However, such quick transformation was not easy as dynamics of air catering was completely different compared to the present work process that they were handling. Vendor contracting had to be aligned quickly for this initiative. Though safety and hygiene part was not new for the air-catering company, arranging vendors who would ensure strict quality norms in a time when entire country was experiencing a lockdown condition was undoubtedly challenging.
This was actually not a big deal for this airlines catering company as the supply chain was modeled for such eventuality, said Dipankar Das, Head of Hospitality vertical at mjunction who is also responsible for handling sourcing needs of the airline catering company. Incidentally, the airlines catering company had outsourced the procurement management part to mjunction to achieve efficiency and reduce cost. “mjunction introduced COVID 19 protocols for the vendors to follow across all the units in the country for the company”, Das said. This was done through introduction of appropriate clauses in the SLA of the vendors and taking set declaration from the vendors to maintain various Hygiene & Safety related Protocols while delivering the goods to airline catering company, he added.
The efforts taken by mjunction was much appreciated by management of the airlines catering company. Mjunction bent backwards in helping us in procuring several food, packaging items, sanitizers, PPE kit etc. during the tough phase, said GM-procurement and logistics of the airline catering company in a letter addressed to mjunction. “Sourcing and procurement during lockdown in the country was extremely difficult, but we along with team mjunction overcame the challenges and emerged as winners,” he said.
Introduction of mjunction in airline catering company operation was part of the business continuity plan of the company, analysts opined. Companies often are seen to plan much in advance before a disruption actually hits their operation. Introduction of mjunction was in similar lines, a person in knowledge of the subject commented.
In fact, 3 years ago the airline catering company felt the need of such a procurement service provider who could streamline their backend procurement operation. The company at that time was catering to approx. 22 airlines on a daily basis & was providing approx. 76000 meals per day to various airlines & other food outlets through its various flight catering units spread across the country.
The entire material of the airline catering company for daily cooking requirement was being procured through various vendors who were attached with its catering units against either monthly or yearly agreements. However, the vendor agreements and rates were done at three levels – central materials group, regional purchase committee and unit level which looked after its parent company comprising a wide network of Hospitality Group Chain of hotels.
Mjunction found that airlines catering company could improve on procurement efficiency by increasing the contract coverage of central materials group which at that time was languishing at 13% of the total spend volume. “This was a herculean task, but we managed to do justice to the expectation set through creation of a central materials group which works exclusively for the airlines catering company, “Das said.
However, the big picture was not ignored and mjunction aligned at all three levels to handle around 15 categories of items comprising of food & beverage and food related packaging materials. “In value terms, we handled spend of Rs 134 crores in FY 2019-20 and generated savings of 3.80% of the spend value for the airlines catering company,” Das added.
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