By Vishal Bharucha, president of VNB Business Brokers, a leading business brokerage and M&A advisory firm.
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The pandemic has significantly impacted businesses all over the world. Different industries learned to adapt and change their business models to survive. The food and beverage industry in particular found it challenging to stay afloat during this trying time. According to the National Restaurant Association, the industry experienced a drastic economic free fall in 2020: 87% of restaurants reported a 36% drop in sales, and 17%—over 110,000—have shut down in the U.S. alone. The good news is that things are starting to look up: In their mid-2021 State of the Restaurant Industry Report, food service and restaurant sales projected a rise of 19.7% from 2020. Indoor dining has started to reopen and business owners are gaining traction in reestablishing their businesses.
For the purposes of clarity, the food and beverage industry includes restaurants, cafés, fast food businesses, catering, pubs and food manufacturing facilities.
It should be noted that sellers have learned several lessons in their operations as a result of the pandemic. This has ensured that food and beverage businesses pivoted and innovated to diversify their revenue streams. As an incoming owner, these insights may be valuable to you and can afford you an opportunity to leverage these insights to design further growth strategies.
Here are five factors buyers should consider when purchasing food and beverage businesses in a post-pandemic world.
Invest In E-commerce
The pandemic demonstrated a drastic shift from in-person shopping to e-commerce. According to Supermarket News, online grocery shopping alone skyrocketed to an unprecedented 300% during the pandemic. At this rate, online food and beverage shopping are now part of the omnichannel strategies for businesses operating in this industry.
The key to buying a food and beverage business is to ensure that it has an efficient e-commerce model or has the systems in place to be able to implement an e-commerce strategy. One aspect to include in a digital strategy is its search engine optimization practice. Is the business visible online? Is there a keyword strategy in place? Do they rank high enough on Google’s search engine for organic search?
Health-Driven Food Products
Customers’ dietary food requirements have been significantly influenced by the pandemic. Health is now a priority for many people, and they are exerting conscious efforts in minding what they eat or drink. From reading labels to calculating nutritional value, the pandemic has had a lasting impact on consumer behavior. According to the 2021 Food & Health Survey by the International Food Information Council, there is a vast growth in people’s positive habits toward healthy food. In fact, 73% of the survey’s respondents are confident in their ability to choose healthy foods.
Food and beverage businesses that aim to improve health and wellness are experiencing an uptick in interest from buyers due to the strong customer demand for their products. The post-pandemic health trend shows no signs of slowing down. Customers are now more aware than ever.
While lockdowns are easing up, the lifestyle that it has introduced to many customers will likely continue to garner traction. With the rise of e-commerce and a change in consumer behavior toward health-driven products, nutrient-dense food is now a staple for every food and beverage business.
Buyers should identify food and beverage businesses that provide nutritious meals for dine-in or takeaway as well as self-branded products that customers can use to cook at home.
Safe Environment For Employees
The key to a successful business is protecting your employees. After all, they’re the manpower you need to run a lucrative venture. In buying and running a food and beverage business, treat your staff as frontline workers. Since the nature of their work is engaging and serving customers, they should be protected at all times. Ensure that your restaurant or food shop follows health guidelines and protocols to safeguard employees.
It is also important to scrutinize the business’s existing healthcare and medical plan in case a staff member becomes ill. The health practices of the pandemic are set to continue long after it’s over due to the health and wellness benefits it has brought about. Ensuring that a business you are intent on buying has the requisite facilities to ensure safety for customers and employees is key.
Diversified Supply Chain
The disruption of trade and supply chain for food products is a great learning experience for all business owners during the pandemic, particularly in the food and beverage industry. According to a survey by HLB International, 58% of business owners are still concerned about international trade flow disruption. To counter this, businesses should implement operationally efficient strategies. From launching new products and services that don’t require complex procurement to sourcing materials and produce from local suppliers, diversifying your supply chain is key.
Industry reports point out a significant decrease in the challenges the food and beverage industry has faced since 2020. As businesses adopt the new normal of running a business in this sector, buyers should understand the importance of being flexible.
