Why are big brands abandoning takeaway and delivery?

Takeaway and delivery last week emerged as a possible silver lining to the biblical storm clouds posing an existential threat to the restaurant and bar industry.

As vast swathes of the country’s hospitality real estate closed for custom, takeaway and delivery was hailed as a saving grace, a way to keep these companies alive amid escalating restrictions to contain the virus.

Yet while some brands such as Dishoom have joined Deliveroo for the first time, and smaller independents are using delivery to reinvent their offering, many big brands are jumping ship.

The sentiment clearly shifted this week, with Pret, McDonald’s and Nando’s all announcing they would close entirely, having previously had a takeaway and delivery offering. 

The withdrawals from public life have put pressure on other brands to follow suit, with Burger King, Wagamama, Greggs, Tortilla, Pure, Wahaca. Bryonm Rosa’s Thai Subway following with similar announcements.

The overarching reason given has been to protect the health and safety of staff, as well as customers, a no doubt a fair and true motive.

For some city centre operators, asking staff to come into work would only increase their exposure to the virus, especially if they are forced to take public transport, one senior CEO told MCA.

Another prominent CEO said: “The challenge is as everyone is shutting down you really are going to struggle on a chain basis to get anyone to go to work. As an employer do we really want to force them, and is it right morally? Of course not.”

By shutting up shop, there is no longer any ambiguity about whether a brand is adhering to the government’s social distancing policy of staying at least two metres apart.

McDonald’s for instance was reported to have been “overwhelmed” with customers at the weekend, according to one senior figure, calling into question the compatibility of its takeaway business and official social distancing policy.

Meanwhile, public opinion is hardening against those seen to be ignoring the guidelines, reflected in the noisy world of social media, where brands have been scolded for remaining open and risking further spread during a time of national crisis.

Another factor for some brands is their bargaining power with landlords as they look for rent relief amid drastic cost cutting.

If landlords see an operator is still taking revenue with takeaway and delivery, it weakens their position when pressing for relief, another director told MCA.

Some operators like Pret and Itsu have a London-centric presence clustered around offices, areas which have been left deserted by working from home, wiping out demand for takeaway and delivery.

Ultimately, a weekend of reflection has led to much number crunching and the realization that with the government’s wage guarantee scheme, operators can effectively furlough most of their head office, as the industry goes into effective hibernation.

Brandon Stephens, founder and chairman of Tortilla, told MCA: “I think it took the whole industry a few days to realize, that if you shut 10 or 20 stores, you still have the head office to pay for.

“If you shut down all your stores, we can furlough the head office as well, and that allows you to shutter and hibernate the company, which brings cashflow as low as possible.

“So you can keep on a small senior management team in the head office, and everyone else goes into a very safe furloughed status, with the government guaranteeing their livelihood.

“For all those reasons, we’ve made that decision, and I think that’s consistent across most of the sector.”

The downside to all this is the still very real need for foodservice for key workers such as NHS staff, as well as those socially isolating.

London Union’s Jonathan Downey, who has campaigned for support for an industry forced to shut down, said operator should make more effort to remain open and serve the community.

“People working to prepare and distribute food are key workers – feeding nurses etc – and we shouldn’t all be throwing in the towel like this,” he said.

“Each business has to make its own decision, but we need a government announcement of support confirming the importance of food supply and the necessity to continue operating, and to ensure there is not call-out or cancel culture for those businesses that carry on providing vital food to countless people who need it.”

With the operators futures effectively safeguarded and sites mothballed, Stephens predicted the focus for key people in the industry would indeed turn towards helping communities left reeling by the virus.

He added: “When businesses go into hibernation essentially, I think we’ll see people turning to the community. It’s dire out there. The food banks are depleted. Hospitals are in panic about food, they need help from food suppliers and operators. People are quickly bandying together. There’s some nuts stuff going on out there, but I think that will be the focus for the next week.”