Research Topic: Effect & Survival Strategy for restaurants in Covid-19

Pandemic
Section: 1
Submitted by: Group 1
2nd Draft

Submitted to: Dr. Muhammad Sabbir Rahman

Name ID

Sadia Ahmed 1610072030

Tahsin Wamia Mahboob 1610076030

Nusrat Zahin 1620329630

Farhana Nazneen Navila 1530761630

Lutfun Nahar Lota 1612613030

Introduction
The rise of a sudden pandemic COVID-19 has created a large impact on the entire world and
has caused an effect and change in all different industries, especially in various businesses.
One of the prime type businesses that have been majorly affected are small firms. Some small
businesses such as such as accommodations, food service, and educational services, that are
directly affected by changed customer behavior, especially the physical distancing and
mandated operational restrictions that began during the pandemic (Humphries, 2020). They
have had to take instant measures in order to sustain their business. Micro, small and medium
enterprises are likely to be severely affected, as they tend to be more concentrated in sectors
that have been directly affected by COVID-19 response measures (e.g. retail and services)
and are typically more credit constrained than larger businesses (Cao and Leung, 2020;
Kumar and Francisco, 2005).
These measures include changes in strategies, health and wellness checks, making sure
proper guidelines are being followed and a very important segment is also focused on the
marketing side of a business and creating a good trusting relationship with the customer for
changed times. Businesses in counties with higher levels of COVID cases expect that they
will take more time to reopen. However, after controlling for the business’s expectations of
when legal restrictions will be fully lifted, this effect dissipates. Worker proximity predicts
the time until reopening. However, this also operates almost entirely through expectations
about when regulations will end (Balla-Elliott, D., Cullen, Z. B., Glaeser, E. L., Luca, M., &
Stanton, C. T, 2020).
The differences in vulnerability across sectors also create a disproportionate level of risk for
lower-income workers, minority business owners, and business owners with less educational
attainment. Most businesses have to change their whole game-plan and introduce new,
unused strategies to make sure their business can withstand and grow through a pandemic
which is COVID-19 and it has had a significant impact on revenue.

In order to bring these changes in their work activity it was not easy for the small firms at
first. Adapting to the changes caused by Covid-19 was not easy at first as these firms have
never encountered any such situation. Initially a lot of these firms such as restaurants were
temporarily closed as they needed time to come with their precaution plan. These firms such
as restaurants temporarily closed their business in order to come up with a new strategic plan
which will help them to sustain in the situation. However a lot of these firms were also
operational or permanently closed depending on their financial capability to sustain.
Although most firms have been affected by Covid-19, the depth and nature of its impact
depend on the firm size. Small to medium enterprises like restaurants faces higher risk of
permanent closure because they are particularly vulnerable and are more likely to have fewer
assets and limited cash reserves to balance the lockdown-induced liquidity shortages (PNAS
July 28, 2020). There was also decrease in employment all over the world as many of these
firms lacked the financial capability because of decreasing number of sales. People all over
the world were asked to stay indoors as a result sales of the small medium enterprises
decreased eventually. Moreover initially these firms were not prepared to adapt to the
changes caused by Covid-19; it took them a while to educate themselves about the
communicable disease and take precautions accordingly.

Purpose of the Study

The purpose of the study was to understand the effects of the Covid-19 pandemic situation on
the survival strategy of the firms which are essential in order to sustain through the situation
of crisis. It was a descriptive research and a causal study. This scale measures the strategies
and changes that the firms are adapting to in order to survive through Covid-19. Using this
scale, existing small medium enterprises as well new firms can take measures beforehand to
the changes in workplace that have been caused due to the Covid-19.

Problem Statement

The problem of the study was to see the effects COVID-19 has on restaurants. There are a
few factors which influence the firm’s survival. They are business agility, the firm’s
marketing operational effectiveness, the optimization of innovation capability, how they can
manage employee’s satisfaction, re-thinking customer experience and their survival
strategies.

Research Questions

For the research question, we will investigate what are the factors that affect the firm’s
survival strategy. We will explore the factors that influence the firm’s survival strategies and
how we can solve it.
Research Design Justification

Problem Statement: The problem lies in the fact that how firms are affected by the novel
Coronavirus henceforth referred as Covid 19 and the strategies taken to survive the crisis.

1. Aim of the study: How adversely are firms affected and to what extent are they prepared to
sustain the crisis.

2. Unit of Analysis: We have conducted interviews (both on telephone and online) for 10-15
firms with number of employees and the type of business (I.e. partnership, sole
proprietorship, Pvt Ltd companies).

3. Extent of researchers influence: The impact of influence by researchers is minimal since

we conducted using all factors included.

4. Study Setting: The research was conducted in a natural environment and hence the study is
considered to be non- contrived.

5. Time horizon: The study was conducted on different firms over two phases of period, 6
months prior to the lockdown and six months into the lockdown date of 17th March 2020.

6. Research Strategies: The strategy used to conduct the research is mainly in the form of
online interviews to get an insight of the true impact of Covid-19 and their changes and
strategies for survival.

7. Measurement: In order to quantitate the interview responses, we used the likert scaling
method where the range of agreement strongly agrees to strongly disagree on a scale of 1-5.

8. Data Collection Method: The data collection method will be through online interview and
Questionnaire.
Literature Review
In this segment we are going to relate the different variables and strategies that restaurants
have adapted in order to survive through the Covid-19 situation. The independent variables
include business agility, marketing operational effectiveness, optimization of innovation
capability, managing employees’ satisfaction and rethink customer experience. The
dependent variable is firm’s survival strategy.

Section 2: Business Agility of the Restaurants

Business agility refers to the ability of the companies to swiftly adapt to the changing market
or business circumstances (Heisterberg and Verma, 2014). In this era of cutthroat
competition, business agility is a must for the survival of the business as it acts as a solution
for achieving competitive edge at the time of doubt and instability in the market environment
(Mathiassen & Pries-Heje, 2006).
In recent times, service businesses are experiencing an increasing risk and uncertainty due to
the emergence of COVID-19 pandemic (Nicola et al., 2020). In particular, the hospitality
sector throughout the globe is under a grievous condition (Jiang & Wen, 2020). In
Bangladesh, the first patient of corona virus was detected on March 8, 2020 (Lalon. 2020).
Subsequently, government had put restrictions on mass gathering at public places such as
hotels, restaurants, and other areas related to hospitality sector (Lalon, 2020).
Prior to COVID-19 lockdown, the restaurant sector in Bangladesh was speeding up at a
steady pace (Abir, 2020). In FY19, the restaurant sector in Bangladesh grew at 7.9 per cent
rate, making a contribution of 79 billion to the economy (Bangladesh Economic Review,
2020). However, this sector’s growth was substantially disrupted once the government
announced countrywide lockdown. Rather than receiving orders from the customers, majority
of the restaurants in the capital could not but shut their outlets in the midst of COVID-19 in a
bid to follow the government regulations to ensure minimal human contact (Kibria, 2020).
Furthermore, the restaurant owners are not being able to cover up their costs of rent, salary,
and many more.
Under these circumstances, restaurant service providers must show agility to overcome the
ever-increasing challenges that they never faced before. In doing so, they should merge with
online food delivery service providers, such as Pathao, Food Panda, to name a few. Besides,
they should give their customers the opportunity to order foods through their social media
pages, websites, or Apps. Nevertheless, they should not only rely on home delivery options
because this service accounts for on 10 per cent of the total restaurant sales (Shovon, 2020).
As a consequence, the restaurant owners must lobby with the respective government
authorizes to convince them about the complete opening of the restaurant maintaining proper
health and safety protocols. All the restaurants should keep sanitizers, temperature detectors
in place. The customers should not be allowed to sit close to each other. Adequate distance
between tables must be maintained. Besides, all the restaurant service providers, together,
must demand the exclusion of various taxes/VAT to reduce their costs (Shovon, 2020). They
can also request the government to provide them incentives with minimal interest rates to
cover up the costs of employee salaries and landlord rents. Overall, it is recommended that
restaurant owners continuously promote their food outlets on social media platforms to
inform, persuade, and remind customers of their new meals/discounts.

H_S2: Business agility is positively related to firms’ survival

SECTION 3: Marketing Operational Effectiveness (MOE)

Marketing operational effectiveness entails any kind of practice which allows a business or
organization to maximize the use of their marketing inputs by developing products at a faster
pace such as leading and controlling functional performance, measuring and improving the
marketing process, leveraging and automating process and continuously improving
performance[ CITATION Mar \l 1033 ]. Small firm like restaurant reported falling demand
across their customer base, thus firms seemed to be more robust in the face of the crisis.
According to a research, ‘As our customers are the most impacted by the virus situation, their
demand is falling. Our different segments are impacted differently; some demand is totally
disappearing while others have a slight dip’ [ CITATION Rit20 \l 1033 ]. Restaurant owners
mentioned closing dine-in because of the pandemic has been the biggest challenge so far.
Although, delivery sales have increased - it is nothing compared to the demand in other
countries because people in Bangladesh do not have the habit of ordering food from home.
The business is down by 50%-60%. Another owner added, since we are not being able to
import our supplies, we have to go for limited operations and are selling selected items only
[ CITATION Tas20 \l 1033 ]. Preliminary findings also indicate that a large proportion of
restaurant customers (64.71%) and the majority of hotel customers (70.42%) believe that the
use of various technologies in service delivery will be necessary in the COVID-19
environment in order to minimize human-to-human contact such as service robots,
contactless payment such as Apply pay or contactless bank cards, digital menus that can be
viewed on personal mobile devices via QR codes, contactless digital payments, keyless entry,
touch less elevators etc [ CITATION Dog20 \l 1033 ] To survive the pandemic, new concept of
a cloud kitchen, an online restaurant has been introduced as an effective operation, to attract
patrons who otherwise preferred to dine-in, under normal circumstances. “Since our
customers could no longer come to us, we decided to go to them, to sustain through the
pandemic, pay wages and utility bills," remarked the entrepreneur. This is for the current
times; in the future, we have plans to take the concept forward, making it bigger and better,"
the restaurateur said, looking to a better tomorrow, saying "The future is online." [ CITATION
Res20 \l 1033 ]. Consumer attitudes and purchase intentions are influenced by CSR initiatives
– if consumers are aware of them. During this pandemic period, CSR has not proven its
general effectiveness in the marketplace where CSR is effective in eliciting favorable
consumer attitudes and behavior in theory[ CITATION Ass20 \l 1033 ].

H_S3: Marketing operational effectiveness shapes the survival strategy for restaurants in a
positive manner during covid-19.

SECTION 4: Optimization of innovation capability

Connective capacity in the context of innovation and optimization can be described as the
capabilities of individuals, organizations and networks to counter fragmentation by crossing.
To become innovative, an organization has to develop its innovation capability. Managing
creativity and capabilities, like innovation capability, is one of the basic elements of an
innovative organization. (Saunila, M., & Ukko, J. (2012). However, the measurement of
innovation capability is challenging, because it is intangible by nature (Albaladejo and
Romijn, 2000). Innovation potential consists of factors that affect the present state of
innovation capability.
Therefore, during this Covid-19 pandemic businesses had to put in their efforts into figuring
our new innovative techniques to keep their business running. A large portion of the effort
had to move to online platforms which use more innovative techniques in order to stand out.
Restaurants have made home-delivery their main focus which needed a different scheme of
marketing as well. Analytical framework included on any concept test that segments the
restaurant innovation opportunities based on strategic potential and evaluation of tangible
activation strategies and implications by looking at different pathways to success had to be
done. For successful innovation optimization an observation of the menus, the products, the
dining experience, and service quality, are congruent with fair pricing has to be done. When
all this is fair, the customers are likely to become return clients (Anselmsson et al., 2014;
Ferguson, Brown, & Johnston, 2017; Rodriguez et al., 2014).

H_S4: : Proper Optimization innovation has a positively proportional relation with business
profits/success.

SECTION 5: SECTION 5: Managing Employees Satisfaction (EMS)

Employee satisfaction can be defined, how content or satisfied employees are with their jobs.
Factors that influence employee satisfaction includes compensation, workload, perceptions of
management, flexibility, teamwork, resources, etc.[ CITATION Emp \l 1033 ]. During
pandemic, Restaurant management should arrange flexible type of work processes through
online mediated platform. COVID-19 impacted on employees’ mental health like
psychological distress and major depression. Managers and human resource practitioners
have to develop an intervention plan for the period during and after COVID-19, to maintain
an efficient and rapid continuous communication with their employees including managers
and to maintain partnership of managers, human resource practitioners, health and
government’s officials[ CITATION Ham20 \l 1033 ]. Employees’ risk perception or motivation
shapes food safety compliance. Notably, in Harris et al.’s (2017) research, they highlighted
that when employees perceive intrinsic values of complying with safety procedures, they are
more likely to follow food sanitation regulations. However, there was no support in the model
for restaurant workers in current situation to follow food sanitation regulations in the
relationship between extrinsic valence and motivation. It was determined that this
relationship is moderated by the length of time the employee has worked in the restaurant
industry[ CITATION KJH17 \l 1033 ]. Employers must also comply with Orders under the
Emergency Management and Civil Protection Act that are applicable for their industry or
business. Employee safety measures by ensuring workers know who their workplace contact
is and how to get in touch with them in case the self-assessment, information and instruction
to your workers. Make sure they know what they need to do to protect themselves and others.
Ensure they know how to follow the work and hygiene practices in your plan, including all
new safety measures. Employers need to train workers on possible COVID-19 transmission
points in the workplace, what steps are being taken to protect them, and how they can protect
themselves, including frequent hand washing especially before and after each client
interaction, sanitizing items and surfaces more frequently, following tool disinfection
procedures, and not touching their face[ CITATION Wor \l 1033 ]

H_S5: Managing employee satisfaction assures necessity safety measures which lead to a
better survival strategy.

Section 6: Rethink Customer Experience

Customer experience is known to be the customer’s perception of their experience towards

the product or service (Grewal, D., Levy, M., & Kumar, V. 2009, February 28). Prior to
Covid-19 lockdown it was easier to get the feedbacks from the customers towards the service
provided by restaurants as customers gave their feedback face to face mostly. It gave the
restaurants opportunity to improve themselves and was completely free of cost for the
restaurants. However now, due to Covid-19 these restaurants are mostly relying on feedbacks
that are being written by customers through online platforms.
The restaurants are using their online platforms more frequently than they used to do
previously due to the pandemic situation. For restaurants communicating through online
platforms seems the most effective way possible now (Bartik, A., Bertrand, M., Cullen, Z.,
Glaeser, E., Luca, M., & Stanton, C. 2020, April 09). The restaurants have adapted to this
change in order to increase positive perception among the customers. Many of the restaurants
have introduced their own app or website which has helped customers get an easy access.
Moreover restaurants also encourage customers to participate service experiences to their
respective online platforms so that they can improve according to their reviews. Potential
customers and the restaurant itself can get benefited through the participation of existing
customers.
In midst of Covid-19 restaurants are taking effective measures when it comes to educating
and training both customers and employees. The way restaurants used to conduct prior to
Covid-19 was entirely different compare to the way they are conducting now (Hargreaves, J.
2020, August 07). Extra safety measures are taken and since customers and employees are
not much familiar to these changes, it has been a challenge for restaurants to make this a
continuous habit. Restaurants are doing their best to meet the customer preferences in this
pandemic situation. The restaurants have trained their employees well enough to maintain all
the safety measures necessary provided by the government (Abouk, R., & Heydari, B. 2020,
April 15). The safety guidelines have been also posted on the online platforms of these
restaurants so that customers can also be aware of the new guidelines and get familiar.

H_S6: The customer experience is positively proportional to the firm’s survival strategy;
during this pandemic the more positive the customer experience, the more likely it is for the
firm’s survival strategy to result a success.

Section 7: Firm Survival Strategy

Survival strategy in a firm means cutting costs, laying off employees, tightening profit
margins and saving cash, in stark contrast to growth mode, during which a company reinvests
profits, expands operations and brainstorms growth strategies with long-term payoffs (Reinik,
A., 2010). Unfortunately, the pandemic has taken a huge toll on all service sectors all over the
world. The restaurants worldwide resorted to online home delivery and contactless delivery,
which are the only options reliable in the world of COVID-19.
Since SMEs all over the world have been struggling, the main objective of the firms should
be knowing how to survive during this crisis. They need to take a cost-cutting measures that
can reduce the scope of activities such as the preparation and sale of food and drinks in the
restaurant, accompanied by an entertainment program, etc. They also need to consider about
their take away service and the people doing the delivery.
Restaurants, in order to operate during this pandemic, have to operate through debt financing.
The restaurant should look for investors with a debt fund, who are able to lend you money
privately and then decide the terms of the loan with a debt investment bid, including the
collateral and interest rates (Bedingfield, 2018).
Restaurants need to have a strong financial external institution to lessen the gravity of the
situation, in this case, the COVID-19 pandemic.
The restaurant needs to adapt to new ways in which they can and have to re think their
customer experience. The customers, along with the employees need to work on working
together, to help each other to work alongside each other. Restaurants need to work on
training and educating the employees so that the environment can be safe for everyone.
Restaurants also need to involve themselves rapidly into difficult situations dealing with the
customers. We will also have to see if the restaurants can respond quickly to the crisis a
customer may face and how fast they can solve it. They should continue to follow established
food safety protocols and best practices for both the food preparation as well as their
employees’ work condition and the employees themselves (Center for Food Safety and
Applied Nutrition, 2020).