This article originally appeared on the Philadelphia Business Journal.
As a city known for its robust and vibrant food scene, Philadelphia is facing lots of questions about what the coronavirus pandemic means for the industry long term.
A statewide stay-at-home order and restrictions on in-person dining have triggered scores of eateries to lay off staff, close up shop or otherwise adapt their business models. Supermarkets are similarly struggling to keep shelves stocked amid supply chain disruptions and panic buying.
The Economy League of Greater Philadelphia held a virtual town hall Friday morning to further examine COVID-19’s effects on the city’s food economy. Event panelists were Marie Campbell, CEO of food industry group Cooks Who Care; Jeff Brown, CEO of Brown’s Super Stores, which operates locations like ShopRite; and Kim Carter, vice president of partnerships at The Enterprise Center.
Philadelphia is home to 79,000 food-related jobs, which account for 12% of all jobs in the city, according to data from the Economy League of Greater Philadelphia and the city’s Department of Health. More than 75% of those positions fall into the hospitality and retail sectors. As of 2018, the city employed 73,000 workers in positions such as servers, bartenders, cooks, shelf stockers, and baristas.
With recent social distancing measures and mandated closures, restaurants have been forced to cut workers to stay afloat. Labor typically accounts for 25% to 35% of expenses in the food hospitality world, said Mike Shields, project manager at the Economy League.
“With non-physical ordering, online takeout and curbside takeout, you don’t need all of your staff to take care of all of those orders,” he added.
There are 6,500 food-related businesses that operate in Philly, representing 18% of the city’s businesses, according to the Economy League. More than 86% of the businesses are small operations employing 19 or fewer people. In 2016, the food economy contributed $66.3 million in wage tax revenue to the city — about 4% of the city’s overall wage tax revenue.
Here are three takeaways from Friday’s digital event on how the pandemic will impact the future of Philly’s food economy:
The pandemic could lead to better compensation and support for service industry employees
Some leaders in the city’s hospitality world are anticipating a long term cultural shift in the sector. As people isolating in their homes rely on essential food workers to satisfy basic needs, a new level of respect for service employees has developed, Campbell said.
This is similarly evident at Brown’s grocery stores, he said, where many customers have expressed gratitude to workers for showing up amid the chaos.
That means restaurants placing a heightened focus on how employees can be better taken care of could be on the horizon as businesses reopen. This could look like considering how to support staff by helping them turn service jobs into long term, sustainable careers, rather than temporary positions held as workers complete college degrees or need to pick up extra cash, Campbell said.
“I hope that system of flex work in a freelance and gig economy may change for the restaurant industry long term,” she added.
For restaurants that do manage to reopen, operations could look very different
Even when stay-at-home restrictions lift and food businesses begin to reopen, things likely won’t snap back to normal for a while. For restaurants and bars in particular, the setup could look very different.
“What’s a bar going to look like as far as getting a drink?” Campbell said. “Or are tables going to need to be pushed at a farther distance rather than trying to get the profit per square foot that they need in order to turn over a certain number of tables to make money?”
She projects brick-and-mortar locations will have more trouble keeping their costs down and identifying a new operations model that is profitable. Campbell also predicts curbside pickup, previously extremely popular with franchise concepts, will be on the rise as people opt to cook at home more frequently.
Restaurants are going to have to come up with a whole new redesign in post-pandemic times, Carter agreed. Kicking off with strategies like curbside pickup, she suggests eateries will need to integrate a retail component into their sales offerings rather than just sit-down meal service. Restaurants will also need to shift marketing campaigns to emphasize sanitation and sterilization efforts, she said.
“That’s going to be part of your marketing tool if you want to survive,” Carter said. “That’s going to make people feel safe and reassured that it’s OK to come into your establishment.”
Streamlined technologies adopted now could impact labor later
While grocery shoppers started off worrying store employees would lose their jobs, they have now “aggressively moved” to prefer self-checkout, doing all they can to distance themselves from other humans, Brown said.
Online grocery orders are pouring in, and Brown estimates the pandemic has accelerated the movement calling for technological advancements that could replace human employees by five years.
“I do think you will see more and more innovations and automations that involve humans not dealing with each other,” he added.
For Campbell, this causes concern because more industry jobs would be lost from those digital developments. Larger companies in the hospitality world were already beginning to adopt such tech accelerators and now smaller businesses will be evaluating their efficiencies and considering how they could utilize new technologies, she said.
What that means is ensuring workers have access to job training resources will be crucial, Carter said.
“If we can have some sort of workforce development or retraining programs in place, I think that would make it much easier to bear,” she added.