LOST SALES & PROFIT – Foodservice OOH Tea Service declines during COVID 19 Trading
By David Parnham – Tmenu & Café Culture Research Director
As a general rule the surviving hospitality sector has largely bounced back from the 18 long month COVID-19 crisis, with OOH (OUT OF HOME) revenue close to pre-pandemic levels measured since February 2019 for many cafes, bars, mixed businesses and restaurants despite ongoing outbreaks, state border closures and employees working from home. Now in June 2021 during the Café Pulse survey data capture and with the bi-annual survey now in its 8th year of Café Industry research, we see that many OOH hospitality related businesses are in fact returning to positive trading vs. 2019.
While many CBD HoReCa Channel businesses such as cafes and restaurants suffered greatly early on with dips in revenue at the start of Covid-19, they were quicker to offer takeaway, local family menu changes and delivery options.
The hospitality industry is on average trading at or near pre-COVID levels, however pre-pandemic many would argue that there was an oversupply of coffee businesses in most Australian CBD locations, so this could partly be the result of reduced trading and cafe closures of under-performing locations and independent owners who have simply shut up shop.
What does this all mean to TEA sales in these businesses and what is the loss in both tea sales and profit during Covid 19 trading and its direct impact on our OOH Tea Service market?
The facts are that overall tea sales, either takeaway or dine-in table service has declined and many respondents in the 2021 Café Pulse survey reported that the average overall business sales of tea dropped below previous levels of 5% of total business takings. There are many reasons for this, however with lower OOH consumer demand for tea beverages during Covid 19 due to work-from-home restrictions, extended lockdowns and an increase in online order-ahead pick up and/or delivery, tea profits have taken a real hit.
We have seen on these online ordering menus that tea choices by type have shrunk to the bare minimum offerings, providing consumers very limited tea choices as takeaway or pick-up. Old classics, English Breakfast, Earl Grey, Chai, Black or Green Tea are prominent as online ordering choices which has greatly restricted the specialty tea service sales of the past.
Another concern is the brewing tea skills and thus our tea professionals that have simply left our beloved industry or worse still had their hard earned businesses close during Covid 19 trading. We have lost so much brewing tea skills in just over two years, leaving the surviving hospitality businesses stretched without a skilled labour force to re-hire, train or employ. The stoppage of critical overseas tourists, backpackers and new immigrants to Australian capital cities has added to our overall reduced gene pool of skilled casual tea service brewing staff in 2021 and beyond. Barista and other tea professional training is required constantly to protect our specialty tea industry from further decay and loss of sales and profits.
What’s been the Covid 19 impact on Tea sales 2021?
Takeaway tea has increased in volume at the expense of traditional dine-in table tea service “Pots” during the pandemic as the below Café Pulse 2021 chart shows. The concern is that the average “Tea Bag with milk & sugar, without milk, and boiling water” takeaway price of $3.24 is well under the national average coffee 8oz latte price of $4.00. When ordering takeaway tea in many hospitality venues there is often simply no care, no brewing skill, lack of both temperature and steep time, just a tea bag in paper cup and lid, little to no brewing tasting notes offered, unlike coffee which is mostly hot service regardless. We need a return to the past tea brewing skills to avoid a BAD takeaway tea experience. Hence, the tea bag steep time, water temperature, and flavour notes matter for improved customer taste satisfaction. Then, if this occurs, as an industry we could all charge more than the average $3.24 per takeaway.
Post Covid 19 we will see heading into 2022 a healthy return of the dine-in teapot table service sales and margins. As you can clearly see from the recent Café Pulse survey the prices charged per teapot are on average $5.10 nationally vs. $3.24 for takeaway tea. With this in mind, again we face the uncertainty of a skilled tea labour force to meet this expected return to tea service sales. Tea brewing education matters and general tea loving consumers are unforgiving to those OOH hospitality venues that FAIL at tea service brewing. By training your key baristas, tea professionals and other casual service staff in the finer art of tea brewing for profit you will increase your overall mix of business by adding additional tea sales and margin levels.
The take up of tea service by traditional HoReCa accounts and cafes is also a lost sales and profit consideration where 14% are reporting No Tea Service and/or 10% are strictly takeaway tea in paper cups. The fact is, less than 4% of these businesses charge more than $5-$6.00 per pot of tea. With tea education and better sourcing of specialty tea choices for your beverage menu, many post Covid 19 trading opportunities will be able to increase the $5.10 per pot pricing with an improved tea service overall experience. Professionally trained tea brewing staff make PROFIT for your business, please consider Tmenu full solution options from the correct Foodservice quality tea ware to match the different styles of specialty tea choices and the best brewing science. Please take a look at www.Tmenu.com.au.
FRESH MADE CHAI IS POPULAR OOH
Similarly to specialty tea service is that chai is also perceived as being very hard for consumers to make themselves at home or in the workspace. Freshly made chai and chai lattes are best enjoyed at OOH venues. These fashionable chai beverages have grown in popularity during Covid 19 trading and are appearing across many cafe app ordering platforms.
These new style lattes are crowding the traditional chai sales – turmeric, blue algae, coloured powders and beetroot lattes are also in solid growth in recent years and not just as a winter-only peak.
There is a rising trend of nice, freshly made barista-style chai in a cafe vs. that of traditional tea, (which is seen by the cafe client as a cheaper, easier-made beverage from a tea bag, and can simply be managed at home and/or workspace).
The popularity of chai and chai lattes is expected to increase further under the new cafe normal trading and the return of the dine-in experience. We see this is also due to the rise in consumer awareness and social media marketing by many leading chai brands – growing the customer perception that chai made in a cafe is a better, healthier option than a coffee latte, being tastier and having premium ingredients.
In Conclusion
With the whole hospitality service industry reset during Covid 19 trading we have seen reported wholesale changes to the way in which these surviving businesses have had to adapt, innovate or thrive into POST pandemic. Many are reporting the advances in both sales and profits from online app software improvements, with 53% seeing an uptake in takeaway food and family meal menu options, 30% growth in retail home coffee purchases, 19% increased prepaid pick-ups/delivery, 19% improved discount offers and loyalty rewards and 8% increase in equipment sales during the pandemic. Sadly, these hospitality businesses are not reporting any, if at all, profits from the tea service area of their overall business in which we have outlined above as an opportunity in 2022. Yes, it’s true these same businesses have had to truly move swiftly to catch the new HoReCa / FoodService OOH business model opportunities and review and finesse these later in many cases. It’s been “fast and the furious” with success for many despite having limited staffing, with family support they have risen above and survived.
The research and the charts used are a summary from the annual “State Of The Café Industry Report” for 2021 – For more informat