How Can a Retail and Restaurant/Catering Business Survive?

All businesses are suffering today. The retail & catering industry is especially visible and emblematic of our economic struggles at this moment in time. All restaurants and non-essential retails are closed. This is happening not only in Malta but in many countries around the globe. In many instances both restaurants and retail companies are providing meals via takeout or goods via delivery only. However, they’re making this shift as customers face deep financial uncertainty.

To survive, restaurant & non-essential retail owners will need to find creative solutions to survive in this new environment and adapt to customers’ plight.

My advice is simple: Lower Your Prices Now.

To start off, few restaurants or retail outlets, will be able to maintain normal revenues during this crisis and for a number of months after that. Many of the costs incurred are sunk costs i.e. rent, kitchen fixtures etc…) and these are are incurred whether or not a restaurant or retail outlined is open. or not. Your new goal for the next six months is to minimise losses by focusing on contribution margin (revenue minus variable costs such as food and wages).

I could think of three solid reasons as why restaurants and retail shops should lower prices.

  1. Restaurants and even non-essential retail shops are now only allowed to offer a delivery/take-away service. Historically there was not much a distinction in price for having food/products taken out or delivered to you and the same prices . However please consider that now a service based only on delivery for both restaurants & retail reduces a lot of the previous buyer experience. For example, in the case of restaurants, while the cuisine is the same, the value of a restaurant meal stems partly from the ambiance, the attentive service, and the social experience. A delivery/take-away experience lacks these attributes and therefore takeout prices should be trimmed to reflect this reduced value. The same argument holds for retail as there is value in the experience of entering a shop and the retail service received.

2. Both restaurant patrons and retail clients are likely to tighten their purse strings as they are now more worried about their present about their present and future incomes. Lower prices can incentivise once-a-month customers to purchase more frequently, and can help attract new ones.

One other strategy to be considered by restaurant owners and retail shops is creating new discounted offers that are appropriate for this economic environment. Now is the time for basic products or basic good cooking at lower prices. It is also important to hit a sweet spot of any discounts given: any discount that doesn’t reach the 15% level is not a meaningful enough motivator. Anything over 20% conveys a whiff of desperation and leaves existing customers wondering, “How much profit have you been earning off of me?”

3. Restaurant owners & retail shops must be mindful that this storm will pass and they’ll have to go back to normal business at some point. To avoid devaluing their business, it’s important that clients understand that these discounts are temporary and prices will rise in the future. For example, if a restaurant offers new menu items during the crisis, make clear that they are a short-term, special offer. Another idea is setting a minimum purchase for any discount allowing clients to justify the discount in their minds. It might also boost orders.

Lowering Prices & Discounting is an important ingredient to help restaurants and retails shops weather this challenging economic environment. To flourish when better times finally arrive, it is critical that even in these hard times you remain in the client’s mind radar even in these difficult times.

We at EMCS ( are working with our business clients on a constant basis not only to survive the present crisis but also to adapt to a new reality that will likely face business post COVID-19. I would be delighted to have a discussion with you and see how we can help. Feel free to drop me an email on

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