How has COVID-19 Impacted the Cafe Industry?

The impact of COVID-19 has quite literally altered global business as we know it. Practically no one has been left unaffected by the pandemic, in one form or another.

Of course, the cafe industry is no exception – in fact, hospitality is one of the worst-hit by COVID-19, up there with poor old tourism.

Lockdowns, business pauses/closures and alterations to the way we pay for goods and services, to name just a few changes, has had dramatic repercussions on cafes and restaurants. Not helped by the fact these types of business typically lack in cash flow and capital.

Since the outbreak, we have been keeping a close eye on our stats. Namely, the number of loyalty stamps being collected around the world through our loyalty app, as well as the number of new digital loyalty program registrations.

One thing we want to do is to share our data and analysis. We want to be open about the impacts of the virus on our business, the cafe industry and share a glimmer of hope for the future of hospitality.

So here is our newly released data on global cafe loyalty transactions since the outbreak, the impact of COVID-19 on cafes, and some interesting effects of lockdowns in different countries.

Cafe loyalty stamp collection data during COVID-19

Countries involved in our cafe analysis include the UK, Australia, USA, Canada and New Zealand, amongst others, which primarily make up our key markets.

The live graphs show the number of digital ‘stamps’ collected on our Stamp Me loyalty program app each week across cafes globally, starting from the beginning of February.

The stats include loyalty stamps primarily redeemed from take-away and in-store purchases of coffee.

The graphs show the lockdown effects on Coffee Loyalty Purchases on the Stamp Me Loyalty Platform in over a 1000 cafes globally.

If you look at the graphs, at the end of February into the beginning of March, you can see a slight peak in transactions across the board. Perhaps this could well be down to people having one last ‘hoorah’ as the world began the motions of shutting down?

It is followed by a noticeable sudden decrease for the week commencing 23 March, which reflects when strict lockdown measures were enforced across the globe, though each country differs in severity.

The data also shows that loyalty transactions are picking-up again as lockdown restrictions start to ease, especially in New Zealand and Australia.

A graph showing stamp redemptions in New Zealand (top) compared to Australia during the same period (bottom).

Cafe data vs lockdown policies

Looking at the data, it is possible to draw many assumptions, including the effect of the different styles and timelines of lockdowns policies on the cafe industry, in our core markets:

“You can get an indication of the different approaches taken by governments with COVID-19 prevention”, says our co-founder, Alan Donaldson. “It’s pretty fascinating to see global cafe data side-by-side like this”.

For example, New Zealand’s response to the virus was notably tough. It was one of the quickest countries to respond – immediately restricting travel, putting quarantine measures in place and completely locking down the nation.

As Alan explains, “New Zealand’s ‘short and sharp’ pandemic policy is actually reflected in our data, with 3 weeks of absolutely zero stamp collections.”

“However near the end of April, cafe stamps can be seen to slowly creep back to ‘business as usual’. This mirrors the country’s success with quickly containing the virus.”

A graph showing 3 weeks of no loyalty stamp collections in New Zealand between the week commencing 30 March – 13 April 2020.

The USA’s stamp collection data on the other hand, is an interesting one. A clear decline in stamp redemption can be seen, but the numbers do not dip as much as other countries. Perhaps this mirrors the advice of ‘social distancing’ and the indirect effects of the virus on a country that did not completely shut down businesses.

“In terms of the shape of the USA’s graph, it’s actually not too dissimilar to Australia’s. Considering both countries had quite different outcomes with the spread and impacts of the virus, this is quite surprising” says Alan.

The number of loyalty stamp transactions during coronavirus in Australia (top) versus the USA (bottom).

Or perhaps it just shows that the Aussie’s can’t quite live without their coffee – even in the depths of a global pandemic lockdown.

Demand for coffee loyalty programs increase

On that rather fitting note, as lockdown restrictions start to ease around the globe, which is also reflected in the stamp collection data, we have actually found the demand for digital loyalty solutions to be increasing. People still want their coffee dammit.

“Mere weeks after certain countries began to ease their lockdown policy, we’ve seen a steep peak in businesses wanting to implement a digital loyalty program” says our Head of Marketing, Michaela Ward.

A graph showing increased demand for Stamp Me digital loyalty programs during the tail end of coronavirus.

If there are just two reasons why we think this is, we’re pretty certain it’s these:

1. Importance of an emotional (and digital) connection to customers

Quite simply, we believe that COVID-19 has highlighted just how important it is for businesses to have a digital and emotional connection to their customers.

Online brand-to-consumer connections are just as essential (if not more essential in times when face-to-face is not possible), as in-person. You should ideally have both to cover all eventualities.

As our marketing guru Michaela puts it, “A lot of these cafes simply won’t see the other side of this pandemic without the active support from its loyal customers.”

“We don’t think there’s a more fitting time for a brand to strengthen a relationship with their existing customers.”

So it seems it’s less of a ‘survival-of-the-fittest’ situation, but more of a ‘survival-of-the-most -in-tune-with-the- consumer’ kind of situation. Though that’s a bit more of a mouthful.

But how can cafe businesses communicate with customers when people may not be coming in-store? Online of course:

“What a digital loyalty program gives that a paper punch card doesn’t, is the means for direct communication” Michaela explains.

“Whereas users of a paper punch-card are anonymous, you can access personal contact details for every single digital loyalty program user.”

Essentially, even if a business is currently closed or running with limited operations, with a digital cafe loyalty program, there’s a way to keep customers updated on COVID-19 responses, and build trust and an emotional connection. It’ll mean customers will be more likely to patronage as soon as they can, or order online as a show of support.

Of course there’s no denying that the repercussions of COVID-19 are going to be felt for many more years.

That’s why, as Michaela says “existing customers are the key to improving business health, which is why building loyalty should be a long-term and on-going strategy“. Well put.

2. A need for "Contactless Loyalty"

How is COVID-19 going to affect the future of cafes? Well, businesses are going to have to adapt to a ‘new normal’ in terms of the way they operate.

For starters, customers are going to want to see a hell of a lot more cleaning. New procedures such as physical distancing and contactless operations to safeguard patrons, are going to be equally as important. Customer safety is going to come before profit now more than ever.

Handling a paper punch card back and forth also seems particularly unhygienic in post COVID times. It’s no surprise we are seeing so many merchants sign up to go digital. Collecting stamps contactlessly on a customer’s own personal mobile is a much more hygienic and safer solution for everyone.

There is, and will be an ongoing shift towards digital, in every possible element of hospitality business operations.

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So hang tight hospitality – if there is one thing our data has shown us it’s that a digital connection with customers is even more essential now in these uncertain times than ever.

A small investment now may well be the only lifeline keeping your neck above water, later down the track.

Want to read more about COVID-19 and hospitality? How about checking out our other posts on how brick-and-mortar businesses can survive during coronavirus or five things hospitality businesses can do right now to thrive.