Industries changing as a result of the pandemic and the role of IP – Case study: Catering

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This case study reviews the impact of the COVID-19 pandemic on SMEs (small – medium enterprises) from early 2020 through to 2021. It focuses on the industries most affected by the crisis and whether intellectual property (IP) and IP management may have helped mitigate its impact through adaptation and change.  It forms part of a series of case studies from across multiple industries examining the role of IP and IP management during COVID-19 and lessons learnt. It is aimed at governments and SMEs who are planning business recovery strategies involving IP assets, over the coming months.

Sector overview

The catering and wider food & beverage (F&B) industry worldwide predominantly comprises SMEs. Since the outbreak of the COVID-19 pandemic this has been one of the worst and most immediately affected sectors, with almost overnight losses of customers, damaged supply chains, significant job losses and financial hardship. For many in the hospitality sector, IP asset largely meant brand assets such as trade marks, and domain names or databases of clients or suppliers. However, the challenges brought about by the pandemic has not only forced business to better utilise and, in many cases, monetise these assets, but more importantly it has also set about a degree of innovation in the industry, accelerating changes already underway but also forcing many business to reinvent themselves and develop new online offerings, new supply chains and new business models. In this context, intangible assets are likely to become increasingly important for this industry in protecting these innovations and helping businesses create a niche for themselves and cement their market position. 

Analysis

These changes for SMEs in the F&B industry have included changes in business models, changes in operations and procurements processes as well as fast-tracking digitalisation and accelerating emerging technologies in this sector. The uncertainties have required businesses to be better at managing risks, business performance, and cash flows as well as imagining new routes to revenue generation and prioritisation business models incorporating digitalisation, the latter being an important tool in aiding recovery of this sector moving forward[1]. It is important that SMEs impacted by COVID-19 recognise the impact on their business at an early stage and understand what actions will be required to restart their business and survive the COVID-19 storm[2]. It is clear that IP will be an important part of this process[3].

A China Cuisine Association and Deloitte China survey indicated that 94% of companies interviewed have had their dine-in services severely affected – in many cases by an 80% decline in dine-in customers. This is especially evident in the chart below, reflecting the year-on-year change in seated restaurant diners globally during the global spread of the coronavirus in March 2020.

Figure 1: Year-over-year daily change in seated restaurant diners due to the coronavirus (COVID-19) pandemic globally in March 2020.

In the UK alone, it is expected that approximately 3.2 million people work in the catering industry and are impacted by COVID-19 job losses, furloughs or pay cuts. Many venues have expanded existing online ordering services by offering food and recipe boxes and supplying customers with fresh ingredients for their favourite meals at home. Some restaurants and cafes are also providing hampers for sale online to customers and may continue to use this as an additional source of income moving forward. With the explosive growth of online food delivery platforms such as Just Eat, Deliveroo and Uber Eats, it is quite straightforward for regular restaurants and cafes to provide such “take away” services, especially to those who may be house bound on a long term basis such as those with existing medical conditions or the elderly.

SMEs and F&B venues across the world are meeting these challenges through automation of process (robotics), development of online ordering and payment systems (e.g. QR codes for online menu access and payment), while also enabling contract tracing, a requirement in many countries during the current pandemic, while others have also introduced innovation air and surface purification technologies to ensure the air present is purified and any viral or bacterial contaminants have been neutralised. Many of these innovations surrounding software platforms, robotics, and food preparation systems are well protected by suitable IP rights and likely represent significant changes in the industry, many of which will continue into the future, with licensing opportunities for these technologies also representing potential additional revenue streams for affected businesses. For example, Creator, a San Francisco based restaurant, already known as innovators due to their robot made hamburgers, have sealed off their restaurant and now deliver their meals via a patent protected pressurised transfer chambers, which avoid ingress of air from outside as well as having a self-sanitising conveyor surface. The company has been granted patents for aspects of its hamburger making robot and has also applied for patents for its COVID-19 inspired food delivery system.

Despite the opportunities in terms of active IP exploitation underpinning innovative business opportunities, IP challenges remain. With ongoing lockdowns and significant economic recession still likely to come, many businesses in this sector may also suffer from potential risk of non-use of their trade marks. Although this period of non-use (which is five years in Europe and three years in the US) may not appear to be immediately worrying, it is not clear if many businesses will continue to meet requirements, especially in the longer term[4]. Moreover, as restaurants expand their delivery activities and dining in becomes only a part of the offering, there may be increasing pressure on F&B businesses to protect recipes through NDAs due to limitations protecting recipes using copyright and trade secrets, as well as the brand of the venue and the personal brand of the chef. This will require the broader understanding of brand assets by the business, the means of protection and, importantly, the means by which the assets can be monetised and deployed to generate revenues. For example, JD.com livestreamed a club experience and partnered with a number of alcoholic drink brands, encouraging viewers to have a drink while watching. This boosted sales of both beer and spirits. This is further demonstrated in the silence of Corona Beer in the face of significant memes and online jokes, shows the company distancing itself and the brand from unfortunate potential damage[5].

[1] Grant Thornton, Raymond Chabot (2020): Preparing SMEs for a rapid recovery from the COVID-19 crisis, Grant Thornton

[2] Deloitte (2020): Covid-19 – Small Business Roadmap for Recovery & Beyond: Workbook, Deloitte Touche Tohmatsu

[3] EPO (2021): Study highlights economic benefits of owning intellectual property rights – especially for small businesses, EPO

[4] Allen & Overy (2020) Issues brand owners need to consider during the Covid-19 coronavirus pandemic to protect their IP portfolio, https://www.allenovery.com/en-gb/global/news-and-insights/publications/issues-brand-owners-need-to-consider-during-the-covid-19-coronavirus-pandemic-to-protect-their-ip-portfolios

[5] Accenture (2020): COVID-19:5 new human, Accenture