The Olive Tree Group bites down in the fight for customer trust
As diners trickle back into F&B premises, The Olive Tree Group reopens its doors with cautious optimism
Leslie Gomez has been pinching himself. The founder and CEO of The Olive Tree Group, which runs 17 luxury restaurants and hip bars specialising in North Indian cuisine at prime postcodes around Malaysia, still feels surreal that his outlets can open for dine-in again.
The Malaysian government announced that the country has transitioned into the final phrase of the National Recovery Plan, which means dine-in at eateries for fully-vaccinated individuals are allowed, essentially lifting one of the biggest restrictions during the last few months of lockdown – the third in Malaysia since the Covid-19 pandemic hit in March 2020.
“Is [the F&B sector] really open? I still ask myself that every day,” he tells Asia Connects. His question is equal parts cautious and hopeful.
Compared to non-essential businesses like the fashion retail and events industry that were ordered to close during lockdowns, F&B operators have been allowed to open throughout the past year and a half. The savvy ones took to online orders and delivery services in droves, while smaller vendors unable or unwilling to pay the cut imposed by food delivery companies survived through its community of loyal customers. Last year, café and restaurant businesses saw retail sales drop by 12.8%, and the kiosk and stall segment shrank by 18.3%, according to data published by RGM on behalf of members of Malaysia Retailers Association (MRA) and Malaysia Retail Chain Association (MRCA).
The impact of the pandemic was far more severe to The Olive Tree Group, which runs full-service luxury restaurants like Frangipaani and Olive Kitchen + Bar, gastro bars like Rock Bottom, and clubs like Temptations and The Beach Bar – at which ambience is a key selling point.
Gomez pointed out that the group only made 5% of its usual revenue between May and September this year compared to the same period before the pandemic. But the pain did come with some gains – Gomez says that in the last 100 days of the pandemic, he learned “a bigger lesson” than his entire career. Lessons that may be just what his company needs to weather through a persisting pandemic and heightened competition as F&B operators scramble to revive dine-in traffic again.
Shaken, not stirred
According to Gomez, the group’s expansion from one restaurant – Pride of India in Kuala Lumpur – in 2003 to 17 establishments today were self-funded. But the challenges of the pandemic proved unprecedented.
“Last year, for the first time in the past 18 years [of The Olive Tree Group’s operation], I went to the banks to ask for a loan,” he shared. The external financing that he secured kept the business running and the staff of over 400 employees intact.
The group opened new outlets almost every year in the last two decades, culminating in over 20 bars and restaurants in Kuala Lumpur, Penang, Malacca and Johor Bahru. As more and more competition flooded the gastro space, expansion was a key strategy of The Olive Tree Group to grow the company and keep the brand fresh on consumer minds, according to Gomez.
But expansion is not feasible amidst the financial crunch during the pandemic. Hence, the group has to find other ways to stay in the game – even though it is a tricky balancing act with steep costs.
“For big organisations like ours, we pay taxes for every order we punch in. That’s one more factor that affected our profits. Then we get delivery platforms charging us 25% to 30% of each order, so you hardly make any money [from these orders] actually. But we still keep our businesses open, just to keep the brand up and running. We were not looking so much at profits. We were just trying to keep our staff by at least having some of them work in the kitchen,” says Gomez.
With dine-ins allowed once more, it seems that the dawn is finally coming for F&B operators. But it is not business as usual. Gomez believes that another test has just begun – can they win customers’ trust that it is safe to wine and dine in restaurants again?
Confidence boost
For a final push for profits in the fourth quarter of 2021, many F&B operators upped the ante by changing up their menu and retraining staff – The Olive Tree is no exception. The group has also invested in stringent sanitation procedures in each of its establishments, which runs up an extra cost of at least RM2,500 per outlet per month.
“Everyone is trying to get back into the business, and everyone wants to do well. At this point, it’s not enough to give 100%; you need to give 1,000%. We may not be seeing our business [fully] recovering yet, but whatever we have, the priority is to keep it tight and keep it safe,” he said.
To him, eating out is a strongly-rooted culture in Malaysia. Hence, he is optimistic that diners will return to restaurants if they can “feel good” about it. For businesses, even well-established ones like The Olive Tree, that means going back to the basics – gaining the confidence of its customers.
While F&B operators can sanitise frequently, check temperatures diligently and vaccinate all their staff, diners themselves need to shoulder personal responsibilities too, including observing SOPs like wearing face masks correctly and staying home when they are not well. It is the challenge in regulating individual actions makes the pandemic such a roller coaster of risks. No one can say for sure when the Covid-19 infections will truly be contained. But Gomez wants to be better prepared – with the wake-up calls he got in the past year and a half.
He learned a major thing through the School of Coronavirus Hard Knocks that it’s not good enough to do what you are best at. “I’ve always believed in not diversifying into something else, to always be in F&B, because I was comfortable with what I did,” says Gomez, who cut his teeth under India’s Taj Hotels group prior to founding The Olive Tree Group in Malaysia.
But now, Gomez is exploring a venture in the farming sector, which was allowed to open during the pandemic. If more lockdowns are imposed in the future, he reasoned, at least there will be funds coming in from another business. “Life lessons are all about that – showing us that we need to reinvent ourselves.”
By Li-Mei Foong
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