Coronavirus: When in-person contact is necessary for business

“I’m a pastry chef—a graduate of the Tadmor School and involved in the baking profession from a young age. Ten years ago, I purchased the Weiss Bakery on King George St in Tel Aviv, and five years later I purchased the Perlin Bakery on Elkhanan St in Rishon LeZion, which is where the factory shop and sales shop are located. I produce and distribute baked goods for private bakeries—loaf cakes and birthday cakes, cheesecakes and yeast cakes, rum baba and profiteroles and more besides. Before the coronavirus, business was good and I was employing 7-8 staff members in the factory and another 2-3 in the patisserie in Tel Aviv. When the first lockdown began, we furloughed a few of the employees, and the family stepped in to help.

“We are considered a vital business in the food industry, so we kept working throughout the lockdown, but every day is a struggle. Our customers have reduced their work, and some have even shut down, so I am working to bring in new ones. I don’t have an online store, and I don’t work with social media. My connection with my customers is on the ground and over the telephone—I call them twice a week to see what they need. Things are inconsistent for them too—one day they’re closed, then they’re open again, then closed once more.

“In the past, I had customers who would order goods from me from Beer Sheva all the way to Nahariya, and would even come and pick them up from me, but they too are struggling with a steep drop in sales, with an accompanying cash flow issue. Some of them still owe me money, so I am trying to work only with people I know—and I’m grateful for it. The situation is unclear, and I am seeing an increase in the cost of many raw materials such as flour and butter in global markets, and that is definitely a concern. At the same time, I am working to open a new factory and bakery, also in Rishon LeZion, but because of the bureaucracy and the period we’re in, everything is moving in slow-motion. This situation was not of our making though—and we will rise to meet the challenge.

“My partner Muhammad Abu Atiya, a pastry chef, and I opened our first patisserie in Acre in 2013, and our second branch in Haifa in 2016. We created a unique hybrid of a French-style café and patisserie with pastries and desserts that you will find almost nowhere else in the Arab sector. In between, we also opened a factory that sells our products to bakeries, cafes and restaurants around northern Israel, as well as in the “Triangle” area. We produce and distribute chocolates, including French dragées, pralines, birthday cakes, mousse cakes, yeast cakes and more. Before the pandemic, business was going great and we were employing almost 30 people across the three sites.

“The first lockdown was tough. We furloughed almost all of our employees and were left with only three in the factory, who continued to supply goods to the branches. But the moment we received authorization of ‘vital’ status in the food industry, things started to change. At the time, our turnover had dropped by approximately 60%, primarily because many of the cafes and restaurants who had been our customers shut down, and we were left with worthless checks running into the hundreds of thousands of Shekels. That was a good lesson for us—today, anyone who wants our products pays in cash or by credit card only. You could say that the coronavirus caused us to ‘reset’ our business in a positive sense and to figure out what was good for it and what was not.

“My partner and I have been planning to expand into a chain for several years now, and after we set up our production facility, we understood that we had sufficient production capacity to offer franchising arrangements. On the eve of the COVID-19 outbreak, we had even signed franchising agreements for two new branches, but we put the process on hold for a while to see how things would unfold. In the end we decided to take the plunge, and in August—between the first and second lockdowns—we opened a branch in Kafr Yasif, and in October we opened an additional one in Shfar’am. Now we are working on opening a fifth branch in Nazareth, because demand for our products is growing, and not only in the Arab sector.”

The COVID-19 crisis has created a situation where many businesses are required to provide their goods via deliveries. This distribution method may be effective, but the associated costs are high, which is a complaint we hear often. And so, in order to reduce the costs, there are a number of options to consider: is it possible to build a distribution route? In this scenario, we would pay a relatively high fee to set up the route—and a low sum for each and every point we add to the route. 

Alternatively, we could ask ourselves: is it worth employing a full-time delivery driver instead of paying to use the services of a delivery company?  

These examples demonstrate the constant need to check our outgoings and seek solutions, even if they involve thinking outside the box. And that is my recommendation to business owners: find any way you can to reduce the expenses associated with running a business, as every Shekel you save now is a Shekel added to the bottom line.

The pandemic period has resulted in a significant shift in how people manage their business, and that is especially true for small businesses, when taking into account also the changes in consumer trends among clients. Business owners today are being asked to respond to constantly shifting dynamics, especially owners of street stores that have been forced to close their doors. My tip for business owners in the commercial sector is to integrate products that are in demand at the moment, to be open to digital opportunities and at the same time to be working to streamline the business. The digital environment saves costs for business owners while also expanding their client base. Financial management is at the top of the pyramid for all business owners. It is important to maintain strict, constant oversight of your cash flow, credit limits with the banks and proper use of the financial tools offered by the state, such as state-backed loans, deferral of payments, grants etc.