Coronavirus’ effect on QSRs could be worse than SARS

Coronavirus’ effect on QSRs could be worse than SARS

Senior economists are forecasting that the effects of Coronavirus on QSRs could be felt for almost two years, costing up to $400 billion to the business supply chain industry.

It’s a reality beginning to take hold for Franchisees and Licensees in the sector across the country, most of whom depend heavily on Asia for things as simple as produce and complex as equipment.

From teas, produce and other menu staples, to the metals and plastics in their restaurant apparatus, QSR brands both nationally and across the globe have steadily cultivated their dependence on the Chinese export market since SARS in 2003.

Back then, businesses weren’t yet aware of the advantages of importing their product from Asia. So while SARS hit hard, businesses really felt only the residual effect of the global economic downturn at the time.

Over the 17 years that have followed, it has become far more common.

Markets like the U.S may not feel the effects quite as strongly – the uncertainty over trade tariffs between the two countries had many brands planning ahead and looking to alternate sources for their products.

Australia may not be quite as fortunate. Typically, those in the food and manufacturing industry operate on a lean inventory, working off what is known in the industry as a ‘just in time’ business practice.

This means the virus will have a relatively immediate impact on partner supply chains.

While the short-term consequences of the Coronavirus are becoming clearer and more unavoidable, the long-term impact is still unfolding and, as such, is relatively unpredictable.

Enterprise Finance is positioned well to handle your financial needs at this time. Should you like to speak to someone, contact us today.