COVID-19 Impacts on QSR and Finance

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QSR Industry - Changes Due to COVID-19: Japan

Contactless delivery, preventive measures, limited menu, and store closure are some examples of impacts in the quick-service restaurant (QSR) industry in Japan as a result of the COVID-19 pandemic.

Contactless delivery

  • Domino's and Pizza Hut are some QSR brands in Japan that have introduced no-contact delivery services to avoid the transmission of COVID-19.
  • According to Japan Today, "Pizza Hut has dubbed their contactless option 'Oki Pizza' (Placed Pizza), a move they say was prompted by customers who have been requesting a delivery service that lets them avoid having to directly interact with the driver."
  • Since last March 12, Pizza Hut delivery men have been "placing the pizza beside the customer’s front door after confirming through the intercom that the customer is home." The payment was done digitally through the store website or app.
  • On the other hand, Domino's call theirs 'Zero Contact Drop-Off.' In this Zero Contact Drop-off, "delivery drivers will place an empty box in a predesignated spot in order to avoid placing the pizza directly on the ground." The delivery driver will then place the ordered pizza upon "the empty box in a plastic bag" then the driver will "ring the doorbell or buzz the intercom to inform customers of the delivery."
  • Domino's makes a visual confirmation that the order was received by waiting for the customer to pick up the pizza. The delivery man will then "step away to a distance of at least two meters" from the front door of the customer as he waits to retrieve the empty box.

Preventive measures

  • To prevent the spread of coronavirus, Domino's has also taken measures such as "temperature checks at the start of each shift, washing hands, gargling, disinfecting hands and fingers thoroughly, and disinfecting the customer area and restrooms with alcohol every two hours." Delivery drivers are also "instructed to disinfect their hands before and after each delivery, and wear masks whenever possible."
  • McDonald's workers "with a body temperature of 37.5 degrees Celsius or higher are not allowed to work, and the wearing of masks by staff members is recommended."

Limited menus

  • Yoshinoya, the Gyudon beef bowl quick-service restaurant, "has stopped offering menu items that take time to cook at some of its restaurants." This is a coping mechanism because of the increase in staff workers that are unable to come to work.
  • This has also been the case at some "Sukiya restaurants under the wing of Zensho Holdings Co."

Store closure

  • The Kichijoin branch of McDonald's, located in Kyoto's Minami Ward, has stopped its operations after a 50-year old female staff member tested positive for COVID-19 last March 3. The store has been closed for sanitation "under the guidance of the public health center."
  • According to McDonald’s Japan’s Public Relations Department and Kyoto City investigators, the staff member contracted the virus when she visited a live music venue called Arc in Osaka last February 15-16. She had been working as a cash register of McDonald's, passing food and money to customers.

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QSR Industry - Changes Due to COVID-19: China

Three key impacts in the QSR industry in China as a result of the COVID-19 pandemic have been fast food restaurants offering contactless delivery and pickup, requiring temperature checks, and imposing stringent sanitizing efforts. Each of those impacts are explained below, along with supporting examples.

Contactless Delivery & Pickup

  • Some of the big-name QSR chains in China that have implemented contactless delivery and/or pickup in response to COVID-19 are McDonald's and Starbucks.
  • Starbucks in Shanghai has continued the policy it enacted earlier during the COVID-19 pandemic of only providing takeout.
  • For some fast-food delivery drivers who transport food to customers via motorcycle, when they arrive at the customer's destination, the delivery driver opens the cooler or heating storage container, backs several feet away, and then instructs the customer to come take the food out of the storage container, thereby eliminating any direct human contact. For other QSR delivery drivers, they leave the order outside the customer's delivery address and then text them that their food is there.
  • Contactless delivery became so popular among customers of the Chinese delivery company Meituan amidst the COVID-19 outbreak that over 80% of them selected contactless delivery when ordering takeout from January 26-February 8, 2020.
  • For fast-food pickup orders, one way that quick serve restaurants, such as KFC, ensured a contactless exchange was by leaving their door open, placing a table slightly inside the entrance, and when the customer arrived, he or she would stand at a distance until an employee came and placed the order on the table for the customer to take.
  • QSR chain Yum China was the pioneer of contactless delivery during the pandemic, which it started offering "in late January." The chain later started offering "contactless pick-up and corporate catering services", as well as "a community delivery service for areas quarantined due to coronavirus infection."
  • Regulations were also implemented requiring delivery drivers to pickup food orders from restaurants at "special terminals outside commercial premises."

Temperature Checks

  • Temperature checks have become a standard practice at QSR restaurants in China, both for customers and employees.
  • When customers walk in the door at some QSR establishments in the country, an employee scans their temperature using a hand-held scanner.
  • This video from CNN shows how those temperature checks are being enacted inside KFC in China.
  • For fast-food delivery orders, there's "a small green card attached to the bag" containing the food, which shows the name and "the temperature reading of the people" who made and delivered a customer's food. This effort is meant to instill confidence in consumers.
  • ID cards are now being carried by fast food delivery drivers "show[ing] that they — and the people who made and packaged the[] food — had their body temperature scanned to prove they do not have a fever."
  • In China, Starbucks used the social media platform WeChat to post photos "of [its] employees checking each others temperature and wearing timers to remind them to wash their hands."


  • McDonald's in China has instructed that its employees disinfect the bags that they deliver food in to customers.
  • A popular platform for food delivery in China, Elema, has also implemented a daily disinfecting requirement for the food boxes that it uses.
  • Disinfectants are also sprayed onto "[t]he exterior of [delivery] food bags."
  • Drivers that deliver Starbucks orders in China "chemically disinfect their vehicle’s food compartment."
  • At the digital ordering screens inside QSR chains such as KFC in China, customers have the option to place their orders without contacting the screen by using their phones, but they also can touch the screen to do so if they wish to.
  • After every customer places an order via the screen, an employee disinfects and wipes down the touchscreen.
  • Food delivery drivers and QSR employees continue to wear masks and gloves to help provide sanitary food service and to protect themselves from infection.
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QSR Industry - Changes Due to COVID-19: Singapore

Though Singapore was one of the first countries to suffer from the effects of COVID-19 after China, the main players of the QSR industry continued to operate. Fast food have been sustained by delivery options, and it is this crucial service that has allowed major names in QSR to stay afloat while smaller ones suffer. Notable new policies have emerged in response to burgeoning hygiene concerns, and as a result, marketing has also transformed to accommodate safety recommendations and community spirit.

New Policies

  • In February, McDonalds started offering contactless delivery as a means of serving customers without risking transmission of COVID-19. This scheme demanded that all delivery riders wear masks, sanitize their hands, and have their temperatures regularly checked. Delivery bags have been sanitized every two hours, as have door handles, tables, chairs, and serving trays within the restaurants.
  • Almost identical delivery and sanitation logistics have been adopted at KFC. Not only is contactless delivery now an option, but hygiene practices, temperature checks, and social distancing policies were also put in place.
  • Within some fast-food chains, tape was laid into squares on the floor to indicate social distancing — though there is evidence to suggest that customers ignored this approach.
  • This laid-back response is potentially attributable to the deep faith or overconfidence many have in the world-class healthcare system in Singapore.
  • In some cases, policies have been developed at the government level rather than the company level. The Singaporean government has prescribed new rules for food and beverage outlets to have a space of one meter between tables and groups of diners to be restricted to 10.

Financial Impacts

  • Despite its comparatively tame impact on the QSR industry, COVID-19 has spawned some detrimental economic consequences for smaller chains, who have banded together in the hopes of achieving rent cuts.
  • Yet, for the big names, the financial drawbacks have not been nearly as debilitating, because many fast food chains have remained open, and the major players have offered delivery (sometimes through couriers like FoodPanda). Some companies have also offered new deals on delivery in order to keep people engaged with fast-food options. Pizza Hut, for example, reportedly offered 'Buy One Free One' option for every delivery order of regular-sized pizzas.
  • Grab and Deliveroo, two food delivery services, experienced a 20% increase in food orders in February. Recognizing this shift towards delivery-focused business, companies have been compelled to invest much more heavily in the welfare of their crucial riders and drivers. With considerable competition in this business landscape, operators of delivery services have been "fighting for talent."
  • One food service analyst argued that strengthening this shift to delivery services could empower businesses to "tap any growth opportunity" once the crisis subsided. In fact, there has been a broader trend in recent years towards home food delivery, which has arguably helped to mitigate the "bleed" of reduced "foot traffic" caused by COVID-19. In a sense, the crisis enabled this different economic dimension of QSR to accelerate in the absence of traditional restaurant service.
  • This is rather common for large fast food retailers, whose delivery services, specific apps (such as Dominos), and independent fleets of delivery riders (such as McDelivery) have proved to be a lifeline while smaller QSR businesses have struggled considerably. The Singaporean government bank, the DBS, has offered a stimulus package to help smaller food and beverage businesses move online to prevent the industry's collapse.

Marketing Approach

  • Since January, McDonalds has made cleanliness, safety, and hygiene a recurrent theme on social media. Between regular Instagram promotions, they made frequent posts about keeping restaurants "clean and safe," as well as ones which praised Singapore's "healthcare heroes" or echoed the rules about social distancing.
  • Subway has released multiple Facebook GIFs advocating for social distancing, demonstrated by, for example, their logo moving apart. They also make their marketing strategy relevant to the pandemic: one post conflated positive community solidarity with their 'Positivi-Tea' deal. This illustrates a tangible change from their usual marketing approach which previously involved HD photos of ingredients and sandwiches.
  • Though their feed remained mostly product-focused, Burger King has started to use Facebook as a channel to relay new policies. Employing the hashtag #socialdistance, the company published a short video that showed how changes to their store (line-marking) operated in line with these measures.

Research Strategy

Our first wave of information came from the large QSR players themselves: we first wanted to find out what measures they were putting in place through their websites, apps, and social media in response to the pandemic. Next, it was necessary to compare this information with media reports and financial data to understand both the responses to these measures and how the virus would affect business operations. Predictably, data concerning the current financial condition of Singapore's major QSR players was difficult to come by, considering that the impact of COVID-19 is recent and still developing. It is our recommendation to keep alert to new information, which reflects a fuller picture of how these changes manifest themselves in the profit margins of the QSR industry.
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Finance Industry - Changes Due to COVID-19: Japan

Major companies in Japan are experiencing a drop in shares as COVID-19 spread takes a toll. The Bank of Japan has devised a measure to improve liquidity through overnight and term repo facility. Barclays bank's capital analysts predict that japan is heading to a technical recession due to COVID-19.

Decline in Stocks

  • Major companies in Japan are experiencing a drop in shares as COVID-19 spread takes a toll.
  • Nikkei plummeted by over 1,800 points, a 6% decline, to settle below the benchmark of 1,700 points since 2016, and the dollar fell to its lowest since November 2016 against yen. The development is likely to have negative impacts on Japan's exports.
  • Approximately 42% of the firms in Japan have experienced a decline of up to 30% in productivity and profit margins.
  • Tokyo Stock Exchange is experiencing a downward trajectory. By March 13, 2020, Tokyo's stock had fallen almost across the board as a result of the plunging of the U.S. Dow Jones industrial average by more than 10%.
  • As the pandemic escalates, real estate firms are foreseeing a decline in office demands as more people work from home. As a result, the companies are heavily selling and are experiencing a decline in share value. For instance, Mitsubishi Estate Co. shares dropped by 9.23%, while those of Sumitomo Realty and Development declined by 13.4%.
  • The bank of Japan's exchange-traded funds recorded unrealized losses amounting to $18-$27 billion as the country's stock prices dropped.

Implications on Monetary policies

  • The Bank of Japan announced extensive measures aimed at ensuring the smooth functioning of financial markets and offered incentives on credit provisions. The proposals include targeted liquidity provision through the government's bond purchases. Also, the bank targets streamlining banks' annual purchases of Exchange Traded Funds and Japan-Real Estate Investment Trusts. Through the measures, targeted purchases of commercial paper and corporate bonds are set to rise.
  • The Bank of Japan has put measures to enhance the provision of U.S. dollar liquidity by partnering with the Bank of Canada, Swiss National Bank, the Bank of England, and the European Central Bank. The corporation will lower pricing on the standing U.S. dollar liquidity swap arrangements by 25 point basis.

Negative Implications on Major Banks

  • The central bank of Japan is counting losses after the spread of COVID-19 intensified in the country. The negative implications are the results of a travel ban by the United States from the state.
  • Some analysts say that if the share market will fall further due to the impact of COVID-19, the bank "could run out of all its reserves and even become insolvent on paper".
  • Barclays bank's capital analysts predict that Japan is heading to a recession due to COVID-19. The recession is likely to have a back-to-back contraction, which will negatively affect businesses in the country.
  • The bank approximates that the likelihood of a recession has increased by 69%.
  • Barclays forecast a -1.6% GDP this year in Japan and is predicted to be one of the countries that will experience the worst hit in the financial industry.

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Finance Industry - Changes Due to COVID-19: China

China's financial services sector has witnessed robust growth since the government implemented a series of reform policies in 2003 including enhancing the structural resilience of the sector, strengthening its domestic financial institutions, and enhancing market confidence. The development of China's financial sector has gained international recognition as its financial institutions continue to increase in number and performance over the years. Despite an overall positive outlook buoyed by sound financial assets, a vibrant banking sector, and a well-performing stock market, the COVID-19 pandemic is seen as having the potential to significantly destabilize its hitherto strong financial position.

The use of FinTech to mitigate the spread of the virus

  • China is home to fintech giants such as Ant Financial (Alibaba), JD Finance, Tencent, among others. Before the corona outbreak, the fintech market was expanding fast and into new regions like the European Union (EU), Africa and the United States. After the declaration by the World Health Organization (WHO) of a global pandemic in the wake of the outbreak, fintech players have changed tact.
  • The major players in the fintech sector are leveraging technology to help minimize further spread of the deadly virus. From using blockchain technology to ease pressure on healthcare professionals by speeding up the verification of medical data (as is being done by Blue Cross Asia-Pacific Insurance) to advocating for cashless payments in places like Vietnam, the fintech sector's new modus operandi is viewed as a direct effect of the coronavirus.
  • For instance, Xiang Hu BaoAlibaba's mutual aid platform — is relying heavily on blockchain to speed up settlements and reduce cases of fraud. In so doing, it is fast-tracking the payout of insurance claims.
  • Others like Tencent and Baidu are among business organizations digging deep to assist those affected by the disease. They are offering financial aid to traders being treated in medical institutions, scientists working on the coronavirus vaccine, as well as purchasing medical supplies to hospitals in need. Recently, Alibaba's MYBank announced loan discounts for all companies in Hubei province, which is the center of the outbreak.
  • These well-thought-out responses by the fintech players are undoubtedly lessening the financial impact of the pandemic both in terms of maintaining the local economy's liquidity and providing much-needed cash injections.

Negative GDP Growth Rate

  • Two months of economic data on the impact of the coronavirus outbreak on China's economy shows that significant damage has already been done even though the country is now well on its path to recovery. The data shows that key economic growth indicator sectors such as retail sales, export values, fixed-assets investments, services production, and industrial production have all recorded negative growth ranging from -13% to -25% from February 11, 2020.
  • Even though its factories are slowly reopening, analysts contend that the country seems to be overcoming the supply-side shock occasioned by the long-drawn lockdown. Nonetheless, the country still faces a demand shock thanks to a domestic demand that is reluctant to get back its original traction due to job losses, bankruptcies, and psychological scars. This could be potentially disastrous in light of a study by a Beijing financial firm which showed that nearly 65% of participants planned to “restructure” their spending behavior after the situation gets back to normal.
  • Economists have ruled out the possibility of a fast recovery with many expecting the country's GDP to shrink in Q1 2020—its first-ever decline since the 1970s.
  • However, similar to other Central Banks taking proactive measures to stem further economic slump, the People’s Bank of China (PBoC) has also injected over US$240 billion into the financial system to counter the virus' debilitating effect on liquidity. It remains unclear if this will achieve the desired effect.

Major Banks Employing Contingency Plans

  • Hong Kong and Shanghai Banking Corporation (HSBC) released over 100 employees on its tenth-floor offices at the Canary Wharf on the week ending March 8, 2020. This was done after one employee from the bank's research division returned from a trip and was diagnosed with the virus.
  • While this could be viewed as an intervention aimed at minimizing the spread of the disease, the CEO, Noel Quinn, is looking into long-term measures that could mitigate the economic impacts of the virus. As the effects of the virus continue to be unpredictable and unprecedented, Quinn plans to cut "tens of thousands" of jobs and closing branches that have been underperforming. Such measures may well face implementation difficulties.
  • The overriding view, however, is that poorly thought-out knee-jerk reactions could inadvertently lead to financial institutions exacerbating the impact of the corona pandemic. Well defined and organized strategies, on the other hand, are likely to have much better outcomes.
  • The main question for the banking sector in China, like anywhere else, is whether its response exacerbates or mitigates the severe economic challenge brought about by the disease outbreak. At these advanced stages in the outbreak, analyses suggest that the impact of the rapidly depreciating interest rates, the minimal economic activity, and the increase in loan defaulters, involves a high likelihood of revenue declining even further. Further escalations of the outbreak will also disrupt bank operations.
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Finance Industry - Changes Due to COVID-19: Singapore

COVID-19 is having a significant impact on the profitability and functioning of the Singapore financial sector. Because of the epidemic, major banks in the country are witnessing a drop in revenue, contraction of loans, and a reduction in credit and profitability.

Weaker Economic Growth

Contraction of Loan Books

  • The growth of Singapore banks’ loan is expected to slow by 1.5% in 2020, down from 3.1% recorded in 2019, given the stiff headwinds caused by coronavirus outbreak.
  • The Strait Times reported a likelihood of a pronounced slowdown in the country’s financial sector, which would eventually weigh on the consumer demand for credit. Singapore banks are already contending with a contraction in the growth of consumer loans, a phenomenon that will continue to affect a broad range of sectors, including tourism, manufacturing, and retail.
  • Since Singapore uses exchange rates as its policy lever, the country’s Interbank Offered Rate (Sibor) rose to maintain the attractiveness of Singapore’s assets. This has directly affected banks who find it hard to lower their interest rates to promote credit demand, thus, affecting the loan growth.
  • In 2019, bank assets in Singapore increased by 4-5%, with evident diversification and expansion of loan books. Deposits of banks also increased by a range of 3% to 6%, with UOB witnessing the largest growth. With COVID-19 widening, the country’s banks are no longer able to sustain balance sheet growth and are likely to face a contraction in their loan books.
  • Although now is the time to extend credit to help small and medium-sized firms in Singapore, banks are projecting worse loan performance from companies and sectors like apparel, tourism, and hospitality that have been largely hit by COVID-19.

Profitability Under Pressure

  • As COVID-19 continues to spread in Singapore, the profitability of the banks is under pressure. The Asian Banker reported that in 2019, the total income of major banks in the country doubled in growth, with returns on assets increasing by 1.08-1.26%. However, the challenging epidemic period has affected the income and profitability of the banks.
  • In 2019, the allowances for credit and other losses for DBS banks fell by 1% while its non-performing loan remained unchanged at 1.5%. However, the shares of the bank have fallen by 3.8% this year because of COVID-19 outbreak.
  • COVID-19 will continue to add substantial costs to Singapore banks, which rely on Hong Kong and China as their primary source of business. The direct exposure of the banks, which averages 24% in China and 13% in Hong Kong, could greatly be hit given the exposure to China being more diverse and the fragile state of the Hong Kong economy.
  • According to the Asian Banking and Finance, Singapore banks’ earnings will continue to decline or otherwise remain flat in 2020F due to compression of net interest margin and higher credit costs resulting from the current COVID-19 epidemic. The overall earning of DBS is expected to decline by 2.4% by the end of the year, while that of OCBC is expected to drop by 2.9% in the same period.
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COVID-19 Impacts on the Film Industry: China

On March 20, more than 500 movie theaters re-opened after a two-month shutdown. As a requirement to resume operations, movie theaters must adhere to standard precautionary measures. Despite the initiatives to entice movie-goers such as subsidized tickets and re-releasing of top grossing films, sales and foot traffic were dismal.

A few days after the announcement of cinema openings, on March 27, the government ordered again their closure.


  • In 2019, China set a new annual domestic record of USD 9.2 billion box office revenue. It is up by 5.4% versus 2018. 64.1 % of the total box office was generated by domestic movies and 35.9% by international movies.
  • 1,037 films were produced in China in 2019. Breaking down per genre, 850 feature films were produced, 51 animated films, 74 educational science films, 47 documentary films and 15 special format films.
  • China has the most number of movie screens in the world at 69,787.
  • Total ticket sold reached 1.73 billion in 2019, or 0.5% higher versus previous year.
  • The largest movie theater chains in China are: 1. Wanda Cinema Line (7.69 billion yuan), 2. Guangdong Dadi Digital Cinemas (5.58 billion yuan), 3. Shanghai Film Cinemas (4.53 billion yuan), 4. China Film Southern (4.2 billion yuan) and 5. China Digifilm Cinemas (4.12 billion yuan).
  • There are 2,587 movie production companies in China. The biggest are: 1. China Film Group Corporation, 2. Huayi Brothers Media Group, 3. Dalian Wanda Group, 4. Bona Film Group and 5. Beijing Enlight Group Market Share.

Reopening of movie theaters on March 20

Decreased Foot Traffic

  • Theaters will limit attendance and allow social distancing in auditoriums. Currently, this is a fairly easy task as "many theaters had just one or two patrons."
  • As per ticketing platform Maoyan, revenue on March 21 was only USD 4,355.
  • Cinema revenues have been dismal as movie-goers are still wary of the virus. Nationwide box office as of March 26 is only at USD 3,200 (RMB 23,000).
  • Xinhua news agency also reported that on average, only one person watches per screening

Subsidized Ticket

Resumption of Movie Releases

Standard Precautionary Measures

Flash News: To Close Again on March 27


From Part 03
  • "“Here the palm trees are swaying and the birds are chirping, a la tropical paradise — a paradise that can manage the coronavirus,” she said. “I guess if we can be a little more careful while being grateful for our health care system and fast-acting government, we’ll be all right.”"
  • "Have Singaporeans become a little too confident that they’re protected from the spread of the virus? When I asked Nur Atiqa Asri, a Singaporean urban planner currently residing in Brooklyn, about conditions here, she was shocked to see crowds of people walking around in Singapore."
  • "These include frequent temperature checks for all delivery riders. Additionally, delivery drivers will wear masks and wash their hands before each delivery. Delivery bags will also be sanitised every two hours."
  • "The company also shared that customers will get RM10 off KFC while Pizza Hut offers ‘Buy One Free One’ (regular size pizza) for every delivery order. Orders can be made via websites, apps and Foodpanda."
  • "The Restaurant Association of Singapore (RAS) has written to 24 major shopping mall landlords requesting for a temporary cut in rent, in a pre-emptive measure to avoid a collapse in the F&B industry."
  • "Jewel Changi was the first to respond with a 50 per cent rental rebate for February and March, following further review of the situation. In the meantime, some RAS members have put staff on unpaid leave and stopped engaging part-timers."
  • "Restaurant operators in Singapore are bracing for a hit on their revenue, with an estimated 80 per cent drop in their businesses as tourists and locals avoid public places following the raised risk level to DORSCON Orange."
  • "“This market movement [delivery] is helping to slow the bleed that foodservice operators are facing at the moment due to reduction of foot traffic in most places,”"
  • "“Strengthening takeaway or online food ordering now, will keep businesses in a stronger position to tap any growth opportunity when crisis is over,” says Kambu Ninad, foodservice analyst with GlobalData."
  • "“In a recent initiative, DBS [the Singapore government bank] announced a new F&B digital relief package which will enable businesses to set up an online food ordering site in just three business days. This came as a huge relief to struggling outlets, especially the independent ones.”"
  • "“With the closure of all entertainment outlets the guidelines also state that F&B outlets must have at least one metre between tables and groups of diners limited to 10,” says GlobalData’s Ninad."
  • "“Due to the intense competition that comes with demographic market saturation; innovation and customer experience has been a strong key to maintaining competitiveness. Operators of delivery platforms are also fighting for talent, so ensuring a high volume of orders and the safety of their delivery freelancers are key.”"
  • "The potential of Asian markets has also attracted European food delivery brands. Deliveroo’s restaurant delivery model has made significant advancements in Singapore and Hong Kong [...]"
  • "If a rider receives a COD order, we have also issued guidelines to use hand sanitizer immediately after handling cash,” said the delivery firm, adding it provides riders with free face masks and hand sanitisers."