As part of the MCA’s recent series of webinars, the insight experts looked at how different factors will impact key foodservice sectors – creating winners and losers. With consumers worried over the imminent recession and job security once furlough ends in October, as well as very real concerns over Covid safety and hygiene when eating out, some operators find themselves in a better position than others. Of course, as has been the case for the last few months, it is an ever changing scene, but as of July 2020 MCA predict the following…

The Winners

  • Fast Food – the top sector for meal occasions during the Covid lockdown, currently fast food has been a winner both before and during lockdown. It benefits from being a low ticket dining occasion, the ability to deliver as well as offer grab and go and in some cases drive through, without too much reliance on eat in.
  • Supermarkets & C-Stores – coming in second for meal occasions during Covid driven by grab and go, the retailers have moved up from 4th ranking pre-Covid as one of the few places open during lock-down. However, as more foodservice outlets open up they are likely to drop back down the rankings.
  • Coffee Shops – made it into 3rd place in the top sectors for eating out during lockdown with some staying open for grab and go. With the nations coffee addiction and their move to a higher quality food offerings, as well as the ability now to eat in (socially distanced) or pavement dining al fresco combined with their strong grab and go offer, those in areas with footfall are likely to fair well.
  • Delivery – already taking the market by storm pre-Covid (see December’s blog here) it was the one channel which boomed during lockdown, offering consumers the safety of eating in their own homes and those habits are likely to hand around post lockdown. It has also encouraged bricks and mortar brands to create virtual brands like Pizza Express’ Mac & Wings Deliveroo concept.
  • Lower Ticket – with consumers fearing the looming recession they are tightening their purse strings with eating out a discretionary spend lower cost options are likely to do best.
  • Rural Pubs with Outside Space – as city centres remain quiet with office workers continuing to work from home, it’s the rural pubs with pub gardens that are best placed to bounce back effectively. Previously ranking at 3rd for eating out occasions pre-Covid they slipped to 4th during lockdown despite some effectively pivoting, but with the good weather their fortunes may be moving in the right direction as consumers look to stay close to home when eating out and enjoy the sunshine with a much missed pint.
  • Staycation Locations – international tourism may have dropped off a cliff, but there has been a notable boom in staycations, so those classic coastal towns and beauty spots like Devon and the Lake District are best placed to capitalise on this.
  • Street Food Operators – operating grab and go outside will play to these guys strengths if they can reassure consumers on hygiene and safety.
  • Contract Catering – in public sector contract caterers have kept on feeding key workers, it is in the B&I sector where things continue to be tough with the rise in remote working, however those that are open have seen an uplift with employees choosing the safety of staying on site to eat.

Likely Losers

  • Chain Full Service Restaurants – as the headlines bear out, this is a sector that has been heavily hit by Covid. With many chains already in trouble pre-Covid, it has exacerbated their issues with names like Carluccios, TRG, Bryon, Azzuri, CDG etc. all coming unstuck. With eat in hit by reduced capacity due to social distancing and increased costs to get Covid compliant married with consumers favouring lower ticket fast food options and hesitant about eating in, this sector is set for a tough ride which will doubtless weed out the weak, but will hopefully also see the best come through.
  • Smaller Local Restaurants – despite strong net promotor score these are often under-funded and will have been hit hard by lockdown if unable to pivot to delivery. But with consumers preferring to stay local those that can hold on financially should see brighter days ahead.
  • Sites Relying on Older Consumers – with the over 70’s at highest risk, department and supermarket cafes and garden centres may see a downturn in their older customer demographic.
  • City Centre Locations – the move to working from home has and continues to leave city centres desolate. With super high rents and marginal footfall operators are struggling.
  • Lunch – with less office based workers those trading on the lunch occasion are likely to be hard hit until more workers return to their offices.
  • After Work Drinking Spots – with city workers working from home the usually buzzing after work drinks occasion is also likely to be hit hard.
  • Travel Hubs – with people avoiding public transport and either using their car, cycling or walking when possible, travel hubs which once offered up huge footfall are now deserted, meaning that foodservice outlets like Upper Crust are struggling.

Across the Board

These common issues seen as a result of Covid include:

  • Social distancing at a meter plus.
  • Theatre of cleanliness as operators look to demonstrate their heightened Covid measures.
  • Rise in technology for ordering, payment, delivery, click and collect, contact detail collection and booking.
  • Buying local as consumers look to eat out closer to home, choosing more local and seasonal produce.
  • Speed of service is the fifth most important consumer driver as consumers want to get in and out quickly.

Latest Developments

In a time when things change by the hour, there have been a number of recent developments some of which were touched on MCA’s webinar. Along with the furlough scheme the VAT cut, the new ‘Eat Out to Help Out’ scheme offers consumers cut price mid-week dining in those outlets who have signed up for it, funded directly by the Government to the operator to help re-boot the hospitality sector. The impact of no shows has hit the headlines and prompted the ‘No More No Shows’ campaign and calls consumers to pay deposits. Finally local authorities have been given the power to shut down any operators who pose “ a serious and imminent threat to public health” as Boris looks to implement localised action to contain the virus rather than another nationwide lockdown. Whilst on the up side vaccine developments seem to be moving forward bringing closer the day when hopefully we can get back to a normal normal, rather than the new normal! Thanks to the team at MCA for their regular updates and ongoing monitoring of what is an ever changing foodservice world facing its biggest challenge in living memory.