It’s been a long road, but despite the threat of a third wave, the roll out of vaccinations does mean there is light at the end of the tunnel for the hospitality sector, which has been devastated by the past 16 months. 2020 saw 11 weeks of normal trading and 41 weeks of restrictions, not to mention the joys of Brexit uncertainty. This led to a total market decline of -47.8%, with an outlet percentage decline of 1.2% in 2020. However, as we head towards the second half of 2021 hopefully things are looking up.

As a leading foodservice agency dedicated to staying one step ahead when it comes to market trends, we joined Lumina Intelligence for their webinar to examine what may lie ahead. The following are our key take outs…

  • Outlet count is expected to stabilize in 2021.
  • 2021 is likely to see only a 0.01% market decline with around 474 sites lost, compared to over 4,000 in 2020.
  • Eating out penetration is rising as restrictions are lifted. With May showing 45% penetration, indicating the pent-up demand in the market, although the weather didn’t help!
  • On premise foodservice occasions are coming back and stealing from delivery, whilst click and collect remains broadly stable.
  • On premise occasions are being driven by drinks – predominately coffee and beer (those long awaiting draft pints!).
  • Interestingly despite the increased focus on health and wellbeing post-Covid, there has been a decline in dairy alternatives to milk (i.e., oat, soya, coconut & lactose free milks).
  • Unsurprisingly eating and drinking out occasions classed as ‘get togethers’ have made a strong come back, as people look to meet up again with family and friends. The good news for operators is that this is the second highest spending mission.
  • There is a polarization of consumers with some keen to get out there and make up for lost time, while others are reticent to mix and nervous of eating and drinking out of home, preferring to stick to the new habits they have formed over the past 16 months.
  • Equally there are those looking to splash out and enjoy themselves after having been denied their beloved dining out experiences for so long and having saved money over the past year. Whilst others have been harder hit by the pandemic and are looking to be cautious with their spending, focused on keeping costs down and getting value for money when eating out.
  • There is a definite drive from consumers to support independent businesses over chains.
  • This is also aligned to an increase in more neighborhood eating out, something that is impacting location strategies as consumers continue to stay closer to home.
  • Social distancing is a particular concern for consumers in pubs.
  • When looking at how certain sectors will bounce back to 2019 levels, there are those who are likely to fair better – coffee, cafes & dessert / fast food / sandwich & bakery / travel / c-store and supermarket to go. Whilst others hit harder by the pandemic restrictions may take longer to recover such as hotels / department store cafes / contract catering / leisure / pubs / service-led restaurants.
  • The good news is that it is predicted that the eating out market will exceed its 2019 value in 2022. With turnover growth up 33.4% in 2021 and 44.7% in 2022.
  • The key trends driving restaurant growth are:
    • Lighter and healthier, like Roosters and Mowgli
    • Contemporary and premium, like Bar + Block and Megan’s
    • Omni-channel operations, like Rosa’s Thai and German Doner Kebab
    • Unique expansion strategy, like Mowgli and Roosters
  • Those operators offering immersive experiences and simply experiences you can’t create at home will do well. Staff training will be key to delivering this (a challenge in the current time of staffing crisis with EU workers lost to hospitality through Brexit uncertainty and many leaving during the pandemic).
  • Although menus may still remain streamlined, innovation and NPD will be key to driving differentiation in the market and are likely to see a swift return.
  • There are some ‘sticky habits’ that are set to outlive the pandemic, such as delivery and make at home boxes, along with ‘coffee and a walk’ and working from home at least part time.
  • It will be interesting to see how casual dining brands fair under new investors, following the raft of CVA’s and refinancing over the past 16 months.
  • We’re likely to see even more eating out brands entering into retail partnerships with the grocery giants.
  • It will be interesting to see how things change as we move from a society with time on our hands, back to one that is super-busy and constantly on the go.
  • The summer of sport will offer pubs, especially, a great opportunity to cash in as hopefully restrictions are lifted and sports fans flock to enjoy the games with their friends.
  • Hospitality businesses have learnt to pivot and work efficiently across multiple channels to survive, which should stand them in good stead for the future. Of course, we have yet to see the end of furlough and the lease forfeiture moratorium, which will doubtless impact the market. These factors coupled with the current staffing crisis prove that we still have a way to go before the troubles of the pandemic are behind us.

With both head and tail winds the hospitality sector still has much to do to recover from the pandemic, but hopefully things are looking up for most. To find out more about Lumina Intelligence and the great insights they can offer across both consumer behaviours out of home, operator and menu trends visit: