IGD Retail Analysis reports on how UK foodservice operators are coping with today's unprecedented market conditions
In this article, IGD takes a step by step look at how UK foodservice operators are coping with the today’s unprecedented situation, and what this might mean for tomorrow’s hospitality sector.
Initial response: pivot to takeaway and delivery
Initially, most of major UK food-to-go and casual dining chains announced plans to stay open and offset some of the loss in dine-in revenues by offering takeaway and delivery. Many pubs and smaller independent businesses followed suit.
This seemed a sensible solution at the time as demand for prepared foods is likely to remain high during the crisis, particularly when shoppers may find it hard to get some ingredients from supermarkets, and amongst time-poor key workers.
Why many changed their plans and closed all operations
Moving to a takeaway and delivery focus was always going to be easier for some operators than others. But even many of those with well-developed delivery capabilities have now chosen to close completely – why is this?
As the reality of depending on takeaway and delivery orders began to sink in, the vast majority realised that this was going to be a risky strategy from both a financial and safety point of view (maintaining a 2m distance is virtually impossible in many commercial kitchens). And the government’s support package gave them an alternative option.
Why and how others are staying open
Not all foodservice companies have put their operations on ice – some have reacted quickly to adapt their businesses so they can continue to serve UK consumers and provide valuable community services. See full article for examples
Independents could seize the day
According to industry consultant Peter Backman, around 30% of all spend on food and drink is made out of the home – a substantial part of the market and a daily habit for many. During the crisis, takeaway and delivery services could help relieve the pressure on supermarkets, give house-bound consumers a break from home-cooking and provide an important service for key workers and the vulnerable.
With major national chains such as Greggs, McDonalds, Subway, Pret, KFC and Burger King, closing stores completely, the opportunity for independent operators to fill the gap is huge. Smaller players with fewer staff, potentially from the same family, who can react quickly are better placed to continue (or begin) to serve local customers who in turn will spread the word via social media channels. The customer loyalty and goodwill earned is likely to stay with them long after the pandemic has passed.
Supporting the switch
For independents who don’t know where to start in setting up takeaway and delivery, service providers to the hospitality industry are offering deals and speeding up response times to support businesses making the switch:
Long term implications
The impact of coronavirus on the foodservice industry runs so deep that it will undoubtably cause long- as well as short-term changes. Fans of the UK’s best-known food-to-go and casual dining chains will be overjoyed when they are able to buy their favourite meals again, however safety measures for workers and customers will need to be robust and well-communicated to build trust and confidence in order to get diners back through the doors.
Some, of course, will not make it through and for others the financial impact will mean growth plans delayed (Greggs has already announced it will be deferring new shop openings and planned refurbishments).
Meanwhile, independents and the more agile operators who have managed to adapt and stay open, will have built new services, revenue streams and a loyal following along the way. Customers may value their local businesses more than before and prioritise them when eating out. Many will also have started buying from new takeaway and delivery places, using new apps and trying new dishes which could all become part of their normal dining repertoire. These factors could place independents and ‘agiles’ in a strong position when the dust settles.
READ THE FULL ARTICLE HERE