Changes in consumption patterns in the catering industry has been saved
Changes in consumption patterns in the catering industry
The catering industry to address the ensuing changes in consumption patterns
The catering sector is confronted with substantial financial and operational challenges, with the UK under lockdown. Now, as the lockdown tentatively reopens, the industry is preparing to implement the safety guidelines set by the government and reconfigure its supply chain. However, consumer intention to spend on the sector remains restrained.
Consumer spending intentions remain restrained
The restaurant and catering sector will continue to face immense pressure, as uncertainty continues, driven by health and financial concerns and lack of clarity on safety measures. Working from home initiatives, temporary closures of retail outlets, offices and events, etc., also contribute to the low demand.
In mid-April when we began tracking consumer spending patterns, we saw a -50 per cent negative net spending intent for the restaurant and takeout food category, which indicates that UK consumers do not plan to spend on the category over the next four weeks. This low response might have been due to concerns over health and finance; 24 per cent of respondents said they were anxious.
In the surveys that followed, results moved upward to -25 per cent, as anxiety levels dropped. This upward movement was possibly driven by the shift towards takeaway and delivery services as consumers remain under lockdown, and catering units for essential workers.
Safety concerns dampen recovery
Safety concerns drive consumers to be cautious, with less than 20 per cent of consumers feeing safe enough to visit a bar or restaurant and even lesser at an in-person event. Only 19 per cent of respondents are actively looking for leisure travel deals, resulting in decreased revenue from tourists. Business travel intention in the next three months is also low, at just 13 per cent, impacting potential corporate event revenue. Only 35 per cent of UK respondents feel safe to return to their workplace, which is likely to impact workplace catering services.
Once the lockdown is lifted the initial recovery will possibly come from latent demand, motivated by a greater need to socialise after months of confinement. However, self-isolation measures imposed on people, will probably lead to an increased use of local, home grown produce. With few options for eating out, the trend of cooking at home and eating home-cooked meals, even at the workplace, is also likely to grow.
Industry adapts to address limited demand
Catering services work behind the scenes at sports, corporate and leisure events, as well as in schools, hospitals, care homes, factories and offices. Whilst some of these businesses, have temporarily closed, others have used their facilities to provide meals for essential workers.
Furthermore, catering service closures caused a ripple effect across related industries such as food and alcohol production, fishing, and farming. The sharp fluctuations of supply and demand resulted in food price instability. A drop in sales usually leads to a fall in prices, but with lockdown affecting production and the availability of exports, prices may be driven up.
With limited demand on the horizon, caterers have adapted to offer takeout meals, meal kits and groceries. Menus have been adjusted to feature simple fare that is suitable for reheating at home and some companies have partnered with local farms to supply customers with provisions boxes of fresh meat and produce.
Future investment is likely to be focused on operations and supply chain
Even as lockdown measures ease, restrictions on large gatherings are likely to extend and companies may continue encouraging employees to work from home. This could result in sustained lowered demand for some catering services and permanent operational changes.
Both regulators and customers are expected to be more demanding about the health and hygiene of the people working with food, driving the need for skilled staff, with in-depth training on food safety. Dedicated staff to ensure the regular cleaning and maintenance of social distancing standards, may also be required.
Investments in contactless services and the sanitation of objects and surfaces are expected to increase. Items, from menus to door handles, will be required to be sanitized more often, or automated where possible.
Food services at workplaces, weddings and conferences may have to shift away from buffets and self-service to plated meals, and elaborate displays are likely be replaced in favour of pre-wrapped individual servings.
Operators are likely to face the additional challenge of reinstating the same supply chains and prices. Recipes may evolve to use limited or locally sourced ingredients, and partnerships with local farms are likely to increase, in order to maintain a steady supply of produce.
Consumer confidence is vital
Investments in employee and customer safety will be vital for the industry. The sector may require the support of local governments, communities and suppliers, on the long road back to normality. The catering industry may also need to evolve, and address the ensuing changes in consumer food consumption patterns and eating habits.