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UK foodservice challenges and opportunities - report

01 February 2022

The British foodservice market has seen a lot of turbulence over the last two years. Closures or reduced capacity due to COVID-19 measures, as well as supply-chain and staffing challenges and the UK’s exit from the EU have hurt the foodservice sector. But as restrictions lessen in 2022, the foodservice market should see some recovery. An Agriculture and Horticulture Development Board (AHDB) report, which includes data up until 5 September 2021, evaluates market trends and challenges and suggests there are opportunities to aid recovery.

Key findings for red meat:

  • Burgers remain one of the most popular dishes on menus. However, beef will need to continue to capitalise on this, as it has been losing share of total burgers as consumers switch to chicken.
  • Encourage shoppers to trade up to steaks. These higher price cuts drive up both value and volume of beef. With the right use of promotions, consumers can be tempted to trade up.
  • Pork can continue to appeal through takeaways by expanding from quicker lighter meals to takeaway breakfasts and evening meals.
  • As pork is more reliant on food-to-go, it could struggle if people do not return to work full time. However, there are also opportunities to appeal in home.

Challenges:

  • Inflation: In October 2021, inflation was at 3.8% (ONS). If inflation stays high or rises, discretionary spend on eating out would likely be impacted.
  • Consumer and business confidence: Consumer Confidence slipped backwards in December 2021 (Gfk) as consumers become more concerned about the economic situation in the next 12 months.
  • Labour shortages: One in six hospitality jobs are currently vacant (CGA, Q3 2021). This has impacted many businesses, which may have to reduce the number of covers or provide a scaled-back service.
  • New high-fat, salt and sugar calorie labelling: New regulations from the Government require some restaurants, cafés and takeaways in England to list calorie counts on non-pre-packed food and soft drinks.
  • Supply-chain logistical challenges: Implementation of new UK border measures have added further complexity to supply chains and this has resulted in suspension of some menu items for big brands.
  • Evolving consumer behaviour: There is a general movement back to pre-pandemic patterns as well as some behaviours which have changed for the long term. Re-focus on pre-pandemic trends, as well as address new ones.
  • New trade deals: While new trade deals provide opportunities for UK exports, they also open our domestic market to increased competition.

Trends:

  • Simplified menus: The average number of dishes on menus has dropped by 22% between spring/summer 2019 and spring/summer 2020 according to research from Lumina Intelligence.
  • Widening value spectrum: One in 10 consumers plan to visit cheaper restaurants when eating out (Lumina Intelligence, May 2021). Consumers are happy to pay more for high-quality experiences and food.
  • Continued working from home: A third of working adults are working some days from home (ONS). Food-to-go operators can cater to home-based workers as they still venture out, especially when meal fatigue kicks in.
  • Digitalisation: Of delivery customers, 53% had not bought into delivery before the pandemic (Kantar). Consumers now rely on digital tools before, during and after their visit when eating out (CGA)
  • Evolving heath and dietary needs: On menus, 47% of main dishes are flagged with a dietary requirement (Lumina Intelligence). Vegetarian and vegan dishes account for 27% of dietary requirements flagged on menus.
  • Sustainability: Two in five consumers say they are willing to spend extra if ingredients are sustainably sourced. 53% of consumers likely to order meals that have evidence of quality and sustainability awards.
  • Provenance: British mentions on dishes are low, at only 1.2% (Lumina Intelligence Autumn/Winter 2019). But desire is there, with 77% of consumers agreeing that they prefer buying food grown or produced in the UK.
  • Socialisation and escapism: Making a dining experience more of a social event has proved popular. While capturing people during seasonal events remains crucial for foodservice operations.


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