The Irish foodservice sector is facing a massive decline as a result of Covid-19, according to a White Paper from Bord Bia. 

The document models three scenarios ranging from ‘best case’ to ‘worst case’ and the results are not pretty. The best case scenario up to the end of this year, which takes into account the collapse in tourism, predicts a collapse in revenue in the ‘out of home’ market of almost 50%, from €8.5 billion at the start of the year to €4.7 billion by December next.

The worst case scenario indicates a possible fall of almost 60%, to €3.7 billion. The white paper sets out some recommendations, and offers supports to businesses in the sector as they plan and set out to adapt their positioning, products and services.  

Maureen Gahan (pictured), Bord Bia foodservice specialist, commented:  “When Covid-19 first started making headlines in late 2019, very few people would have expected the global impact that would occur. Within Ireland, the foodservice industry has been challenged as never before, and the goal of this white paper is to begin to quantify the scale of the impact on the industry and what the landscape may look like as this situation progresses. 

“While acknowledging the clear and ongoing damage to the Irish foodservice market, it’s also important to begin thinking about how the industry restarts and what permanent changes may ultimately be seen," Gahan added.  “What does the food service industry look like when this is over? How long will it take to recover? What steps are being taken now by the industry and how likely are current initiatives to remain in place after the immediate danger has passed?”

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According to the Bord Bia analysis, some key trends can be distinguished for the short term, though the broader outlook remains unclear.

“These macro-trends will generally be true across most food service sectors and have an impact not only on operators, but will reverberate through the supply chain. On this basis, it is important for food and drink manufacturers to understand potential implications for their own product offerings,” the White paper states.

And it offers up these key trends for the sector to consider:

• Decreased emphasis on customisation/made-to-order This will be driven by labour challenges and a move toward value seeking among many consumers. It seems likely that operators will focus more on grab-and-go and pre-prepared items.

• Continued investment in off-premises This crisis has shown that having an off-premise strategy to diversify risk is a must. Expect more types of operators to invest in off-premise, whether it’s takeout or delivery. Digital strategies will become more important to operators of all types. This may also mean more grab-and-go and packaged items in food service segments that formerly would have avoided them. 

• Acceleration of channel blurring This crisis has shown that restaurants can function as grocers and that full-service restaurants can offer more convenience options. In Ireland and globally, restaurant operators are selling ingredients or kits as part of their offering—this may continue as an additional revenue source.  The food industry will likely further blur the lines between retail and food service, and within food service, more service options will be found across segments, including takeaway, delivery and even more drive-thru.

• Reduction (or removal) of self-service While the ultimate consumer mindset won’t be clear until this pandemic passes, it seems likely that many operators will reduce or remove self-service stations. This includes buffet-style service, self-service beverage, bakery cases and even self-service ordering kiosks.  While self-service may not disappear completely, changing methods and dispensing styles, as well as a renewed hyper-sensitivity to sanitisation to ensure safety, will be necessary. 

• Ghost/delivery kitchen acceleration As the industry resets, more operators may decide to eliminate the dining room altogether to capitalise on longer-term, off-premise trends. 

• Renewed interest in single-use packaging The trend over the past several years has been toward more sustainable options and banning/ reducing certain types of packaging. We expect to see more focus on packaging (and excess packaging for off-premise orders).  An emphasis on sustainable packaging may be reduced in the short term to midterm, as safety concerns becomes a primary driver for product selection. 

• Streamlined/smaller menus As operators streamlined menus during the pandemic, after the crisis many will continue to focus on those items that yield maximum revenue.

• Labour If, as seems likely based on reopening guidelines, restaurants and hospitality will be one of the later industries to open up, the labour challenges such as recruitment and training that were experienced before this crisis could worsen, as former employees find other opportunities.

• Drinks business challenges Social distancing will continue to be challenging in pubs. Pubs that rely on wet (drink) sales will be under more pressure than those that have a strong food offering.

• Consolidation While this may manifest most clearly in the restaurant space, we are also likely to see acquisition of some players throughout the supply chain. Those that are vulnerable will face significant challenges from larger players and in some cases, potential closure.

Click HERE to download Bord Bia Covid-19 foodservice White Paper