IGD predicts that the whole food-to-go sector will decline by 43% to £10.8bn in 2020.
QSRs will benefit most from changes to food-to-go consumption brought about by the pandemic, according to new research from IGD.
The insights agency cites the sector’s capacity to offer value options for financially stretched consumers, with drive thru and delivery offers playing a role to adapt to local lockdown restrictions.
Food-to-go specialists, in contrast, will be most affected by aforementioned changes as they are most likely to be located in city centres and transport hubs with footfall dependent on office workers, commuters and tourists. IGD anticipates store closures and estate sizes in 2022 will be smaller than 2019.
Coffee shops, meanwhile, will be affected to a lesser extent, with IGD explaining that shops and food-to-go specialists will start to recover somewhat in 2021 and regain market share from retail in 2022, - although not to 2019 levels - through “innovation and evolution.”
Other retailers are predicted to benefit from increased visits where food-to-go crosses over with other shopping missions. Convenience stores in particular have and will continue to benefit from their local presence. Retail channels are expected to grow market share, mainly during 2020 as food-to-go specialists and coffee shops are impacted by declines in commuter footfall.
IGD predicts that the whole food-to-go sector will decline by 43% to £10.8bn in 2020 – a decrease of £8.1 billion in 2019. However, a degree of bounce-back is anticipated in 2021, with high levels of year-on year growth off a low base. In 2022 – despite continued high growth rates – IGD said the market will only return to 88% of 2019 levels, valued at £16.7 billion.
“Unsurprisingly, since the UK went into lockdown, almost all food-to-go shopping trips experienced significant declines. Where previous forecasts saw the sector growing at twice the rate of grocery retail, 2020 has seen a rapid change in consumer behaviours and daily routines that could have long term implications,” IGD senior food-to-go analyst Nicola Knight said.
“Footfall in cities and transport hubs – on which many food-to-go businesses depend – has so far been slow to return. The shift to more homeworking in particular has had massive implications for food-to-go. Specialist operators with sites prevalent in affected locations are already adapting strategies to offset this long-term change in consumer behaviour.”
The return, Knight said, will be gradual and may be subject to reversal as trends may differ by geographic area subject to local lockdowns. “It is reasonable to assume that a degree of homeworking will form a part of the new normal in the short and long term, which may mean food-to-go businesses will adapt to fit in with their customers’ work patterns rather than wait for old habits to resume.”
Addressing food-to-go businesses on how retailers and suppliers can navigate current and future challenges, Knight advised them to be agile in grabbing opportunities based on changes in consumer behaviors.
“Picnic sets for outdoor socialising, lunch boxes for home workers and meals to be heated at home are all examples of rapid deployment of new ranges adapted to current consumer needs. Responding this quickly requires staying close to customers, building strong partnerships with suppliers and an internal structure designed for fast decision-making,” she said.
“Well-developed digital loyalty, communications and ordering systems have a real role to play for businesses looking for an edge here. Engaging with customers in this way should also help retailers to understand where the demand has moved to if city centres and transport hubs continue to lose footfall.”
“Delivery should also continue to form a part of retailer and operator strategies, particularly if local lockdowns progress. To offset the price of third-party delivery charges many operators are moving to delivery-only dark kitchens with lower overheads,” she concluded.
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