Food Business

How is COVID-19 changing the food industry?

In order to understand food system consolidation and resilience, we’ll be monitoring COVID-19’s impact on the structure and economics of the food industry, identifying where old business models are forced to expire and where innovation is shaping new alternatives. We’ll also be looking at where companies are prioritising food that is healthy and affordable, and where private sector solutions to food access problems are ensuring that vulnerable groups receive the food they need. In the long-term, will the changes we see in this sector hinder or accelerate progress towards a food system that is healthy and sustainable for human and planetary health?

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Pub and restaurant chain Mitchells & Butlers announce  £121 million loss due to lockdown

Mitchells & Butlers, owner of Harvester, Toby Carvery and All Bar One, have announced pre-tax losses of £121 million in its half-year ending in April. Notably, like-for-like sales had been improving pre-lockdown, demonstrating the severity of impact the first month of lockdown has had on the hospitality sector. Chief Executive Phil Urban remains cautiously optimistic however, stating that experience of reopening sites in Germany has given the company confidence for the UK’s reopening phase.

60% of hospitality sector expected to reopen on 4th July bringing nearly a million people back into work

The Caterer reports that 60% of the hospitality sector is planning to reopen in some capacity at the weekend, bringing nearly a million people out of furlough, with this expected to reach 75% by the end of the month and further re-openings in September.

Upper Crust owner SSP Group announce up to 5,000 jobs to be lost due to Covid-19

With UK pubs and restaurants only days away from reopening, SSP Group, who operate fast food and restaurant outlets at train stations and in airports, has announced job cuts affecting up to 5,000 people (55% of its 9,000 strong workforce). The cuts come as part of a restructuring process in response to dramatic fall in customer footfall through lockdown measures and travel restrictions that have hit both rail and air travel.

Grocery year-on-year sales growth continues, with over 90% increase in online food sales

IGD reports that in the three-month period up to mid-June, grocery sales grew by 13.7% compared to the same period last year (data source: Kantar). With online sales growing by 91% in the previous four weeks, Ocado are the big winners with a record-high 1.7% of total market share. With sales growth of over 40% in the last 12 weeks, the online retailer has also raised £1 billion from shareholders to fund its future growth strategy in the UK and abroad.  As reported previously here, Co-op continue to take market share, with many customers preferring local smaller stores.  Tesco remains the best performer of the big four retailers (outperforming Sainsbury’s, Morrisons, and Asda).

Pubs and restaurants to reopen on 4th July with one metre social distancing allowed

The government has confirmed that pubs and restaurants will be allowed to reopen from the 4th of July, with a revised “one metre plus” guideline for social distancing. This means that pubs and restaurants will need to ensure that customers stay at least one metre apart and that additional safety measures are in place. These measures include partitions at tables, no “standing drinking”, no customer spaces at service points such as bars, and taking customer contact details for possible track and trace purposes. The hospitality sector has long argued that a one metre rule was the maximum needed to make the sector economically viable, although it remains to be seen how well the industry recovers and what appetite customers have for returning to eating and drinking out.

Government to review two-metre social distancing rule

As the restaurant sector gears up to reopen in early July, the government is due to reassess the two-metre distancing rule, potentially announcing new guidelines for one metre social distancing. The hospitality sector has argued for a revision of the two-metre rule, claiming that two metres would make most businesses in the sector inviable due to reduced capacity. This comes alongside an industry call for a wider package of support measures, including longer term financial support, to avoid widespread closures and job losses.

Report calls for suite of supportive measures for the hospitality sector, but fails to include measures that would encourage more sustainable business models

With the hospitality sector having seen a 90% reduction in revenues due to the lockdown, a report by UK Hospitality follows an inquiry by the All-Party Parliamentary Group for Hospitality and Tourism, and calls for a suite of supportive measures for the sector, including:
– cutting tourism VAT to encourage domestic tourism
– rethinking business rates
– support for rent and other business costs
– an extension of the furlough scheme
– the creation of an October bank holiday.

As of yet, no mention has been made of how this could be aligned with the concept of ‘build back better’ but the Food Foundation feels that economic support should take into account how food businesses can work to better align their business models with a healthy, just and sustainable food system.

Supermarket promotions pick up but still not at pre-Covid levels

Data from The Grocer shows that supermarket promotions and multi-buy offers almost halved between March and early April.  Promotions have since increased as concerns around availability have eased, but remain lower than pre-lockdown numbers (35% lower at Tesco, 28% at Ocado, 23% at Asda, 14% at Sainsbury’s and 12% at Morrisons). Assosia, who provided the data for The Grocer, expects promotions to return to normal over time assuming that supply issues continue to improve.

Restaurant and catering companies join collaborative effort for a more sustainable recovery from Covid-19

Leading caterers Compass Group, Aramark, and Sodexo, have joined the food industry’s newly formed Responsible Business Recovery Forum (RCRF). The forum, the brainchild of Foodservice Footprint, includes Greene King, Coca-Cola, InterContinental Hotels, and TGI Friday among its members, and aims to foster collaboration between companies to drive industry-wide recovery, whilst anticipating future trends such as environmental concerns.