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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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Hospitality sector accounted for a third of the UK’s GDP loss in April

Analysis by UKHospitality has found that, with revenues falling by 90%, the hospitality sector accounts for 32.7% of the UK’s lost GDP in April. This highlights both the significance of the sector to the economy and the severity of the lockdown measures on an industry reliant on footfall and social interaction.  The sector is calling for clarity on reopening dates and, as reported previously in this section, for a revision of the two-metre distancing rule.

150 business leaders, NGOs and research institutions write to Prime Minister urging a sustainable and just economic recovery from Covid-19

In a letter coordinated by the UN Global Compact Network UK and UK Stakeholders for Sustainable Development (UKSSD), leaders from over 150 businesses, NGOs, research institutions and public figures have urged the Prime Minister to make the Sustainable Development Goals the focus of the country’s recovery from Covid-19.  The letter calls on the government to:
– unite all sectors behind a plan to build a stronger and more resilient economy
– prioritise the most vulnerable in our society and level-up regional and societal inequalities
– build coherent policies for a healthy planet and to aid the transition to net zero.

A number of food businesses are among the signatories, including foodservice giants Compass Group.  Download the letter here.

 

Report predicts permanent closure of 22% of the hospitality sector, with economic recovery taking until 2025, and urges the government to maintain support in order to save jobs

A new report by FutureFoodService forecasts a £10 billion fall in revenues for the hospitality and food service sector in 2021, 10% less than 2019, and claims that real economic recovery may take until 2025. The report also predicts that 22% of all hospitality outlets will not be open by the end of 2020, as the financial impacts of the pandemic could force many out of business. A combination of reductions in both frequency of visits and spending by customers and lower margins due to potential supply issues will, the report claims, make business simply unviable for many. Worst hit will be city centre operators, with contract catering and local businesses more able to survive the crisis. It urges the government to maintain support for the industry, and for the sector to embrace technology as part of its recovery.

Online sales of food here to stay, according to recent study and industry experts

After a recent study from GlobalData forecast that the UK online food and grocery retail market is set to expand by over 25% this year, industry experts CSB-System have emphasised the need for businesses to implement robust technical systems to take advantage of the opportunity. Analysis by the Food Foundation has shown that those companies with pre-existing strengths in online ordering and home delivery capabilities have coped better during the pandemic. So whilst the growth of online food shopping provides an investment opportunity for the sector, it could also risk favouring those with deeper pockets and more advanced existing systems.

Disagreements within government suggest the exact date for reopening of pubs and restaurants remains uncertain, despite industry concerns about the need for clear targets and whether reopening will be financially viable

The government is still aiming for a reopening of pubs and restaurants in early July, with strict social distancing measures in place (potentially using outside spaces initially). However, this is despite some ministers reportedly urging the government to  target  an earlier date given the impacts the lockdown is having on the sector and employment prospects. The industry response has been mixed, with the reopening plans welcomed, but with concerns raised about whether social distancing will allow businesses to operate profitably, and if the social distancing measures should be reduced from  two metres to one in order to find a balance between safety and profitability.

What if restaurants continued to feed local communities after lockdown lifts?

The Guardian reflects on whether, as the restaurant sector begins to reopen, the industry will return to business as usual and some of the more community-focused initiatives of the past three months will fade, or whether a more long-term, socially-minded restaurant industry will emerge. It emphasises the role the government could play, not to “nationalise Wetherspoons”, but to build on the initiatives that have played an important role in helping vulnerable and isolated people to access food.

The Restaurant Group, owners of Frankie & Bennys, look to permanently close up to 20% of sites across their brands

Based on what appears to have been a leaked email, the BBC reports that restaurant chain The Restaurant Group, who own well-known chains including Frankie & Benny’s, Garfunkels, and Wagamama, does not intend to reopen 20% of its 600+ sites. The majority of permanent closures are believed to be planned for Frankie & Benny’s, with the group’s more recent acquisition Wagamama not affected. The scale of economic damage to the restaurant industry from the lockdown, and fears that social distance measures will make reopening unprofitable, could lead to as many as 30,000 pubs and restaurants failing to recover.

Share prices point to stark differences in how Covid-19 is impacting different sectors in the food industry

Share price fluctuations in 2020 point to recent months having had very different impacts on businesses across the food industry. Big supermarkets are generally tracking the FTSE100, but Ocado is 67% up from January and M&S is down 54%. Fast food chains are outperforming the FTSE100 (having to varying degrees been able to reopen). Contract catering and casual dining operators are all struggling (on average down 43% down compared to January).

Hospitality losses expected to result in a wave of restaurant insolvencies

Research by accountancy group UHY Hacker Young shows that the restaurant sector was already struggling financially coming into lockdown, with suggested losses of over £150 million in top restaurant groups last year. The report expects the sector’s financial woes to continue throughout the current crisis, despite the potential for reopening in July, as businesses look to control costs by shrinking the number of sites they operate, adjusting menus, and reducing staffing levels once the furlough scheme ends.