Food Industry

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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Weekly update w/c 16.11: Hospitality sector sees lockdown continue to impact revenues in the traditional boom season while concerns are raised about food supply in early 2021

With the devolved nations in various states of country-wide lockdown, restaurant and pub chain Mitchells & Butlers have announced the permanent closure of 20 sites.  The company owns pub chain All Bar One as well as Toby Carvery and Harvester restaurants and, despite seeing a sales boost in August during the Eat Out To Help Out scheme, blames the pandemic for the closure. July sales were down 32.4% year-on-year and fears of a second wave of infections has seen sales fall again (down 6.4% in the first three weeks of September year-on-year). 

Job cut announcements in the restaurant sector have become a common feature of the pandemic with major chains such as Pizza Express recently announcing 1,300 losses, although Whitbread recently halved it’s September prediction of 6,000 internal job losses, citing the furlough extension and positive vaccine developments as reasons for some renewed optimism.

UKHospitality has called for greater clarity on the support that will be made available to the sector over the winter. Lockdowns and restrictions between Halloween and January will result in significant business losses for pubs and restaurants, in a year where annual turnover for the hospitality sector has fallen by 40% already. A recent survey by trade bodies the British Beer & Pub Association (BBPA), the British Institute of Innkeeping (BII) and UKHospitality has found that 72% of hospitality businesses expect to become unviable and close in 2021 depending on the level of restrictions place by the government. 

Beyond the immediate concerns of the pandemic, and with the deadline for a trade agreement with the EU looming, concerns about UK food supply into the UK have been raised by the Guardian.  The combination of potential border delays and limited warehouse capacity due to Covid-19 could, claims the newspaper, lead to significant food shortages after December. While a great deal of uncertainty exists around any projections made for the combined impacts of Covid-19 and future trade deals, this to some extent echos comments from within the food retail sector (Tesco, Morrisons) on food supply and prices.

Weekly update w/c 02.11: More pressure on the hospitality sector with lockdowns returning across the UK.

Supermarkets continue to adapt to the pandemic and changing consumer habits, with Coop partnering with delivery company Gohpr in Scotland and introducing new pricing strategies aimed at a more affordable shopping basket.  The unpredictable nature of the business environment does not look like ending any time soon with the Welsh government restricting supermarkets to selling essential items only in a bid to protect smaller more specialist retailers forced to close in the recent “circuit break” lockdown in Wales.

Meanwhile, the hospitality industry is arguing that low actual transmission rates from within the sector make the restrictions placed on restaurants unfair.  A UKHospitality survey of 568 businesses (with a combined workforce of 358,000 people) reported 1,728 infections among the workforce, at a time when  about 20 million shifts were worked.  Restrictions such as the 10pm curfew has hit revenues, according to the industry, and poor financial results continue with Whitbread announcing a £725 million loss due to the restrictions placed in 2020.

Weekly update w/c 05.10: A tale of two sectors, retailers enjoy positive financial returns while fears of job losses continue for the hospitality sector

Six months after lockdown began in the UK, Ocado has seen revenues increase by 52% in the third quarter of 2020 and share price more than double since March (a trend that we have been following on our covid-19 share price tracker since May). 

Tesco has also reported good financial results with pre-tax profits up 28.7% in the six months leading up to September (compared to 2019) as its own capacity for online ordering and delivery services has doubled in response to the pandemic.  

In contrast, the hospitality sector’s woes continue with Greene King the latest to announce job losses (800) and closures (79 pubs and restaurants), blaming the end of the furlough scheme and the 10pm pub closure ruling in England. 

More bad news for the sector has come from Scotland with a temporary 6pm closure rule introduced this week and the possibility of further temporary local closures in England. 

With obesity now clearly linked to the severity of illness from Covid-19, the government has released the latest results from the voluntary sugar reduction programme for supermarkets and the hospitality sector.  An overall reduction of 3%, against a target of 20%, has led to calls from some for stronger regulation similar to the sugar drinks industry levy.

Weekly update w/c 21.09: Job loss announcements continue in the hospitality sector and supermarkets ask shoppers not to stockpile as the government brings in new covid-19 restrictions

Whitbread and Wetherspoons are the latest major hospitality businesses to acknowledge the risk of redundancies, with Whitbread warning of 6,000 job losses due to both the slump in hotel trade and drop in dining numbers across their restaurants and Wetherspoons due to cut 450 jobs from it’s airport pubs.


In the same week, governments across the four nations have announced new restrictions including reductions in the numbers of people allowed in a social gathering and early closing in the hospitality sector.  With local lockdowns increasing, supermarkets have made a plea for people to not stockpile or panic buy amid speculation that a wider lockdown could be looming.

Weekly update w/c 14.09: Success of the Eat Out Tp Help Out scheme contributes to fall in inflation rate as hospitality trade body calls for more sector-specific recovery packages and Tesco joins forces with food waste sharing app Olio

In economic news, the fall in inflation rate in the UK (from 1% in July to 0.2% in August) has been partially attributed by the Office of National Statistics to lower prices in restaurants during August’s Eat Out To Help Out scheme. The scheme saw over 100 million discounted meals claimed over the month, at a a value of over £500 million.   

Meanwhile hospitality trade body, UKHospitality, has claimed that unless the government puts in place a sector-specific job protection scheme then up to 900,000 jobs could be lost in the sector.  100,000 hospitality jobs have already been lost, despite the sector making widespread use of the furlough scheme.  The trade body is asking for partial wage support for businesses that have re-opened, extended wage support for those who have to close in local lockdowns, alongside wider financial packages for those forced to close.

In retail, Tesco have partnered with food sharing app Olio to redistribute food that would otherwise have been wasted in-store.  The partnership, Olio’s first at a national scale in the retail sector, follows a six month trial and will now be rolled out to all 2,700 Tesco branches.

At a time when food insecurity among vulnerable groups in the UK has risen due to the pandemic (see our tracker theme dedicated to this) the retailer has said they want to “make sure that any surplus food is being managed, and people who need it have access to it. The results of our trial have allowed us to roll out the partnership in our commitment to make sure no good food goes to waste”

Weekly update w/c 07.09.2020: Restaurants benefit from August boost but the future remains uncertain for many, and Morrisons kicks-off the discounting war on household essentials

Official government figures report that 100 million meals were claimed during the Eat Out To Help Out scheme, with restaurant reservations up 216% on the August bank holiday compared to last year. The value being claimed now sits at £522 million, although this is expected to rise as more claims are processed. 

Despite the August boost, the hospitality sector still faces an uncertain future.  Pret A Manger has announced that nearly 3,000 jobs will be lost and expects to close 28 London sites as it restructures its business.  Targets for new revenue streams include expanded delivery services (opening its first “dark kitchen”), the launch of a “coffee subscription” service, and exploring food retail opportunities.

In the more traditional food retail sector, Morrisons have announced plans for mass discounting across 400 essentials, including fruit & vegetables, meat, bread, cornflakes, rice and pasta, as well as household cleaning products.  The supermarket has said that these discounts are to help families who have found themselves stretched due to the pandemic and that the promotions are “here to stay”.   

As reported previously, food retailers have generally seen sales increase during the lockdown, with the Association of Convenience Stores reporting that two thirds of convenience stores saw sales growth in that period.

YouGov poll finds support for extending Eat Out To Help Out scheme to prevent drop off in dining frequency

A YouGov survey has found that 59% of Brits would support a month-long extension of the Eat Out To Help Out scheme, with 46% having benefitted from the discount opportunity at least once (17% once, 10% twice, 19% at least three times).  Industry fears that the scheme will only provide a short-term temporary boost may be supported by the survey results, with 43% of those who have used the scheme saying they will eat out less or not at all when it ends.                               

First three weeks of Eat Out To Help Out scheme sees 64 million meals claimed

Data from OpenTable shows that 64 million meals were claimed (87,000 individual claims by restaurants) during the first three weeks of the restaurant discount scheme which ended on the August bank holiday.  The total number of meals claimed rose from 10.5 million in the first week to 35 and 64 million through the second and third weeks with (see our related post on a recent You Gov survey) nearly half of Brits reported using the scheme at least once.            

Tesco to create 16,000 jobs to meet demand for online delivery

In a signal that the supermarkets see the rise in online ordering and home delivery as a trend that is here to stay, Tesco are to create 16,000 new permanent roles, including 10,000 to pick customer orders and 3,000 delivery drivers, many from current temporary staff who joined during the pandemic.  The retailer saw proportionate online sales increase from 9% to 16% of total revenue, with online customer numbers growing from 600,000 to almost 1.5 million.  Online revenue is expected to reach £5.5 billion by the end of the year.