In my previous blog, I touched upon the ‘new normal’ we should expect to see in Great Britain’s foodservice industry, post-COVID-19. I’d like to expound my analysis of what this entails.  

I believe the ‘new normal’ will involve three key components: deals; delivery; and the increased use of technology.

Deals

As British consumers begin to assess the impact of COVID-19 on their own personal finances, they will look for ways to cut back on discretionary spending. As a result, deals and promotions will be extremely important for the industry. Savvy operators will need to find a way to come up with deals that give the consumer good value while avoiding the pitfalls of deep, ongoing discounting. This builds on a trend that we have already seen in Britain over the last five years, where visits on deals have risen more than three times faster than the overall growth in visits, and now account for 30% of all visits. 

Operators should be encouraged by the fact that the average transaction value of visits on the deal has grown almost +5% in the year to March, more than twice as fast as the overall average transaction value. In some market sectors – such as pubs, quick service restaurants, or travel and leisure – the average transaction value of on-deal visits is actually higher than on non-deal visits. In other words, a deal does not necessarily mean a low price, but good value. 

Delivery

Delivery is hardly ‘new’, but this channel may acquire new characteristics as and when Britain’s lockdown eases. The mandated closure of on-premise dining has led to increased importance of all forms of off-premise dining, including carry-out, drive-thru and delivery. Combined, these off-premise occasions represented close to 63% of total visits annually prior to the COVID-19 crisis. During the current crisis, it has become a safe haven for consumers who are looking to avoid leaving their homes. Our NPD colleagues in China have data that shows us delivery visits were up by +10% in February during the height of that country’s isolation efforts. Delivery has been a key feature of Britain’s lockdown – both in terms of grocery and foodservice – and delivery foodservice visits were up +5% in the month of March, while the rest of the market was suffering double-digit declines. 

The question on everybody’s mind is: how much of this behaviour will carry over through the recovery? Will delivery platforms and offers mutate and transform themselves so that we arrive eventually at ‘new delivery’? It’s likely that the COVID-19 crisis and the lockdown that British foodservice has suffered will amplify the rapid ascent of the delivery channel, and its central role in every operator’s strategy. 

Technology

The growth of delivery is being driven in large part by technology (to support social distancing). Whether it’s third-party delivery services or independently-operated online/app-based platforms, technology offers a way for operators to quickly and easily connect with their consumers. Technology is also driving some key trends that have become increasingly important to consumers during the COVID-19 pandemic, including contactless payment, pre-ordering, loyalty programmes, and social media.

According to figures compiled by UK Hospitality – which includes NPD data – the UK Hospitality industry was worth around £134bn in 2019.  The restaurant industry represents about 43% of this total and has been one of the hardest hit sectors during the unprecedented challenges of the COVID-19 crisis. The impacts will be deep and long lasting. But the fact that a small majority of UK consumers tell us that eating out is high on their to-do list following the lifting of restrictions does give some room for optimism, provided operators and suppliers prepare carefully and adjust positively to the ‘new normal’ way of trading as and when the lockdown begins to lift.

*This content also appeared in 11 May 2020 edition of Propel Info newsletter

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