Into the unknown

With more than 30 years’ experience of working in, analysing and commentating on the UK foodservice and hospitality industry, Simon Stenning is the founder of www.futurefoodservice.com. At a time when the immediate future has never been more uncertain, Simon recently gave some insight into how the sector will re-emerge post-coronavirus.

Simon would normally be spending his days predicting the long-termfuture of the food industry, looking as far ahead as 2030.

However, we are not living in ‘normal’ times, and by his own admission during a webinar for BFFF members in April, his report on the forecast through to 2030 is currently ‘completely irrelevant’ because it’s difficult to predict what the next few months hold.

While the implications of the lock down are not yet fully clear, Simonoutlined how the industry could re-emerge and what that involves.

Analysing the current figures, he said: “It is of course the largest channels that have been most dramatically affected through the lock down; we’ve lost so much of the eating out industry. And yet a quick check on Deliveroo for central London shows there are more than 400 operators working today.

“There are even services delivering meals from Michelin starred restaurants, so there are some operators who have pivoted swiftly, reacting to the challenge of this new normal, and it’s fantastic to see.”

He also highlighted that KFC, Burger King and Nandos are re-opening a handful of sites on the proviso that staff continue to work safely and not travel via public transport, something we’re seeing across Europe as certain sectors of the market start to re-emerge.

These measures, he said, are also instrumental in helping get supplychains back into action.

“Because everything has been turning off very quickly it’s going to takesome time before it fully gets back up and running. Opening up smallnumbers of stores is going to be very helpful.”

Simon also praised the commitment and hard work of many operators in supporting key workers, but also pointed out the business benefits of this approach: “By opening to serve key workers they’re going to be open for normal business as well. They’re also gaining credibility that will last for a long time once we get back to some form of normality.”

He went on to accurately predict that around 15% of the fast food andtakeaway market would be operating by the start of May with moreopening as the lock down and social distancing are relaxed.

But it is not just fast food sector continuing to operate. Pubs, Simonobserved, are recognising their role in the heart of neighbourhoods.

“The strength of the tenanted model which went through some verydifficult times over the last 10 years is coming through. These teamsare able to cook, provide meals for takeaway along with some otherservices to help keep their businesses going and obviously helpsupport key workers and their community.”

He estimated by the start of May 20% of the total pub market wouldbe providing some services.

Then of course there is the contract catering sector, which is stillworking, particularly within healthcare, but also other sites providinga service to keep people fed in theworkplace.

Simon also touched on emergingchanges in consumer behaviour whichare likely to have a lasting impact onthe industry.

“Consumers have increased their useof delivery services,” he said, “It’s beentheir taste of getting their eating out ‘fix’.I expect that this is going to continue. But there are also people whoaren’t using their normal delivery. Certainly older generations whomay well have been eating and ordering from local restaurants arenot doing that.”

While it’s impossible to know exactly how the consumer will behavegoing forward, Simon expects younger consumers - gen z andmillennials - to return to normal, while the over 60s will significantlychange their behaviours.

He added: “Other factors will come into play. Unemployment willaffect younger generations much more than older. Older generationswill be affected by drops in investments. Everyone has been affectedand won’t revert to generational norms.”

On the financial impact of the lock down, Simon commented:“Regrettably operators have furloughed lots of staff, they’re cutting alltheir spending including payments to suppliers. But its only becausethey have to do everything to try to keep their businesses alive.

“Of course there have been some casualties. I forecast that as thelock down relaxes and businesses start up again there will be morethat fail.”

He says the greatest challenge for the industry is going to be the wayin which pubs and restaurants fully re-open rather then just providea takeaway service. Health fears and social distancing will continue,perhaps until Autumn 2021, and most businesses will probably onlystart at about 20% of normal trading levels.

But there is also concern in the industry that by relaxing the lock downmeasures too soon we will only seethem switched back on again to preventanother peak.

Nevertheless, he expects coffee shops,sandwich shops and bakeries to be atthe forefront of re-opening throughoutMay and June, with pubs and restaurantsfollowing later in the summer.

The Restaurant Group has alreadyannounced its plans to have 400 of its 600 sites open by the end ofDecember, and Simon thinks that probably reflects the whole industry.

“None of those operations are going to be opening on 100% ofprevious revenues though. I think if restaurants are allowed to openby putting social distancing measures in place, spacing out tables,we might see 50% of capacity achieved. We won’t reach 100% untila vaccine is distributed.”

Of course a lot depends on the financial stability of the economy.Simon warns we are going to be in recession, experience greaterlevels of unemployment, personal debt, business debt, taxation anda lack of consumer confidence.

“Fair to say that if 2020 is badly wounded, 2021 is going to show somesignificant scars.”