The foodservice industry has suffered greatly in the COVID-19 pandemic. Recently, a report showed what changes in consumer behavior dragged restaurant sales. While many people lacked resources to buy in restaurants, there were non-financial factors significant enough to affect the industry.
The impact of the COVID-19 pandemic on the foodservice industry was unveiled by Technomic, a research and consulting firm. A recent report from the firm highlighted the severe adverse effects of the pandemic on sales and shortages within the industry. Despite the revival efforts, consumers remained cautious of anticipated new waves of outbreaks. Still, the report showed what methods could significantly aid the recovery of the industry.
The Economic Damage of COVID-19 to the Restaurant Industry
On June 2, 2020, Technomic revealed how much the global restaurant industry would suffer from the pandemic. The estimated potential loss would be almost $600 billion in terms of consumer spending by the end of 2020. That would be around 25% to 30% of the entire restaurant sales loss compared to consumer spending last year. Even with ongoing efforts to reboot the industry, the growth might only be felt during the second quarter of 2021, at the least.
"The restaurant industry has taken a huge hit on a global scale, causing operators to get creative on promotions and innovate their menus to stay afloat. In terms of reopening and recovery, we predict there will be four phases that the industry will go through: survival, start, strengthen, and surge. It will take years for the industry to go through these phases and for restaurants to bounce back, as well as varying by market, but this framework should be considered a starting point for any company building a recovery plan for their business," explained David Henkes, senior principal at Technomic.
The disruption caused by COVID-19 in the industry varied per region. Some regions managed to survive the onslaught, while other regions experienced partial or total shutdown. The primary contributors to the endurance of the industry per region were the mode of selling and preparedness in the early months of 2020. The secondary contributors include the local trend before the pandemic and the impairment in related sectors like lodging and travel.
In Asia, several countries successfully reduced the impact of COVID-19 via early efforts to slow down local transmission. Compared to most regions, Asia fared well in sustaining the restaurant industry, despite paralyzed tourism. In Europe, the situation became severe quickly when tourism had been suspended. The critical aspect of the industry in the region would be resilience in the coming months, as tourism could not be expected to return until 2021.
South Africa would begin easing some restrictions. Although the move could bolster new cases, it would help reinforce the region's foodservice industry. Latin America was found with slow growth before COVID-19 outbreaks. The region's industry might have continued to decline until solutions were deployed. In the US, the industry managed to alleviate some losses with drive-thru services and off-premise sales, which were nonexistent in Europe when restaurants had been forced to close.
Unlike in those regions, the restaurant industry in Australia and the Middle East suffered less serious consequences. Both Australia and New Zealand have been on top of the game in managing COVID-19 cases. But the situation of the industry in the Middle East might change as cases continue to rise. As such, off-premise services would be essential to reduce potential losses.
The Consumer Behaviors That Affected the Restaurant Industry
On June 5, 2020, Technomic released The Foodservice View update to show how bad the pandemic has been to the industry. The most influential factors were protests, altered consumer behaviors, safety protocols, and problems in supplies. Together, these factors crippled the growth and recovery of the industry on a global scale.
In the US, the industry was impacted by protests induced by public unrest. Country-wide, the foot traffic indices were 95 in fast food chains and 68 in restaurants in the May 16, 2020 week. By May 23, 2020 week, the indices were down to 80 for fast food chains and 60 for restaurants. That represented a decline of 15% week-over-week for fast foods while a decline of 12% for restaurants.
Like other businesses, consumer spending powered fast-food chains and restaurants for decades. However, COVID-19 changed how consumers would spend their money. Among influencers of altered consumer behaviors, the concern surrounding the virus reappearing has been identified as the most substantial in pulling down sales. About 88% of people in the New England Region and 85% of consumers aged 55 to 64 years expressed major concern on disease resurgence before the year ends, while 32% of people in the West North Central and 31% of consumers aged 18 to 24 years either expressed mild or no concern.
To protect employees from COVID-19, employers must adhere to strict health and safety protocols. That would include face masks, face shields, gloves, hand sanitizers, and social distancing. Even though social distancing could be done inside the premises, restaurant employees would still be interacting with customers physically from time to time. About 43% of restaurant operators expressed concern in keeping employees healthy and safe, 39% in keeping customers healthy and safe, 33% in readjustments in operations to integrate COVID-19 standards, 29% in bringing in enough customers to maintain business operations, 25% in the rehiring of laid-off employees, and 25% in the cost of keeping the workplace healthy and safe.
The international supply lines were disrupted by the pandemic. With limited flights, shipping schedules, and business operations, the supplies of raw materials were either thinned-out or completely depleted. Despite replenishing efforts, the worldwide demand remains very high across basic necessities. More than one-fifth of restaurant and non-restaurant business operators reported shortages, especially in animal protein products. Over 51% of them were considering making a switch from fresh meats to frozen variants.
Several methods can be applied to assist the industry. The most important one is solving as many issues in the supply shortages. The more supplies are available, the more restaurants can survive the pandemic. Another excellent way is to provide useful information to help operators, suppliers, and distributors better tackle the situation.