CHICAGO — The coronavirus pandemic has shocked the foodservice industry on nearly all fronts. Convenience stores and supermarkets have curtailed much of their food programs while restaurants remain shut down except for carryout and delivery. But how will the foodservice industry operate when the pandemic eases?
In a new white paper, CSP’s sister research firm, Technomic, attempts to answer that question.
“Coming out of this pandemic, there are certain trends that will accelerate in the short term and may have longer-lasting impact on the industry over the course of the next several years,” Technomic said. “These macrotrends will generally be true across most foodservice sectors and will have impact on not only operators but also will reverberate through the supply chain.”
Here’s how the foodservice industry might look once the health crisis is over—whenever that may be …
A recession awaits
Technomic has outlined three outcomes that the foodservice industry could face once the coronavirus outbreak slows. All three scenarios include an economic recession through the end of 2020. The mildest scenario would inflict an 18% decline in year-over-year foodservice revenue, and the worst would be a devastating 26% drop. These numbers are greater than Technomic’s forecasts in late March, which included a 10% to 11% drop for the mildest scenario and a 21% to 22% drop in the worst-case scenario.
“With the rapid collapse of the U.S. economy, it’s clear that a recession has become likely,” Technomic said.
The labor headache
Although many c-store chains have launched hiring initiatives during this time, labor—especially recruitment and training—will remain one of the industry’s biggest challenges once the crisis subsides. Operators should focus on cross-training their staff to handle multiple duties in different departments, Technomic said. This may help if other employees fall ill and cannot come to work or are furloughed or laid off during another crisis.
Made-to-order food will fall
More than a third (38%) of c-store operators said their made-to-order foodservice items have dipped in sales since the start of the pandemic, according to a recent CSP survey. Expect this to increase even as the pandemic slows, Technomic said, because the labor challenges will encourage customers to purchase cheaper food options such as grab-and-go items.
Off-premise will grow
Off-premise technologies such as home delivery, preordering through mobile apps, online ordering and cashierless shopping are increasingly becoming part of the c-store industry. Even as the pandemic slows, expect more operators to invest in these services; these formats may become more common than in-store purchasing altogether, according to more than half (51%) of the respondents to CSP’s recent retailer survey.
“This crisis has shown that having any off-premise strategy to diversify risk is a must,” Technomic said.
Since the beginning of March, numerous chains have halted self-serve food and beverage options in their stores, and it’s likely that some self-service stations will remain closed permanently once the pandemic slows, Technomic said.
“Self-service roller grills and other self-service stations are vulnerable and could potentially be removed or reduced in number and scope,” Technomic said. “Changing methods and dispensing styles, as well as a renewed hypersensitivity to sanitization to ensure safety, will likely be necessary.”
Single-use packaging will increase
Consumers have increasingly desired sustainable packaging options over the years, and while many operators have listened, this will likely halt after the pandemic, Technomic said. Operators are focusing on “safe” packaging, such as single-use cups, during this time to protect their customers and employees. Also, cost is a driver for packaging, and the price of single-use cups and to-go boxes, for instance, are cheaper than those of sustainable options.
Menus will be streamlined
C-store retailers, restaurant and grocery operators will likely focus on selling their core food and beverage items—those that drive the most profits and are popular—immediately after the crisis, Technomic said. These are the items that will keep their businesses afloat while they are being forced to cut back on their supply.
“Assess and evaluate the menu to focus on items that are most profitable and travel well,” Technomic said.