Foodservice revenues could fall 60% this year

Revenues in the Irish foodservice industry could collapse by as much as 60 per cent this year, according to a white paper published by Bord Bia. It suggests the impact of Covid-19 will be significant, with the market potentially experiencing a near €5 billion drop in turnover this year from €8.5 billion to €3.7 billion.

Even in a “best case scenario” revenue will tumble by close to €4 billion due to forced closures and falling tourism figures.

Last yea, turnover in the foodservice or catering sector topped €6.3 billion in the Republic and €2.2 billion in the North. In a best-case scenario revenues in 2020 will total €3.5 billion and € 1.2 billion respectively. And if the sector fails to bounce back with the reopening of the economy, it could be as little as €2.7 billion in the Republic and €1 billion in the North.

Foodservice companies produce meals prepared outside the home. This covers settings such as schools, workplaces, hospital cafes and restaurants.

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The report reveals a number of trends that are likely to emerge as a result of the pandemic. These include streamlined and smaller menus, increased investment in takeout and delivery options, a decline in self-service options, the acceleration of so-called “ghost kitchens” – kitchens with no on-site dining or takeout option – and consolidation in the sector.

"Foodservice will certainly see contractions in 2020, erasing years of growth and share gain from the retail sector," said report co-author David Henkes of Technomic, which compiled the report on behalf of Bord Bia.

“However, we remain bullish on the longer-term viability and resurgence of the industry as the economy recovers and as consumers grow more confident living in the age of Covid-19.”

Maureen Gahan, foodservice specialist with Bord Bia, said while it was important to acknowledge the damage to the sector, it is also time to begin thinking about how the industry could restart and what permanent changes may ultimately stick.

She said eating out had been particularly hit by Covid-19, but stressed that the restaurant sector was also hugely resilient.

“We have already seen a number of outlets transitioning their businesses to take-away and home delivery. Similarly, we have seen examples from our food and beverage producers that are pivoting their businesses to meet the new needs of their foodservice customers.”

While many restaurants are hoping to reopen shortly, the Restaurant Association of Ireland, which has more than 3,000 members, has said that under current social distancing rules most will not be able to do so.