Outlook for UK food-to-go: challenges will accelerate innovation

Date : 22 September 2020

Nicola Knight

Senior Analyst - Food-To -Go

2020 is a year like no other for UK food-to-go.  Previously the hero of the food and drink market, the sector has experienced unprecedented challenges in 2020 which will continue to impact it for years to come.

In our new UK food-to-go market report 2020, produced with the help of colleagues from across the industry, we predict that the sector will decline by 43% this year and only return to 88% of 2019 levels by 2022.   However, the UK’s food-to-go sector has a reputation as one of the most innovative and dynamic in the world and already we are hearing operators such as Pret talk of tearing up the rule book in order to prepare their business for a post-COVID future.

In our report, we explore four scenarios for the future of UK food-to-go, focusing on the current most probable outcome.  As well as revealing the impact of COVID-19 on the overall market over the next two years, we also look in detail at the implications for each sub-sector and the innovation already taking place to adapt to changing consumer needs.

Severe declines this year not reversed by 2022

In the most likely of the four scenarios explored in the report, we forecast that the impact of COVID-19 will cause the UK food-to-go market to decline by 43% to £10.8bn in 2020 - a decrease of £8.1bn on 2019.

A degree of bounce-back is anticipated in 2021, with high levels of year-on year growth off a low base. However, in 2022 – despite continued high growth rates – the market will only reach £16.7bn, £2.2bn (-12%) less than in 2019

UK food-to-go market forecast, 2020-2022

Source: IGD UK food-to-go market report 2020

COVID-19 impact varies by sector

  • Food-to-go specialists will be most affected as they are more likely to be located in city centres and transport hubs with footfall dependent on office workers, commuters and tourists. IGD anticipates store closures and estate sizes in 2022 will be smaller than 2019. Whilst some smaller players and new entrants may grow by moving into vacant city centre properties, economic conditions will mean many empty sites are not filled for some time
  • Coffee shops will be affected in a similar way, albeit to a lesser extent, as locations are more dispersed and have a strong local presence. Through innovation and evolution coffee shops and food-to-go specialists will start to recover somewhat in 2021 and regain market share from retail in 2022, although not to 2019 levels
  • QSR will be most resilient as it offers a value option for financially stretched consumers. Drive thru and delivery offers have also enabled the sector to adapt to local lockdown restrictions. QSR will benefit most from the changes to food-to-go consumption brought about by the pandemic, growing its share by 4.6 percentage points between 2019 and 2022
  • Retailers will benefit from increased visits where food-to-go crosses over with other shopping missions. Convenience stores in particular have and will continue to benefit from their local presence. Retail channels will grow market share, mainly during 2020 as food-to-go specialists and coffee shops are impacted by declines in commuter footfall. 

Short term consumer responses become longer term changes

Unsurprisingly, since the UK went into lockdown almost all food-to-go shopping trips experienced significant declines. Where previous forecasts saw the sector growing at twice the rate of grocery retail, 2020 has seen a rapid change in consumer behaviours and daily routines that could have long term implications.

Footfall in cities and transport hubs – on which many food-to-go businesses depend – has so far been slow to return. The shift to more homeworking in particular has had massive implications for food-to-go. Specialist operators with sites prevalent in affected locations are already adapting strategies to offset this long-term change in consumer behaviour.

The return will be gradual and may be subject to reversal; trends may differ by geographic area subject to local lockdowns. We assume that a degree of homeworking will form a part of the new normal in the short and long term, which may mean food-to-go businesses will adapt to fit in with their customers’ work patterns rather than wait for old habits to resume.

Identifying future opportunities

Over the next two years, changes in consumer behaviours will offer up opportunities but food-to-go businesses need to be quick to grab them. Never has it been more important to know customers, understand them and engage with them. 

Picnic sets for outdoor socialising, lunch boxes for home workers and meals to be heated at home are all recent examples of rapid deployment of new ranges adapted to current consumer needs. Responding this quickly requires staying close to customers, building strong partnerships with suppliers and an internal structure designed for fast decision-making.

Well-developed digital loyalty, communications and ordering systems have a real role to play for businesses looking for an edge here. Engaging with customers in this way should also help operators and retailers to understand where the demand has moved to if city centres and transport hubs continue to lose footfall.

Delivery should also continue to form a part of retailer and operator strategies, particularly if local lockdowns progress. To offset the price of third-party delivery charges many operators are moving to delivery-only dark kitchens with lower overheads.

Want to know more?

  • Retail Analysis subscribers can read the full UK food-to-go market 2020 report here
  • Subscibers can also register for our UK food-to-go predictions and international inspiration webinar on 8th October here
  • Not a Retail Analysis subscriber?  Contact us to purchase a copy of the report
  • Want to know the latest on changing food-to-go shopper behaviour? Read our ShopperVista blog Keeping up with the food-to-go shopper through COVID-19 and beyond