The Foodservice Post-Pandemic Playbook

As the COVID-19 pandemic continues, the damage to the industry is becoming increasingly clear. While acknowledging where we are, it’s important to talk about what that industry looks like opening back up and what it eventually settles into post-pandemic. How will foodservice segments evolve and what should we all do to prepare for this new reality?

We shared our predictions for the Top 5 Post-Pandemic Snacking Trends and now we are delving deeper into Technomic’s Post-Pandemic Playbook and our TGF take on some of their predictions for each foodservice channel.

Post-Pandemic Predictions by Channel:

Full Service Restaurants

90% or more of full-service units before the pandemic were small chain/independent (i.e., outside of the Top 500). Independent closures could range from 15% to 25% of all locations depending on the duration. Chains could lose 5%-10% of total locations in 2020. Assuming alcohol delivery and carryout regulations remain relaxed, this will likely be an area of emphasis and innovation for many types of operators.
TGF’s Take: The pandemic forced FSRs to adapt quickly to trends consumers were already asking for. Convenience has been a main driver for consumers when it comes to full-service restaurants especially the demand for online ordering and delivery. We expect these services to stay an important piece of their business and a necessity in the recovery mode.

Limited Service Restaurants

Expect an acceleration of off-premise options, including more investment in drive-thrus by fast casual as well as technology (e.g., app-based ordering, etc.). Possible re-thinking of certain self-service options. Expect more emphasis by fast casual on alcohol, particularly if alcohol delivery regulations remain relaxed.
TGF’s Take: Like FSRs, Limited Service Restaurants were also forced to adapt quickly with online ordering and mobile payment methods. As we predicted last year, we still expect to see LSR focus on adding more plant-based options to their offerings once we are moving into the post-pandemic phase.

Hotel F&B

With banquets and catering representing nearly half of F&B revenue (higher at upscale and luxury properties), hotel F&B will have significant challenges bouncing back until businesses restart larger events and conferences. Lower-cost options, like buffet-style dining, will likely be curtailed. Other areas where consumer concern over contamination exists (e.g., minibars, in-room coffee, etc.) could also be vulnerable. The number of hotels that reopen will likely be smaller by 10%-15%, and the travel sector more generally is anticipated to one of the last economic segments to recover.
TGF’s Take: We agree that without business events and weddings, hotels will feel the hurt into 2021. As other channels have pivoted into new lines of business, hotels will need to consider new opportunities for foodservice sales.

Convenience Store Foodservice

We expect some refocus by c-stores on the fundamentals, including a renewed focus on the grocery/ sundries side of the business. Within foodservice, self-service roller grills and other self-service stations are vulnerable and could potentially be removed or reduced in number and scope. There are likely to be more c-stores that get involved with delivery.
TGF’s Take: Once reopening phases are complete across the country, we expect road trips to be the primary source of family travel this year. This is good news for convenience stores. C-stores should focus on the convenience they are identified with and invest in online ordering and an increased amount of grocery items to cover any foodservice losses.

Supermarket Foodservice

With the short-term acceleration in grocery store sales, expect less focus on supermarket foodservice. It is likely that many self-service models within supermarket will be deemphasized.
TGF’s Take: Supermarkets are one of the few channels whose sales have not been hit by the pandemic. With more and more customers shopping center-of-store aisles, there is a new opportunity to introduce more shelf-stable brands to the marketplace. Private label is also a big opportunity for supermarkets with consumers more price-sensitive post-pandemic.

B&I

With an acceleration in working from home (and an uneven return in office workers to their job), business feeding will be slow to return to pre-pandemic levels. B&I is likely to see more prepackaged foods throughout the foodservice areas.
TGF’s Take: This is a foodservice segment that might change completely as employers allow more people to work from home indefinitely. Those companies that do return to a full in-office environment will focus on employee appreciation tactics and free snacks could be a big piece of this. While we might see less bulk snacks and more packaged snacks initially, we do expect this to bounce back. With gravity bins and repackaged individual serving sizes, there are plenty of safe options for bulk snacks.

Recreation

This is likely one of the last segments to reopen and will likely underperform for the next several years. Food and beverage will likely be de-emphasized as margin and profitability concerns drive decision-making at many of these types of operators. Consumers’ desire for value will be paramount.
TGF’s Take: This segment will largely depend on consumer demand and safety concerns. After being quarantined for months, consumers will probably want to get out of their houses, but they need to feel confident about the safety measures in place. We are already seeing some large amusement parks reopen with strict new safety guidelines. Expect smaller recreation locations to watch and follow their lead.

Colleges & Universities

Assuming most universities reopen in the fall (an assumption that is NOT guaranteed), there should be less disruption in this channel compared to others, although there will be a shift in cafeteria feeding to reduce/minimize the risk of unsanitary self-service stations.
TGF’s Take: We agree this segment should be expected to return to somewhat business as usual if schools do indeed open back up in the fall. In the beginning, we could see an increase in packaged snacks in cafeterias and an increase in sales on grocery items at on-campus markets. Similar to the trends we saw with restaurants, colleges should consider adding online ordering and delivery when possible to their foodservice outlets.

Hospitals

Visitor feeding and the hospital cafeterias will gradually come back as the lockdown is reduced at hospitals. However, as in other cafeteria segments, expect changes in service and labor.
TGF’s Take: Although hospitals saw an increase in patients during the pandemic, foodservice budgets were cut in healthcare due to no visitors. Expect this to increase back closer to normal levels as visitor restrictions are lifted.

Refreshment Services

Anticipate packaged goods to be more in demand, at least in the short term. While vending has gradually been declining, there may be some uptick in sales, and micromarkets will continue to be in demand as unmanned retail can offer better solutions in workplaces and education. Expect slower growth in area like office coffee and pantry services.
TGF’s Take: We agree that micromarkets will be key for growth in this segment post-pandemic. A large portion of their success depends on how fast B&I bounces back.