The Irish foodservice, or the ‘eating out’ industry, experienced significant growth of 61% in value to reach over €8.2 billion this year.
That’s according to Bord Bia’s 2022 Irish Foodservice Market Insights report released today (Thursday, October 3).
This represents an almost full recovery to pre-pandemic levels, but it is set against a forecast for modest growth of 11.6% in 2023 (predicted to be fuelled mainly by cost inflation, rather than consumer visits), according to Bord Bia.
Eating out
According to the research, eight in 10 (76%) Irish consumers say that they are enjoying the social aspect of dining out now that Covid-19 public health restrictions have been fully lifted.
However, with eight in 10 consumers (77%) concerned about their finances, many are changing their out-of-home consumption to reduce costs.
The report identifies a number of growth opportunities for the foodservice sector in response to changing consumer behaviours.
This includes the rise in popularity of eating out on Thursday evenings rather than Friday; lunch and early dinners replacing late-night eating; and the return in demand for eating breakfast out of home.
Maureen Gahan, foodservice specialist, Bord Bia said: “Certainly, for many companies, the boom seen in 2022 has been a welcome return to growth, but most acknowledge that looking ahead to 2023, projections are perhaps just as challenging as they were at the height of the pandemic.
“Significant economic headwinds remain in place, including higher inflation, rising interest rates, global uncertainty and rising energy prices, all of which are likely to create consumer pull back and add to existing industry challenges.
“Today’s report identifies a number of trends and key imperatives for Irish food and beverage suppliers to familiarise themselves with in order to ensure that their own businesses remain relevant to industry needs moving into next year,” she added.
The trends could include creating labour-saving products; providing transparency around environmental and sustainability messages; and enhancing communications around supply chain issues.
Critical factors for foodservice sector
Within the report, Bord Bia has identified nine critical factors which the Irish foodservice sector and suppliers should consider moving into 2023.
These include:
- Energy prices – higher domestic energy bills are likely to suppress consumer demand during the winter. Energy bills are also significantly impacting foodservice operators at a time when all costs are increasing;
- Inflationary pressures – inflation has caused industry growth and valuation to recover quicker than anticipated, but it also creates challenges for consumers. Much of the growth in 2023 is expected to be inflation-driven, with modest growth (if any) in consumer visits;
- Labour shortages – labour shortages are expected to persist into 2023. Additional labour-saving initiatives and products will remain in high demand throughout 2023 and beyond;
- Consumers ‘feeling the pinch’ – as cost continues to pose a challenge to consumers, they will need to see value in dining out beyond the menu price. Delivering a memorable consumer experience is still important to many and take-aways have remained popular amongst younger consumers;
- New consumer behaviours – the industry has seen behaviour changes driven by shifts in hybrid work and labour shortages. For many, Thursday is the new Friday, and lunch and earlier dinners are often replacing evening or late-night occasions. With an increase in consumers ‘on the go’ and a return of office workers (albeit on a hybrid basis), the popularity of breakfast out of home has returned and offers further growth potential;
- Menu tension – with concern around cost, operators have mostly simplified their menus with limited innovation. There is a recognised need for new menu items to maintain consumer interest and drive visits;
- Compressed margins – while operators have raised menu prices significantly, many of them are not passing on full cost increases and so this has resulted in additional margin compression;
- Sustainability – sustainability has returned to the fore for many operators. In today’s environment, much of this is driven by a desire to save on costs (energy, food waste, etc.) as much as environmental concerns;
- Tourism and economic growth – the global situation remains very much in flux, which points to a much more subdued demand for foodservice in 2023. Overall plans and strategies should reflect this likely new reality in terms of both sales and volume growth.