Crisis as a Catalyst: Reinventing the Out-of-Home Gastronomy

The temporary closures of restaurants due to the pandemic, followed by a cost of living crisis and political instability: All of these circumstances have led to a change in the consumers' attitude towards out-of-home food services. Whilst delivery services have experienced a boom over the past two years, the restaurants that were recording growth before the outbreak of COVID suffered from the pandemic-related restrictions. Since the economic and political crises are still having an effect on the food industry, this does at the same time enable the sector to adapt to new circumstances.

The latest survey by Innova Market Insights on eating habits outside of one's own home, shows that more than 80 percent of the people worldwide use food delivery services. Fast food restaurants are the most popular, followed closely by light restaurants. The main reasons for ordering meals from a delivery service are on the one hand the lacking ability, inclination or time to cook and on the other the availability of fast delivery options and the possibility of enjoying restaurant quality without having to leave the house.

The long-time consequences of the pandemic are the reason for the increased popularity of having food delivered to one's own home. Due to the limited social activities and long closures of pubs, the selection of delivery services has increased for the consumers and more and more people have registered with the umbrella providers. The growing offer of options fitted into a broader, experimental trend during the pandemic: Almost 30 percent of the consumers stated that they use restaurant delivery services to try out something different or something new. As Innova surveys demonstrate the habits that developed between 2020 and 2022 are ongoing . The challenge for restaurant chains nowadays is to stand out against a multitude of offers on the delivery portals which the majority of providers are available on.

For instance, McDonald's recorded a decline in the number of customers eating in the restaurant compared to before the pandemic, but parallel to this also an increase in the number of take-away and delivery orders. Furthermore, the company recently ascertained that digital orders make up a third of the turnover in its six largest markets. As a result all of the business areas are to be examined this year with a view to closing down loss-making business areas and revising the core offer. For smaller businesses the current challenge lies in increasing the recognition of their brand and achieving profit margins that cover the delivery costs. The possibility of expanding their culinary niches and offering more diversity compared to the big chains is an advantage here.

The restaurant industry had experienced rapid growth prior to 2019 and then it became one of the biggest victims of the pandemic. The industry still hasn't recovered completely today. Tourism is still on the decline and more and more people are working from home. They are no longer commuting and spend their lunchtime within their own four walls.

However, in the summer of 2022 the demand began to increase again and more than half of the consumers worldwide reported to Innova that they feel safer again when they visit restaurants because the threat of catching COVID has decreased. Less than every fifth person claimed to be worried.

Regarding the decision of which restaurant to eat at, the most decisive aspect is the price or good value for money . This particularly applies due to the cost of living crisis and also explains why the majority (more than 60 percent) of the people who visit restaurants opt for fast food or light restaurants. The three most important reasons for visiting a restaurant are meeting up with family and friends, special occasions or a romantic meal with one's partner. New dishes, local cuisine and seasonal offers are popular menu options when visiting a restaurant.

The retail trade still offers food service brands turnover and marketing opportunities, but this does involve risks. Half of the respondents of the Innova taste survey stated that when shopping in supermarkets they are looking for taste experiences they originally made in restaurants or at food trucks. That means restaurants have to offer something special that the consumers can't make themselves at home. This especially applies for brands that lend their names to retail trade versions of their products. There still has to be an additional incentive that justifies the additional costs and efforts involved in visiting a restaurant or placing an order - whether it is the overall experience or the improved quality and selection.

Insecure economic times, wage stagnation and price inflation are restricting the consumers' expenditure on luxury goods . Part of the demand for out-of-home food services may have diminished because of changed habits, but the delivery services on the other hand have benefited from those same pandemic influences. In the face of the high fixed costs and the fact that the consumers are spending cautiously, it is more important than ever for the food service brands to optimise their number of outlets and their offer. Because consumers still feel the need to carefully manage their resources, the brands of the out-of-home sector have to attract their attention with unique offers and skilfully encourage their target group to order something from them or dine out at their establishment.

Market and consumer insights put together by: Innova Market Insights .

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