Foodservice sector unlikely to fully recover until end of 2022

'As the economy recovers and consumers grow more confident living in the age of Covid-19, this will see a parallel recovery in the Irish foodservice market,' says Bord Bia’s Maureen Gahan.

People enjoy drinks on Market Street in Carlingford, Co Louth. The foodservice sector will take longer than expected to recover, according to Bord Bia. Picture: Liam McBurney/PA Wire

The foodservice sector — taking in gastropubs, restaurants, hotels, and office caterers — is unlikely to recover to pre-pandemic revenue levels until the end of 2022, Bord Bia has warned.

While the gradual reopening of the hospitality industry means some growth will be seen this year, a return to the kind of trading levels seen before the Covid crisis hit in early 2020 will take longer than first anticipated, the State agency has warned.

In a report on the Irish foodservice sector, Bord Bia said the prolonged Covid lockdown restrictions this year — and the resulting disruption to staffing levels — have resulted in the slower-than-anticipated recovery.

Double-digit revenue growth is still expected for the sector this year. Bord Bia is anticipating an 11% increase in foodservice revenues for 2021, to around €5bn.

However, that is well below the 16% growth that it had factored in as a “worst-case scenario” for 2021.

Princes St, Cork, where a new multi-coloured canopy of parasols has been installed to support outdoor dining in all weathers. Picture: Michael O'Sullivan /OSM PHOTO

Bord Bia’s foodservice specialist Maureen Gahan said the agency “had not anticipated the length nor depth of the lockdown that was to follow” when initial forecasts were made.

Foodservice sector revenues rose for eight consecutive years before Covid’s impact led to a massive 47% reduction in 2020 — dragging combined revenues down from €8.5bn to €4.5bn.

However, Bord Bia expects growth to balloon by 56% next year. 

But, it said, it will be the end of 2022 before the majority of the industry can return to close to the pre-pandemic levels of trade.

“Foodservice in Ireland has displayed resilience in the face of the most prolonged shutdown in modern memory,” Ms Gahan said. 

The industry has shown adaptability, perseverance and tenacity to survive, and with the assumption that the worst part of the crisis has passed, will begin to emerge and grow again in 2021 and beyond.

"We are forecasting a strong second half to 2021 as the vaccine rollout continues at pace, coupled with pent-up demand and consumer savings, and we remain confident on the longer-term viability and resurgence of the industry.

“As the economy recovers and consumers grow more confident living in the age of Covid-19, this will see a parallel recovery in the Irish foodservice market.”

The report said that while the availability of skilled labour was a concern even before Covid, that has been further exacerbated by the crisis and the overall level of job uncertainty in the wider economy. 

It also said an increase in contactless experiences — be it when it comes to payments, ordering, and/or reservations — will be the norm after Covid, while restaurants and cafes will need to accommodate more for both dine-in and outside consumption options.

“Technology has been a key enabler for restaurant and foodservice operator survival and success during the pandemic,” said report co-author David Henkes.

“Many of these changes are here to stay.”