Covid-19 and the Future of Takeaway
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The impact of the COVID-19 pandemic has uprooted all corners of society, disrupting the way we live, work, communicate and shop. Throughout the pandemic and subsequent lockdowns, the takeaway route expanded across the whole of the hospitality sector to the extent that the UK government deemed it an ‘essential’ part of the economy, playing a critical role in feeding the nation.
Our report provides a snapshot of the valuable economic, social and cultural contribution made by the takeaway sector to the UK during 2020. In collaboration with British Takeaway Campaign, the work examines the significant steps restaurant and takeaway owners took to continue serving their communities and ensure their businesses survived. It also illustrates how consumer appetites continue to change and what the future of takeaway will look like.
How COVID-19 changed the future of the restaurant sector
For many restaurant, café and pub owners, takeaway was a lifeline during lockdowns. Businesses adapted, some providing takeaway for the first time and others quickly expanding their takeaway service to increase revenue.
During our research, we spoke to hundreds of restaurant and takeaway owners to understand how they changed their business, and surveyed consumers to paint a picture of how food habits have changed.
Three distinct themes have emerged: takeaway will continue to be a vital source of stable revenue for restaurants, even after they can reopen for normal service; technology is key to finding new customers; as is being able to adapt a business to capitalise on changing consumer trends.
Takeaway will continue to provide vital support to restaurants. 32% of consumers say they will continue to order more takeaway after the pandemic, while 31% say they will eat out less in the future. It’s clear that restaurants, pubs and cafes need to blend their traditional eat-in and takeaway offers in the future, so they can benefit from continued takeaway income while the economy reopens and the hospitality sector recovers, but also to ensure their businesses can withstand any unexpected challenges. The strongest businesses will be those... (download full report for more details).
The role of technology
Our research found that consumers now rely on apps and websites to order their takeaways. 39% of consumers say that mobile apps are their preferred method of ordering takeaways, while 24% place orders through a website.
What’s more, consumers who order via apps or websites also spend more per order than those who order in person or over the phone - half of the total spend on takeaways in 2020 was made through apps such as Just Eat. App users are also almost twice as likely to have ordered from new restaurants since the outbreak of the pandemic. These findings illustrate... (download full report for more details).
Business adaptation
For many restaurant, pub and café owners, pivoting to offer takeaway was vital in keeping their businesses afloat, becoming their only source of income for much of the last 12 months.
Making the change was not always straightforward. For many, it meant fundamentally altering their offer, such as switching to new cuisines or dishes better suited to takeaway or investing in new equipment. This required financial investment and an innovative, flexible approach. For those who were able to make these changes, they also often saw revenue increase as with the adoption of technology. In order to capitalise on the opportunity that takeaway presents in the months ahead, business owners need to consider every step of the customer journey and be prepared to change operations to meet changing consumer demands.... (download full report for more details).
Challenges to growth
Despite the growth in spending, takeaways still only provided a fraction of revenue compared to what consumers would usually spend on eating out. Total spend in restaurants and cafes in 2019 was £97.8 billion. The increase in spending on takeaway in 2020 accounts for just 1.7% of 2019 revenue, illustrating the scale of the hit the hospitality sector has faced over the last year.
Strong regional disparities in consumer spending and the ability of restaurants to adopt new technology means there has been a significant variation across the restaurant sector, with the opportunities to capitalise on a switch to takeaway felt most strongly in major UK cities. Adapting operations to offer takeaway can also require significant levels of investment, at a time when... (download full report for more details).
Recommendations for Government
We urge the Government to consider ways it can support businesses as they adapt to changing consumer demand. Not only has the pandemic had an enormous impact on the sector, but prior to that, consumers increasingly wanted high quality, restaurant grade, healthy food that they could eat in the comfort of their own home. Many takeaway owners were already responding to these new demands before the pandemic hit. As a result, the line between takeaway and restaurant is more blurred than ever before.
1. The Government should make changes to the Enterprise Investment Scheme and Seed Enterprise Investment Scheme so that established businesses can access equity from investors, rather than more debt through the Recovery Loan Scheme announced in the Budget in March. Access to finance is incredibly important if businesses are to be able to adapt their operations.
2. The Government must ensure that Restart Grants are distributed speedily, with uniform criteria across the UK so that takeaways and restaurants get equal access wherever they are based.
3. The Government should extend the current reduced 5% VAT rate until the end of March 2022 while the sector recovers.
4. The Government must bring forward the business rates review to coincide with the new... (download full report to view all 10 recommendations).
Conclusion
After the most extraordinary and challenging year for the hospitality industry, the importance of the takeaway sector has never been clearer. Takeaway will continue to be at the heart of the hospitality sector as it looks to recover and looks set to stay there, even after the sector starts to flourish again. The recommendations made by this report will help businesses survive the pandemic and thrive in the future.
