What you need to know

Mintel’s COVID-19 Tracker shows that consumer confidence in eating out is gradually improving, with 42% of Brits saying they would feel comfortable going to an outdoor restaurant/bar as of 3–11 September, compared to 27% at the end of June (on the eve of premises reopening).

Whilst it is important for the market to maintain the momentum of August’s eating out participation helped by the government’s ‘Eat Out to Help Out’ (EOHO) scheme, consumers’ “discount mindset” is likely to persist in the face of tighter household budgets and rising unemployment in the UK.

Although quick service restaurants (QSRs) are often characterised by the takeaway nature of the food and drink, more QSRs will offer home delivery, which will provide a regular and consistent revenue stream that will help to offset some of the uncertainty surrounding dine-in trade. Whilst some of this expenditure will be redistributed to QSRs within suburban and rural areas, overall spend will be restricted by the lasting impact of COVID-19 on the economy, unemployment and consumer confidence.

Since VAT has been temporarily cut from 20% to 5% for food and non-alcoholic drinks sold in foodservice venues, some big players including Burger King and Subway have slashed prices in the form of value deals to pass on the benefit of the VAT cut to their customers.

Key issues covered in this Report

  • The impact of COVID-19 on the QSR sector, with a focus on consumers’ eating out decision-making process.

  • Consumers’ QSR eating in and takeaway/home delivery habits and how these are impacted by the COVID-19 outbreak.

  • Improvements that consumers would like to see made to QSR venues and their food/drink offerings.

  • Consumers’ attitudes towards the value and quality of QSR food/drink.

Products covered in this Report

In this Report, Mintel analyses consumers’ decision-making process with regards to QSRs. Burger and chicken restaurants are a clearly defined sector of the QSR market. They are characterised mainly by the way the leading brands operate so that, in the same way a McDonald’s outlet typifies the burger market, a KFC outlet typifies the chicken market. The way the market has been changing means that although the core product defines these outlets, they also tend to offer other food types. This is particularly the case for burger restaurants, which also offer chicken and vegetarian options.

Although QSRs are often characterised by the takeaway nature of the food and drink, a significant proportion also offer an eat-in facility. In many leisure and retail park locations a drive-through facility accompanies the main restaurant. Home delivery is a new growth strategy for this market.

The main meal items are served hot, usually from a counter, with the emphasis on speed of service and consistency of product. The format of each brand is typically standardised, with the consumer being able to expect the same offering and standards throughout the country.

Although small in number by comparison, some outlets in this market, such as McDonald’s, offer a more sophisticated eat-in facility, including table service where this is an optional offer.

This attitudinal Report explores eating out habits in terms of usage and frequency of visits, changes in usage resulting from COVID-19, interest in menu features and potential opportunities around advanced technologies. The Report also examines selected initiatives by foodservice operators, such as product, venue development and marketing activities.

COVID-19: Market context

This update was prepared on 16 September 2020.

The first COVID-19 cases were confirmed in the UK at the end of January 2020 with a small number of cases in February. The government focused on the ‘contain’ stage of its strategy, with the country continuing to operate much as normal. As the case level rose significantly, the government ordered the closure of hospitality venues such as pubs and restaurants (except for takeaway) on 20 March 2020.

A wider lockdown requiring people to stay at home except for essential shopping, exercise and work ‘if absolutely necessary’ followed on 23 March. Initially, a three-week timeframe was put on the measures, which was extended in mid-April for another three weeks.

On 10 May 2020, the Prime Minister announced revised guidance, recommending that people who could not work from home should return to the workplace, and giving people more scope to spend time out of the home. Further relaxations to lockdown rules were announced in the week of the 23 May, including gradual re-opening of non-essential retailers, and increased opportunities for social interaction across households.

On 23 June the government announced that pubs, restaurants, hotels & other holiday accommodation and hairdressers would be allowed to re-open in England from 4 July. The guidelines on social distancing were modified from 2.0 metres to ‘1.0 metre-plus’ – from 4 July people in England were advised to keep 2 metres apart where possible, but where not possible to keep 1 metre apart while taking ‘mitigating measures’. The guidelines for foodservice also included:

  • Maintaining social distancing between staff and customers when taking orders and minimising customer self-service of food, cutlery and condiments, which could mean using screens or tables at tills and counters

  • Prioritising contactless payments

  • Avoiding clusters of people waiting for or collecting takeaways within a venue.

In Scotland pubs were allowed to open beer gardens from 6 July, and could welcome indoor trade from 15 July, when the 2.0 metre rule was reduced to ‘1.0 metre-plus’ for public transport, hospitality and retail. In Wales pubs and restaurants were allowed to open outdoors-only from 13 July and indoors from 3 August, with exemptions made to the 2.0 metre rule for businesses that cannot adhere to this as long as other precautions are taken.

On 9 September 2020, HM Government published guidance for England which centres on the ‘rule of six’. Venues following COVID-19 secure guidelines can host more than six people in total, but no one should visit in a group of greater than six. It will be illegal to be in group of more than six from outside of one household from 14 September. Those visiting one of these places, such as a pub, shop, leisure venue, restaurant or place of worship should:

  • Avoid social interaction with anyone outside the group

  • Provide contact details to the organiser to be contacted if needed by the NHS Test and Trace programme.

On 22 September 2020, the government announced that from 24 September 2020 pubs, cafés and restaurants in England will only be allowed to provide table service, operating up until 10pm, while people have been told to work from home if they can.

Economic and other assumptions

Mintel’s economic assumptions are based on the Office for Budget Responsibility’s central scenario included in its July 2020 Fiscal Sustainability Report. The scenario suggests that UK GDP could fall by 12.4% in 2020, recovering by 8.7% in 2021, and that unemployment will reach 11.9% by the end of 2020, falling to 8.8% by the end of 2021. The current uncertainty means that there is wide variation on the range of forecasts however, something reflected in the OBR’s own scenarios. In its upside scenario, economic activity returns to pre-COVID-19 levels by Q1 2021. The OBR’s more negative scenario, by contrast, would mean that GDP doesn’t recover until Q3 2024.

We are working on the assumption that a vaccine will be available by mid-2021, but that there will be continued disruption to both domestic and global markets for some time after that.

At the time of writing (16 September 2020), the government has tightened restrictions on meeting in groups after a spike in infections which led to speculation that a second wave of coronavirus is in progress now and further lockdown measures may be required. We don’t expect industries such as hospitality, travel and live entertainment to return to any kind of normality until a vaccine is introduced.

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