The coronavirus pandemic has discouraged canteen usage with over half of respondents (53%) stating that they would visit canteens less over the next 12 months, and 69% of these people listed concerns over exposure to COVID-19 as a reason for visiting canteens less.

A rising number of cases and a new strain of COVID-19 led to a rising number of local lockdowns, and on 4 January 2021 the announcement of a new national lockdown. The harsher measures will severely restrict contract catering operations through most of Q1 2021 and are likely to prolong the market’s recovery beyond that as businesses will delay reopening offices and other facilities will remain out of action.

Consumer wariness, in addition to COVID-19-related closures and restrictions subdued the contract catering market’s performance in 2020, and led to a 55% reduction in its value to £2.7 billion. Closures and restrictions limited operational capacity, resulting in a misalignment between overheads and revenues. This has significantly impacted travel caterers, which have seen a dearth of passengers at rail stations and airports, with no long-term resolution beyond the rollout of the vaccination programme.

Despite these challenges, the pandemic has galvanised many leading contract caterers to invest in digital foodservice platforms. These offer long-term opportunities for efficiency savings through analytics, in addition to increasing their addressable market through the facilitation of food delivery which may rise in popularity if the uptake of remote working prompted by the crisis becomes institutionalised.

• The impact of COVID-19 on the contract catering market

• The impact of COVID-19 on consumers’ use of canteens and how caterers are responding to COVID-19

• How public awareness about health and wellbeing can be tapped into by corporate caterers

• How younger generations are driving investment into better ethical and environmental practices

• How Brexit is likely to affect the contract catering market

• Consumer attitudes, behaviours and preferences in the contract catering market

• Industry structure, company activity and operators’ responses to COVID-19.

The first COVID-19 cases were confirmed in the UK at the end of January 2020, with a small number of cases in February. As the case level rose, the government ordered the closure of non-essential stores on 20 March.

A wider lockdown requiring people to stay at home except for essential shopping, exercise and work ‘if absolutely necessary’ followed on 23 March. It wasn’t until 15 June that non-essential stores were allowed to re-open, followed by pubs, restaurants, hotels and hairdressers on 4 July, and many beauty businesses on 13 July.

By September, it had become clear that the UK was at the start of a second wave, and social distancing measures were intensified. Continued increases in infection numbers led to Wales implementing a two-week national lockdown from 19 October, England announcing a full month-long lockdown from 5 November, and Scotland introducing a new five-level system of coronavirus restrictions.

Despite these restrictions, however, case numbers continued to increase, and after a brief relaxation for Christmas Day, a full national lockdown was announced on the evening of 4 January. There is no defined end date for the lockdown: the legislation presented to Parliament extends to 31 March, but Boris Johnson has said that he hopes that schools will be able to re-open after February half term.

The UK’s vaccination programme started on 8 December, and with both the Pfizer-BioNTech and the Oxford-AstraZenica vaccines licenced for use in the UK, the government aims to offer a vaccine to 15 million people by mid-February.

Much of this Report was prepared in December 2020, before the announcement of the January lockdown, and when the extent of the vaccine rollout was less clear.

However, the content was reassessed and, where necessary, adjusted on 6 January, in order to ensure that our analysis and our forecast expectations still hold true.

Our core assumptions on the path of the pandemic had always included an expectation of severe disruption to markets and consumers’ lifestyles well into 2021, with a strong likelihood that the virus would still be with us even into 2022. Although the second wave of infections and subsequent lockdown puts us towards the negative end of our initial expectations, these developments are still broadly consistent with our previous assumptions.

Similarly, Mintel had factored in the likelihood that an effective vaccine would be available from early- to-mid 2021. The licensing of the Pfizer-BioNTech and Oxford-AstraZenica vaccines puts us slightly ahead of that assumption, but the challenge associated with rolling out a new vaccination programme to millions of people means that our previous assumptions are still broadly consistent with the new reality.

Mintel’s economic assumptions are based on the Office for Budget Responsibility’s central scenario included in its November 2020 Fiscal Sustainability Report. The scenario suggests that UK GDP will have fallen by 11.3% in 2020, recovering by 5.5% in 2021, and 6.6% in 2022. GDP isn’t expected to return to pre-COVID levels until the fourth quarter of 2022. The central scenario has unemployment peaking at 7.5% in Q2 2021.

The current uncertainty means that there is wide variation on the range of forecasts, however, and this is reflected in the OBR’s own scenarios. In its upside scenario, economic activity returns to pre-COVID-19 levels by Q4 2021. Its more negative scenario, by contrast, would mean that GDP doesn’t recover until Q3 2024.

The second wave of infections and subsequent lockdown means that the short-term prospects for the country are consistent with the OBR’s negative scenario, but this needs to be balanced against the fact that the vaccine rollout is ahead of even the OBR’s central scenario. Medium- to long-term, then, we are still basing our forecasts and market analysis on the OBR’s central economic scenario.

For the purposes of this Report, contract catering is defined as the part of the foodservice industry that supplies meals to third-party organisations. This encompasses a wide variety of businesses and institutions.

This report concentrates on the main sections of contract catering; Mintel has used the following definitions:

Business and industry: company staff catering, including government and agency locations.

Local authorities: local government.

Education: including both state education, such as schools, colleges and universities and independent schools.

Healthcare: including NHS and trust hospitals, private hospitals, and private nursing homes.

Defence: MoD and armed services.

Remote sites: including oil rigs, training centres and construction sites.

Retail catering: including catering for the public in high-street retail outlets.

There has been an increasing trend for facilities management companies to provide contract catering services. However, as these services are often bundled with other services and provided in one facilities management contract, it is not always possible to analyse the value of the catering aspect.