As vast numbers of consumers are still uncomfortable dining indoors, people will respond well to operators that offer outdoor dining facilities throughout all seasons as 75% of consumers are happy to eat/drink in a heated outdoor seating area.

Underlying consumer demand for out-of-home leisure experiences such as eating out remains strong. However, COVID-19 has had a devastating effect on the foodservice industry with sales expected to be cut by more than half in 2020. Prior to the national lockdown that was announced on 4 January 2021, most pubs, restaurants and coffee shops were already closed for dine-in trade for an indefinite period of time due to local tiered restrictions, with businesses only able to offer takeaway food/drink. This latest development adds greater uncertainty for operators and will undoubtedly result in more closures.

The long-lasting impact on the economy represents a key threat to the industry moving forwards, as those hit by unemployment or changes to their financial security will cut back on discretionary expenditure. Meanwhile many people will remain hesitant to visit hospitality venues due to concerns about transmission of the virus, at least until a vaccine is widely distributed.

However, Mintel is optimistic about the long-term prospects for the sector and there are clear opportunities for operators to benefit from consumers’ desire to support local in the aftermath of the pandemic. Pubs and cafés/coffee shops are viewed as being a valuable part of local communities, and more consumers will be keen to visit these establishments regularly once they feel safe to do so. Operators can tap into this goodwill by emphasising their use of local suppliers and by developing their own initiatives to help run or sponsor community events.

• The impact of COVID-19 on the foodservice market.

• Consumers’ participation in eating out and how this has been impacted by the pandemic.

• Ways that brands can adapt their foodservice business to reach more consumers who are staying at home.

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

• Consumers’ perceptions of foodservice venues.

The scope of this Report is the eating out market within the UK. This consists of various market segments, which are defined as:

Burger and chicken: quick-service restaurants with limited service where food is served quickly at the counter. These restaurants are typically used for takeaway, though most establishments have the option to dine in (eg McDonald’s, KFC). Most are open for all-day dining with a continuing focus on lunch and snacking occasions.

Pizza takeaway: brands and independents that typically sell pizza as a key product to takeaway customers, with options for home delivery and collection/click-and-collect (eg Papa John’s, Domino’s).

Pubs: includes branded/managed pubs and tenanted/leased pubs.

Branded/managed pubs: owned by managed pub groups and restaurant groups, with consistent branding and/or menus (eg Beefeater, JD Wetherspoon).

Tenanted/leased pubs: owned by pub companies and leased/licensed to individuals or small franchisees. The manager is often tied to the brewery.

Casual dining restaurants: a sit-down meal in a casual venue that provides a fast, efficient table service (ie where food and drink is brought to the table by waiters/waitresses). Predominantly a branded chain of restaurants that may also offer home delivery services (eg PizzaExpress, Wagamama).

Independent restaurants: a casual restaurant that typically provides a limited number of seats for a sit-down meal and may also offer home delivery services. Owned by one person or group; not part of a branded chain.

Coffee shops: branded chains and independents serving espresso-based beverages as core products. Many larger chains, such as Costa and Starbucks, also serve food options for breakfast and lunch in particular.

Hotel catering: comprising hotel restaurants, bars and room service.

Roadside catering: outlets that operate at MSAs and on major roads, with the leading operators being Euro Garages UK and Applegreen.

In-store restaurants: full-service and/or limited-service restaurants located within retail outlets, including supermarkets and department stores.

Food-to-go specialists: quick-service retail outlets that cater to takeaway customers for breakfast, lunch and snacking occasions (eg Pret A Manger, Subway, Greggs). Most establishments serve pre-packed food and drink in hot/cold displays, and may serve made-to-order food as well, such as salads and sandwiches. Some venues may also provide seats for a sit-down meal. Also referred to as grab-and-go (ie where customers grab a meal, pay at the counter and go).

Other fast-food outlets: quick-service retail outlets that typically cater to takeaway customers, often serving made-to-order dishes. Typical cuisines include kebabs, fish and chips, pies and Chinese (takeaway).

Street food/food courts: Food prepared and served quickly to order from a stall or van with a limited menu, at value prices, and where customers wait on themselves. Street food stalls are often managed by mobile caterers at markets, events and festivals, while food courts are typically located within shopping centres.

The following sectors are specifically excluded from the Report although may be included for the purpose of comparison and analysis.

• Contract catering: On-site catering provided within public sector and workplace environments. Typically, canteen restaurant catering. Also referred to as cost-sector catering.

• Supermarket-to-go: Food that can be purchased off the shelf and taken out to eat, typically from supermarkets and convenience stores.

The first COVID-19 cases were confirmed in the UK at the end of January, 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.

The UK lockdown ended as planned on 2 December, but the revised Tiered lockdown meant that almost all of the UK faced heavy restrictions on social activities. Although all non-essential retailers were able to re-open, foodservice and hospitality businesses still face extremely challenging conditions.

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.

This third national lockdown means that hospitality venues such as cafes, restaurants, pubs, bars are required to close with the exception of providing food and non-alcoholic drinks for takeaway (until 11pm), click-and-collect and drive-through. All food and drink (including alcohol) can continue to be provided by delivery.

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.