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Foodservice industry sales to drop as much as 27 percent in 2020: Technomic

Restaurants face decision to close units or shift to takeout, delivery

Food consultancy Technomic provided a COVID-19 update for the week ending March 13, assessing the impact to foodservice. Using modeling techniques and consumer research, it was able to outline some of the major developments as coronavirus continues to spread across the country. In a report updated by Joe Pawlak, managing principal, it provided more clarity on the virus’ ramifications, expecting a 12 percent to 27 percent decrease in year-over-year sales growth for the foodservice industry during 2020.

Restaurant dining-room closures and shelter-in-place orders are taking a big bite out of restaurant business. While the COVID-19 outbreak continues to dominate the headlines, Technomic found that there was a sharp increase in the number of consumers who are concerned about coronavirus and also those who are not willing to dine at restaurants. During the week of March 13, 77 percent of consumers followed coronavirus news compared to 66 percent just one week earlier.

Restaurants struggle as they shift to off-premises business only and consumer spending drops 45 percent. Video by Eatery Pulse Streem.

Among those ages 18 to 34, coronavirus increased in importance: from 53 percent, one week earlier, to 66 percent, reported Technomic. What’s more, during the week ending March 13, 53 percent of all consumers said they would not go out to eat at restaurants as often and 48 percent said they would likely not purchase food or beverage away from home. This compares to 32 percent and 31 percent, respectively, for those same topics just one week earlier.

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The silver lining in the report: the number of consumers who would likely order food for delivery nearly doubled. During the week of March 13 respondents that favored delivery increased from 13 percent of 25 percent. Restaurants are not alone in facing a sales crisis due to COVID-19. The $22.8B K-12 foodservice sector has been impacted severely by school closures. Technomic reported that all states have at least one district with closed schools.

The challenges facing restaurants are enormous. Restaurants need to weigh considerations for restaurant closures or shift of their business to a takeout/delivery model only. For suppliers, Technomic announced these important recommendations in its own verbiage, in its update:

  • Being transparent with all trading partners regarding their response to COVID-19 and safeguards taking place within their organizations
  • Start adjusting plans based on lower industry volume expectations
  • Explore micro-niche opportunities, including products that are more conducive for delivery

This report also factors in information reported on Twitter from Technomic executives. We have adjusted the data accordingly. To view the source report, navigate here.

Photo credit: Angelo Pantazis

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