Casual Dining

Unsurprisingly, the Casual Dining sector in the United Kingdom has been amongst the worst impacted by Covid-19 lockdowns and subsequent social distancing rules, with c.£220m of revenue lost every day from April 2020 to March 2021 in the UK. The impact has not been felt equally across the sector, with sub-sectors and geographies feeling the impacts differently.

• Those with attractive and well-developed takeaway/delivery options at the outset of the pandemic were able to pivot to a takeaway model more rapidly than their peers. However, takeaway sales only account for a fraction of sales and even operators who significantly grew their takeaway sales were unable to completely replace dine-in sales, while also paying substantial commission to food delivery platforms (e.g. Uber Eats and Just Eat).
• As lockdown measures ease and vaccine rollouts continues, operators have seen positive signs of recovery to trading performance as they re-open, however demand remains difficult to predict. Following social distancing measures easing, it is evident that consumers are eager to return to venues following a long period of closure and harsh restrictions, with increased capacity creating a positive boost for operators. It is yet to be seen whether this recovery is a result of pent up demand, or a return to “normal” sustainable trade which will allow businesses to address significant liabilities built up over the course of the pandemic.
• Despite pent up demand for consumers returning to venues, operators will need to continually reassure consumers of safety measures in place, as consumer demand following the pandemic remains fragile. Business will need to adapt to the new way of operating with increased hygiene standards to evolving technology (i.e. menus on apps / via QR codes, online booking systems etc.) to ensure future viability, which poses a significant operational and financial challenge for many operators.
• During a period of closures/significantly reduced demand, global supply chains reacted by winding down and have struggled to meet surging demand as economies reopen. As a result, there have been food shortages and price increases. Strong consumer demand during initial phases of reopening has meant operators have been able to pass on these price increases. It is unclear how long consumers will accept increases before seeking out better value offerings which would signal a return to competitive pre-pandemic pricing pressures.
• The sector continues to be impacted by staff shortages, with operators being forced to adjust opening hours or close all together. Staff shortages are also forcing wages up as operators seek staff in a competitive labour market, placing further pressure on a sector with traditionally thin margins.
• As the sector has slowly re-opened, city centre locations that are highly dependent on workers returning to offices or international tourists have experienced subdued demand, with residential areas and locations popular with domestic tourists seeing a faster return to pre-pandemic levels of trade.
• Operators with a mix of indoor and outdoor spaces have typically traded favourably as a result of government restrictions on indoor trade and some consumers continuing to be wary of non-essential social contact, especially in enclosed indoor settings.
• Despite the challenges to the sector, the pandemic has reminded consumers of the importance of supporting local venues and the positive impact that socialising has on mental health, providing hope for a recovery in the medium term.