Food services firms warned of Brexit and rent squeeze despite solid year

Brexit disruption to the food services industry is likely to slow sales growth and complicate sourcing of ingredients.

That is the central finding of the annual Foodservice Market Insights report from Bord Bia, which sees a loss of British tourist trade and tougher UK supply chains as the top Brexit worries for food providers.

Consumers will spend €8.55bn on out-of-home food and drink this year, 4.5pc higher than in 2018, the report found – but slower growth of 4.2pc annually is forecast for the coming three years.

“The Irish food service industry has been growing at robust levels for several years, but warning signs are on the horizon,” said Maureen Gahan, a food service specialist at Bord Bia.

Please log in or register with Independent.ie for free access to this article.

Log In

New to Independent.ie? Create an account

“Industry operators, and food and drink suppliers alike should be examining options and alternative strategic plans in the event of a slowdown,” she said.

The report said operators and distributors must keep “actively working to identify alternatives to sourcing products from the UK”. It said: “This may include focusing more on Irish goods, as well as evaluating continental Europe or even North America as a source for certain products.”

Labour and rent costs, meanwhile, pose a rising threat to firms’ profit margins. While ingredient costs typically represent a third of the menu price of an item and are relatively static for Irish-sourced ingredients, the report found salaries and rent bills were “rising faster than the operators’ ability to raise prices”.

The report featured consumer feedback – based in part on Bord Bia ‘dine-alongs’ with seven Dublin, Kildare and Meath residents aged 20 to 48 – on their preferences when eating out. It identified ways that restaurants, fast-food outlets and convenience stores could do better.

One respondent reported seeking out restaurants where it is “fun to eat” and staff engage with customers to explain novel menu offerings.

The report found that eateries offering “experiential and interactive elements” would do better in attracting consumers. Most consumers surveyed reported relying increasingly on convenience foods, particularly from outlets located along the work commute – reflecting less time to prepare food at home.

It identified providing premium coffee and tea as “a solid strategy for growth”, while non-alcoholic cocktails “are also becoming more popular across segments that have been drinks-forward, including pubs, hotels and full-service restaurants”.

Ensuring menu choice for vegans and vegetarians is paramount for growing turnover, it found, because “vegetarian and plant-based foods are top-of-mind for many consumers … for both sustainability and health reasons”.

However, the consumer survey found that some shied away from ordering vegetarian options when dining out chiefly because, in the words of one respondent: “I want to make sure that I get value for money, that I’m full and satisfied, and very often I wouldn’t feel that way choosing the vegetarian option.”

Increased focus on providing “fresh” food and drink means chilled products now represent 59pc of operators’ purchases, up two points from last year versus sales of frozen and ambient-temperature products.

Source: Read Full Article