Adding Value to a Recovering Industry

Because frozen meals have evolved into such an integral component of the day-to-day operations of foodservice businesses, meeting the ever-increasing demand for these products may provide difficulties for both manufacturers and distributors.

The category not only fulfills the requirements that operators have for quality, taste, and consistency, but it also provides several other advantages, such as a long shelf life, availability throughout the year, convenience, ease of preparation, product consistency, reduced preparation time, and affordability. And now, after a few difficult years, the value that is added by frozen meals appears to be even more significant.

State of Foodservice in Europe

The number of transactions in consumer foodservice experienced a moderate recovery in 2021 after seeing substantial decreases in 2020 because of outlet closures during the early months of the COVID-19 pandemic, according to Euromonitor’s Foodservice Report for Germany. Consumer foodservice establishments that heavily rely on dine-in business continued to modify their menus and offerings by focusing more on takeout and home delivery. Following a disastrous 2020 for the business, German consumers were ready to return to restaurants in 2021.

However, the ongoing restrictions brought on by the spread of COVID-19 hampered recovery. Numerous foodservice providers’ strategies have been influenced by the trend away from eat-in consumption and toward home delivery. International chains McDonald’s, Burger King, and Domino’s Pizza, the top three consumer foodservice providers in Germany, all saw increases in value share in 2020 and 2021. Since the restrictions continued to have a greater negative impact on the operations of full-service restaurants, these businesses profited from German consumers returning to limited-service restaurants in some capacity. At the end of the assessment period, most independent foodservice businesses were still unsure about their capacity to stay in business.

Many independent businesses lacked the capacity and resources necessary to concentrate on home delivery and takeaway services to preserve income in 2020 and 2021. Despite projections for more vivacious growth in 2022–2023, the recovery of German consumer foodservice is projected to be slow and uneven. Even though this recovery was insufficient to make up for the loss in sales in 2020, most players in France’s consumer foodservice industry reported an improvement in both transactional volume and value sales. Foodservice businesses were required to close for nearly five months starting in November 2020 as part of the second lockdown following the start of the COVID-19 pandemic.

The consumer foodservice industry’s transition to e-commerce was expedited by the COVID-19 pandemic. The bulk of consumer foodservice providers rapidly adjusted and started providing home delivery and takeout to reduce their losses throughout 2020 and advance in 2021. Chained restaurants fared better during the COVID-19 outbreak than independent restaurants. Most players immediately adjusted to providing click-and-collect and home delivery/takeaway options to attempt to limit their losses during the year. When the COVID-19 pandemic hit France, independent businesses were already in decline, largely because of the structural decline of cafés and bars (which annually lose hundreds of locations), the impact of social movements on city centers, such as the “Gilets Jaunes” (Yellow Vests) movement in 2018–2019, and rising consumer demand for restaurants with limited service, such as pizza and burger concepts, and their affordable prices.

As the COVID-19 outbreak is contained, 2022 might be even better than 2021 because of a potential return of inbound travelers and a more evenly distributed tourist flow across the entire region. Consumer foodservice should have a two-to-three-year recovery, with double-digit value growth predicted for 2022 and moderate growth rates for 2023 to 2026. In Italy, consumer foodservice had a terrible and dramatic year in 2020, according to research by Euromonitor. However, the decline in annual revenues in 2020 was caused by the outbreak of the coronavirus (COVID-19) and the subsequent measures put in place to slow the virus’ spread throughout the nation.

During the review period, many categories struggled to generate foodservice value growth or saw declines. In 2021, Italian customers paid more attention to cleanliness and safety precautions. The space required to avoid crowds and observe social distance regulations was one of the most problematic challenges associated with the new ways of using foodservice outlets. An increase in consumer polarization was brought to light by the Italian economic crisis. In this line, an increasing percentage of Italian customers choose a foodservice establishment based on pricing, and an increasing number of them pay attention to restaurants that are running specials or discounts.

Across socioeconomic categories, there was a growing interest in health and wellness to maintain good physical and mental health and a strong immune system to provide resistance to the virus. However, the menu items for health and wellness tended to draw in more affluent customers first due to their frequently higher pricing.

To read the entire article, please access your complimentary e-copy of Frozen Food Europe November-December, 2022 issue here.