Effects of COVID-19 on restaurants in the UK.

Written by:

John A Waller

Director.

Originated: June 26th,2021.

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The effects of COVID-19 on restaurants in the UK high street have been widespread. Restaurants remain particularly hard hit. The pandemic has, as time goes by, altered individuals’ dining habits and social interaction. As each day goes by, the problem worsens, and the potential viability of businesses in the future.

As many businesses cash flow drys and UK government support ends, reality hits. Many face exhaustion of liquid assets and face liquidation.

However, many restaurant businesses have evolved. Previously, many restaurants offered a dine-in experience only. Now many have opened seating on the streets, as certain councils relax laws allowing this to happen. Additionally, they may have set up provisions through online menu sites to provide both collection and delivery services.

Delivery services have particularly benefited from the likes of:

They are providing prepared food in highly populated parts of the UK.

In addition, many companies have sprung up, like:

Throughout the UK, Meal Kit delivery services are experiencing a significant surge in interest. 

Uk Online grocers including:

Tesco

Sainsbury’s

Asda

Morrisons

Waitrose

Booths

Ocado

Iceland

Aldi 

Co-op

Many of the above have witnessed changes and growth in online sales, possibly due directly to the pandemic.

Individuals shop more online for food while remaining safe at home.

Foot traffic in restaurants and online reservations has fallen considerably since the pandemic. However, online internet orders for either delivery of food or collection are growing rapidly! As orders increase and visits to restaurants decline, then the share of takeaway food sales and those delivered increases equally. However, a trend now exists where individuals feel less safe travelling out of their area to eat and migrate to more local establishments. 

Patterns of Individual ordering times changed.

There are not only more orders, but also different times they order. 

Over the weekend, individuals opt for Takeaways compared to online internet orders in the week. 

Effects of COVID-19 on restaurants in the UK and more orders from new customers

Individuals in the UK are now searching for new restaurants nearby, opting to order food online from restaurants not previously providing services other than sit down meals. Restaurateurs have noted however a new trend of ordering higher-value food than they did when sat in the restaurant. However, drink sales reduced considerably. Individuals in the UK now migrate to new restaurants when ordering online, particularly on Friday, Saturday and Sunday nights.

Individuals surf the internet for restaurant options more.

People now peruse the internet more for different styles of restaurant food. However, the more senior individuals still order by phone, while the younger click online.  

Individuals age plays a significant role in how the orders are placed. Younger consumers remain likely to opt for takeaways compared to senior consumers.

Eating out in restaurants.

Social distancing restriction in the UK has changed shopping habits. Since the pandemic, people now pick up an order originated online or ordered food from a takeaway, utilising the delivery companies stated above.

However, as discussed, many UK restaurants now have either a pickup and takeaway service or even both.

The pandemic and restrictions in place. Impact restaurant turnover, its viability and solvency potential.

As orders rather than sit down, sales have increased, and waiting delivery times have increased, causing frustration and allowing new entrants into the delivery arena in the UK. 

Since the start of lockdown efforts, foot traffic to fast food and casual dining restaurants has decreased 45% and 67%, respectively.

Similar trends throughout the world

We observe similar trends across the different regions. For example, Canada still has higher cross-visitation between restaurants, while in Germany, consumers prefer casual dining, while US consumers prefer fast-food dining.  

Home cooking is now challenging the urge to eat out at restaurants.

With individuals spending more extended time at their homes and deterring from visiting restaurants, attention to home cooking has developed. The internet traffic has increased considerable searching out alternatives to attending restaurants. 

Since the Coronavirus pandemic, many lockdown chefs have focused on preparing healthier cooking, providing simple one-pot meals that require less effort, time in preparation and duplication in a cost-effective way. 

 Search interest in cooking on weekdays has also been growing steadily during the lockdown, with more consumers seeking to cook a substantial dinner, notably in the UK and the US. 

Meal Kit Services in the UK is increasing.

UK’s consumers under 40 are pushing interest in cooking at home. Consequently, as interest increases, so has cooking increased.

Also, meal kit services activity has increased significantly among people aged over 55 in the UK. 

Hand Held Mobile devices in the UK remain essential to seek cookery advice.

Mobile devices remain essential to help individuals search for:

  • Groceries;
  • Cooking advice, and 
  • Meal kits. 

In the UK, over three out of ten cooking-related searches are on a mobile device.

So what is the future of high street restaurants in the UK?

  • Business Rates:

One issue facing many restaurants is business rates.

The UK central governments must review how rates are charged for restaurants, bars and takeaways to survive.

  • VAT:

Many restaurants struggle to meet their VAT liability, as margins are so low and operating cost high. Perhaps an increase in the VAT threshold is required, or maintaining VAT at 5%, as is currently during the pandemic?

  • The future for restaurants:

Currently, many restaurants reinvent themselves on how they operate. 

To succeed, operators must evolve to meet changing business requirements, from increased digital offerings to:

  • Optimising delivery; 
  • Curbside pickup, and 
  • Other contactless ordering options.

All while ensuring the protection of your staff and diners. 

  • Restructuring menus to satisfy changing consumer demands; 
  • Assessing packaging for off-site orders; and 
  • Swiftly moving equipment to comply with pandemic business restrictions.   

Finally

If unsure about your restaurant’s future, or importantly its financial viability and solvency, please contact John Waller at HBG Advisory for robust support and advice on 0800 612 5448.

Directors of restaurants struggling should consider business recovery coming out of the COVID-19 pandemic.