21 Apr 2020
Posted in Foodservice
Covid-19 demands radical changes in APAC foodservice industry, says GlobalData
Consumers are highly concerned about the possibility of being exposed to Covid-19 and its impact on their health and lifestyle. In line with this, changes in customer behavior, especially consumption habits, have been observed in the Asia-Pacific (APAC) food service industry. With the customers shifting their consumption habits, it has now become necessary for the brands to follow the growing business trends that are perfectly in sync with the consumer’s comfortability.
Shagun Sachdeva, Consumer Insights Analyst at GlobalData, a leading data and analytics company, highlights the key trends and developing insights impacting the foodservice industry in the APAC amid Covid-19.
Foodservice becomes more automated
The impact of Covid-19 pandemic is such that it will transform the dynamics of the market by giving rise to the automated and robotic lead outlets that will be the new trend to follow. Automated systems will allow food service companies to defend themselves against these unexpected disasters while at the same time appealing to customers who are still wary of human-to-human contact, justifying the social distancing aptly.
According to GlobalData’s Covid-19 Week 3 consumer survey, 56% of Indians are influenced by how digitally advanced/’smart’ the service is. However in China, the epicenter of the Covid-19, almost 40% consumers are influenced by how digitally advanced/’smart’ the service is. In addition, as per GlobalData 2019 Q4 Survey, the concept of being served by robots instead of human while eating outside the home is appealing for nearly 46% of the APAC consumers. In the longer-term, automation of the kitchen and e-commerce may become important to keep labor costs low and potentially increase funds for delivering meals.
Re-examine business operations
The scale of upheaval is staggering as most pubs, clubs and restaurants have been closed for business. Profit sector sales forecasts in the APAC for 2020 are 16.4% lower as a result of the pandemic and reduced socializing. Hence, foodservice operators and third-party delivery companies are explicitly courting more ethical and community-focused models of business, even if this is simply to help out rather than to drive sustainable revenues.
Foodservice companies are now shifting from meal distribution to the sale of grocery and raw products. KFC and Pizza Hut operator Yum China Holdings Inc. is carrying out innovative market lines like catering and raw food delivery, complete with a formula that specifies the precise minutes of cooking time.
Operators and their suppliers should also seek to make maximum use of the new ways consumers are socializing. Online applications such as House Party offer a way to at least re-connect with consumers.
‘Contactless’ operations might also help to attract consumers who may still be concerned about human contact following the outbreak. Therefore, couple of ride-hailing service providers such as Deliveroo as well as Zomato along with other fast food companies have implemented contactless food delivery service to avoid human-to-human transmission of the virus and support customers carrying out self-quarantines and social distancing. Many hotels and restaurants that previously did not offer a delivery service are joining the bandwagon to reach out to their customers and maintain their business. According to Covid-19 Week 3 Consumer Survey, 39% Indians and 34% Chinese have been ordering food deliveries (from restaurants) take-away more often than before. The survey highlights the opportunity for foodservice operators the tap the demand.
Sustainability to take backseat in the short-run
Prior to the lockdown, foodservice operators such as KFC, McDonald’s, Starbucks, Costa among others had taken sustainability efforts in the past; have now realigned their focus on the health and well-being of employees and customers. Maximizing the revenues from new channels will be the key for small-scale profit sector operators to survive; therefore operators will see an upturn in sales through promotion and marketing of a range of retail products.