OPINION
Where from here?
In the wake of the response to the Covid pandemic, and what’s now happening in the market as a whole, foodservice sector analyst and consultant, Peter Backman (pictured) – who comes into regular contact with sector operators, suppliers, investors, analysts and the press at home and abroad – raised some questions and potential answers in sharing his views with BSA members via a webinar held at the end of January. THE WHY An important element to understanding where things were going was to understand the ‘why’, Peter Backman emphasised, the hope being that it would make things much easier. Working internationally over many years as he had, he had also come to learn that what happens in the UK is often not very dissimilar to what’s happening in other countries. In detail, there were certainly differences, but when it came to the overarching picture, there is often a lot of commonality too. Covid had clearly made some huge changes, he acknowledged; the questions being how much, and what has been permanently changed, and how much are we going to go back to where we were (or fairly close to it)? What’s going to be driving future growth and change, and what does that mean for companies in the various foodservice markets? FOODSERVICE ON THE EDGE OF COVID Peter Backman also posed the question what was foodservice like a couple of years ago? Having been through such a disruptive process in recent times, this is an important consideration, he felt. Between 2018 and 2019, he reported, there were signs that the whole eating out food market had stopped and changed at that particular moment in time, in turn meaning that in 2019 the market was not growing very much, having been going through a period of rapid growth prior to that point and at least since the great recession of 2009 to 2011.
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Come 2019, this growth was really slowing down, said Peter Backman. In running a ‘tracker tracker’ – a device which looked at a range of data and information from numerous sources about the market in a single tracker – it had revealed to him not so much a market that was stable but one that was slowing down, and even declining (particularly when it came to pubs, restaurants, QSR – the ‘destination eating market’). Thus, the world had been ‘slowing down’ anyway, acknowledged Peter Backman, then Covid hit, and a recession was entered into. In referencing recessions of the past by way of informative insight to change, Peter Backman referenced the growth periods, followed by the lack of growth periods, characterised by ‘saw tooth’ periods of growth that had taken place over time but always in an overall up and up direction – slowing a little in the great recession of 2009/11, but still continuing upwards afterwards up until 2020, just as you might expect (although the market growth then dipped, and in a few instances dipped below zero in terms of change, he reported). WHAT HAPPENS IN RECESSIONS The 1981 recession was a cyclical recession, he felt, ‘a bound to happen’, and it happened. It was a time when franchising started to grow as a way of expanding the market, he reflected, and a time when fast food really took off (KFC, McDonalds and the pizza chains). The early 1990s saw another cyclical recession; the beer orders affected the beer
market in that no brewer could own more than 1000 pubs, he recalled. With many brewers owning far more than that at the time, they sold off their pubs (these outlets expected to become much more than outlets for brewery beer, and giving rise to the pub food sector). This change had already begun, but received a huge impetus in the 1990s, he proposed. By the early 2000s, the dot com bubble was bursting; a consumer confidence crisis, and not a notable drop for the foodservice sector, but it gave rise to the break-up of the portfolio model, Peter Backman claimed, which was how pubs had been growing through the nineties. People who owned pubs also owned restaurants and often owned leisure sites too (David Lloyd owned by Whitbread, for example). From 2000, large chains started to grow as private equity got into the market. Then followed the banking crisis of 2009/10/11, becoming a time when private equity really took off, and funding the casual dining growth in particular. Each recession had its own nature, but gives rise to a different style and leading type of operation, Peter Backman pointed out. So the question now is what is the recession of 2020 going to give rise to? It is possible to get some clues, if not necessarily the full picture and answer. Immediately, however, with Brexit out of the way, there was a need for companies to get their momentum back, rebuild their balance sheets and do things that are going to set them on a firm footing for the next ten years until the next recession comes, he
