Some €332 million will have been purchased by operators in the food and non-alcoholic beverage sector. The turnover figure represents growth of 178% in value this year and Bord Bia forecasts that this will increase by another 10.3% in value in 2023.
If this proves to be the case pubs across the Island of Ireland will have brought in 93% of what they’d been taking in turnover pre-Covid in 2019.
However the report observes that, “Publicans note an increasing price sensitivity on the part of consumers. Many are reluctant to pass on full cost increases; menu inflation as a result appears to be lower in pubs than in other sectors.”
In 2019 turnover in pubs on the Island of Ireland grew 2.0%. This fell by 64.6% in 2020, growing again by 2.7% in 2021.
Splitting their revenues 84% beverages and 16% food, pubs are now likely to account for some 17% of total IoI commercial foodservice channels which are predicted to reach €7.6 billion in total in 2022 where they were responsible for just 11% of the €4.7 billion commercial foodservice market total in ’21.
The report predicts that consumer spend in IoI pubs in 2022 will reach €1.32 billion, a 156.3% increase over ’21’s €515 million figure. Of this, RoI pubs witnessed a consumer spend of €979 million in ’22 where this figure had been €352 million in ’21.
A forecast for modest IoI growth of 11.6% in 2023 turnovers is more likely to be fuelled by cost and price inflation rather than consumer visits.
Consumers & trends
A consumer survey was conducted on Bord Bia’s behalf by Opinions, a research agency based in Dublin, as part of the report.
This was the third wave of the survey, conducted last September, which had begun in October 2021 and which was followed by a second wave this March.
It found that some 56% of what it terms ‘Re-emerging Socialisers’ (a generally older cohort who’re unlikely to spend as frequently as younger cohorts but will spend more when out) intend to use the pub much as they do at present or intend to use it more in the next six months.
For ‘Foodservice Champions’ (a younger cohort, going out more frequently but spending less when out) this figure was 51%.
Some 19% of those in the ‘Cost Constrained’ category intend to use the pub the same as or more often in the next six months.
According to the research, eight in 10 (76%) Irish consumers say that they’re enjoying the social aspect of dining out now that Covid-19 public health restrictions have been fully lifted. However, eight in 10 consumers (77%) are also concerned about their finances and many are changing their out-of-home consumption to reduce costs.
The report identifies a number of growth opportunities for the foodservice sector in response to changing consumer behaviours. This includes the rise in popularity of eating out on Thursday evenings rather than Friday, lunch and early dinners replacing late-night eating and the return in demand for eating breakfast out of home.
Critical Factors Facing the Foodservice Sector
Within the Irish Foodservice Market & Consumer Insights report, Bord Bia has identified a number of critical factors which the Irish foodservice sector and suppliers should consider as we move into 2023.
- Higher domestic energy bills are likely to suppress consumer demand during the Winter. Energy bills are also significantly impacting foodservice operators at a time when all costs are increasing.
- Much of the growth in 2023 is expected to be inflation-driven, with modest growth (if any) in consumer visits.
- Labour shortages are expected to persist into 2023. Ongoing shortages will have implications on overall industry sales and on operators’ ability to drive growth. Additional labour-saving initiatives and products will remain in high demand throughout 2023 and beyond.
- Consumers ‘Feeling the Pinch’ – as cost continues to pose a challenge to consumers, they’ll need to see value in dining out beyond the menu price.
- For many Thursday is the new Friday and lunch and earlier dinners are often replacing evening or late-night occasions. There’s an opportunity to develop solutions for new and emerging day parts. With an increase in consumers ‘on the go’ and a return of office workers (albeit on a hybrid basis), the popularity of breakfast out of home has returned and offers further growth potential.
- With concern around cost, operators have mostly simplified their menus with limited innovation. There is, however, a recognised need for new menu items to maintain consumer interest and drive visits.
- While operators have raised menu prices significantly, many are not passing on full cost increases resulting in additional margin compression.
- Sustainability has returned to the fore for many operators. In today’s environment much of this is driven by a desire to save on costs (energy, food waste etc) as much as environmental concerns.