Warning signs on menu for suppliers as food services adjust to COVID-19

What's on the menu? Fewer sales but new choices in food service sector


The coronavirus pandemic is changing what's practical for cafes and restaurants to serve up during the COVID-19 era, and beyond.


As surging supermarket purchases dominate Australian food sales trends this year, industry analysts are pondering how the coronavirus pandemic is also changing the ingredients on our food service sector menus.

Restaurants, pubs and cafes have been forced to limit seating numbers and swiftly adapt to rising demand for takeaway and home delivered meals, which in turn, may be already triggering long-term changes in what's practical to serve up, or eat, during the COVID-19 era, and beyond.

"Restaurant meals don't always translate into take-away friendly eating," said National Australia Bank agribusiness analyst, Phin Ziebell.

With NAB calculating national food service and accommodation related spending already down almost 20 per cent on the same time last year, the additional prospect of less choice on Australia's eatery menus represented another challenge for food producers to plan for.

"Even the popularity of smashed avocado and eggs for a cafe breakfast seems less like making an easy transition to takeaway or home delivered situations," Mr Ziebell said.

"That's potentially not such good news for the avocado industry."

Home delivery is already changing what they can afford to offer, including how much variety they'll have on their menus - Phin Ziebell, National Australia Bank

Lettuce and fresh leafy greens were also food service sector staples, but generally less likely to enjoy year-round popularity in most household kitchens, unlike meat, potatoes, eggs and flour which have been in hot demand since March.

"Restaurants and cafes are still working out what does work in these different times, but I think home delivery is already changing what they can afford to offer, including how much variety they'll have on their menus," he said.

Mr Ziebell even questioned how the eating quality of cafe and bistro classics such as veal parmigiana with chips would survive a shift to home delivery without some innovative packaging improvements to keep meals from turning soggy.

Sheepmeat subdued

Meanwhile, Rural Bank has warned sheepmeat producers demand for lamb would be "subdued" while restrictions remained on food service outlets, particularly in Victoria, and as overall economic conditions weighed on consumer spending.

Rural Bank expected domestic demand, which absorbed 40pc of Australian sheepmeat, would "remain tightly linked to a food service recovery and the risk of more restrictions being re-imposed".

Lamb market fortunes will be tightly linked to a food service sector recovery says Rural Bank.

Lamb market fortunes will be tightly linked to a food service sector recovery says Rural Bank.

University of Adelaide's head of food values research Professor Rachel Ankeny saw potential for "quality ethnic foods" gaining a bigger foothold in the home delivered market.

Cook-at-home meal box kits from recognisable chefs or restaurants, featuring some ingredients part-prepared, had also made their mark in capital cities since coronavirus turned dining out into a "dining in" phenomenon.

However, she too, observed choices on restaurant menus may be less expansive regardless of whether eateries were continuing traditional table service or diversifying into takeaway and home delivered options, too.

Social distancing limits meant fewer tables to cover and fewer eat-in patrons, which meant a greater risk of food waste, which restaurants had to avoid to stay profitable.


Fine dining venues would find it harder to pivot to home delivery options to survive because part of their appeal was the experience which came with eating in a classy establishment, rather than have customers paying premium prices for food to eat at home.

"Restaurants are certainly trying new angles to keep people interested, and they want to retain supplier relationships, too," she said.

"They want to be sure they can emerge from this disrupted period with a quality network of suppliers still behind them."

Prof Ankeny conceded, however, the current Victorian lockdown experience and travel restrictions across Australia suggested many food service businesses may not survive.

Food service sales dive

Australian Bureau of Statistics figures indicate the restaurant and cafe industry's share of national food sales plunged from about 25pc to less than a fifth in the first five months of 2020.

Total cafe, restaurant and catering sales, including takeaway turnover, dropped about $4 billion, according to ABS food spending data analysed by Credit Suisse.

Supermarkets, however, had a boom run with sales to May 31 growing $4.5b, or 6pc.

Industry analytical group IBISworld recently upgraded its estimates for Australian supermarket and grocery store revenue to rise about 4.6pc for 2019-20 thanks to COVID-19-related shopper demand - double previous estimates.

Credit Suisse noted the cafe and restaurant sector had grown its share of total food expenditure for decades, but physical distancing and the hurdles associated with developing sustainable food delivery service alternatives meant supermarkets may enjoy elevated food sales growth for at least another year, especially if no COVID-19 vaccine emerged.

Home-made recovery for avocado on toast. Photo: Australian Avocados.

Home-made recovery for avocado on toast. Photo: Australian Avocados.

The swing to supermarkets has been clearly reflected in recent sales of what had been one of the cafe culture's star ingredients in the past decade - avocados.

Cafe and restaurant sales, which have grown from about 10pc of total avo consumption to about a third in just 10 years, took a particularly big hit in the first month of the pandemic.

Smashed, briefly

Food service shutdowns caused a temporary market glut, but rising retail sales at supermarkets and green grocers helped rescue the market.

"Retail has been very strong," said Avocados Australia chief executive officer John Tyas.

"In the end, total sales across the industry were up another 2.3pc in 2019-20, despite the pressures experienced in the final quarter.

The recovery was helped by the peak body pushing hard on social media to urge consumers to keep tucking into their smashed avocado on sourdough toast, at home.

Australians spend about $900m a year eating almost four kilograms of avocados each - the highest per capita consumption of the fruit in the English speaking world.

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