Rabobank Reports Tempering of Foodservice Growth Likely in 2020

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Rabobank’s global market forecast calls for foodservice sales to continue to grow, although some tempering is expected due to macroeconomic uncertainties across the world, according to the Dutch multinational banking and financial service company’s Foodservice 2020 Global Outlook report. It examines the foodservice sector in various regions and looks at the four main issues: the macroeconomic and geopolitical environment, delivery, input costs and sustainability.

The report explores matters that are top of mind for foodservice executives. The first of these is the uncertain macroeconomic and geopolitical environment. Consumer confidence, a key driver for foodservice sales, may be under increased pressure in 2020 as economic growth slows down and geopolitical events add uncertainty and an overall negative sentiment in a number of relevant foodservice markets.

On the other hand, purchasing power is expected to be stable. For foodservice operators, it is crucial to secure the customers’ share of wallet. Convenience and customer experience are key elements for achieving this.

“The next issue in global foodservice is the changes in the delivery market. Online ordering and delivery are, by now, an established part of the foodservice landscape. The key challenge for 2020 is profitability,” said Maria Castroviejo, senior analyst at Rabobank.

Maria Castroviejo

She added: “The current business models are far from perfect. For the restaurants, high fees make the added profits marginal. Platforms are struggling to break even and meet investor expectations. Flaws and risks are becoming more visible for both sides and for society. Yet consumers, restaurants and platforms have a common interest in making it work. Are virtual restaurants and ghost kitchens part of the solution?”

Another concern is input costs. Labor costs remain high in industrialized countries, and employee rotation a source of concern in a number of relevant markets (USA, UK, Netherlands). This reflects more than just low unemployment: Social and emigration policies and trends, ageing populations, demographic mismatches are some of the structural hurdles. Also, the impact of African swine fever (ASF) will continue to be felt across all animal protein prices and in all markets during 2020. Meanwhile, the novel coronavirus outbreak in Wuhan, China (which was reported after Rabobank’s 2020 analysis was completed), could have a negative impact if its spread beyond the PRC continues to expand significantly.

The last main issue is sustainability. The number of companies incorporating sustainability-related commitments is increasing, and specific actions are also becoming a reality. Minimizing the impact of single-use items, reducing and managing food waste, responsible sourcing, sustainable store designs and reduction of the carbon footprint are some of the points that the industry will continue to focus on.