American lamb and the changing foodservice industry
It has been approximately 4 months since the COVID-19 took hold in the United States and the U.S. foodservice industry was hit hard. An estimated 40 to 50 percent of American lamb (pounds) has traditionally been sold to the foodservice industry. As the coronavirus pandemic has devastated the foodservice industry, it has also greatly impacted this important sales channel for the American lamb industry.
According to the foodservice impact model created by Datassential/IFMA, the foodservice industry will experience sales losses of 23 percent in 2020 as compared to sales in 2019 based on a single wave of COVID-19. If there is a second wave, Datassential predicts that foodservice sales will be down 30 percent in 2020 versus the previous year.
Using this same Foodservice Impact Model and entering the estimated percentage of American lamb sales by segment, the American lamb industry will suffer greatly due to the shutdown of restaurants:
• Projected loss of American lamb sales with single wave of coronavirus in 2020: -35%.
• Projected loss of American lamb sales with two waves of coronavirus in 2020: -45%.
With the shut-down of dine-in restaurant services, many restaurant operators pivoted to expanded delivery, take out and grocery markets to survive. Quick service restaurants – especially burger, chicken and pizza – weathered the storm better than others due to wider availability of off-premise options. Unfortunately, restaurants where lamb is most likely menued (fine dining/casual dining, cruise ships, resorts and hotels as well as independent restaurants in general) were most impacted.
An estimated 25 percent of restaurants will permanently close due to the COVID-19 upheaval. States are now reopening restaurants with some level of on-premise dining. As restaurants reopen, they will be expected to display enhanced sanitation practices, masks, greater social distancing and limited capacity.
How restaurants and diners adapt to the COVID-19 upheaval is still playing out. While many diners are anxious to socialize again and visit their favorite restaurants, others say they will avoid eating out. Further, many diners are anticipating a recession as result of COVID-19. Tightened consumer spending will likely further impact the foodservice industry.
Recognizing social distancing in kitchens will necessitate simplification of cooking, thus industry experts predict that menus will be simplified with focus on core menu items.
As with the previous recession, it is expected that consumers will seek comfort foods as well as continued use of takeout meals and delivery. Restaurants are also expected to offer value pricing.
As culinary and chef events have been cancelled, the American Lamb Board’s (ALB) foodservice program will shift to support promotions for restaurants committed to using American lamb. Promotions as well as media relations will highlight simplified comfort dishes with lamb with a new family takeout meals element. And, as always, ALB will focus on telling the industry story and encouraging foodservice operators to support local, fresh American lamb.