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US on-trade reopening gives near-future glimpse of path ahead for UK

Published:  21 May, 2020

Reduced food and drink ranges, continued off-trade sales, ongoing food take-out, plus the need for support from suppliers to ‘optimise drinks assortments’ are among the main takeaways from a recent Nielsen CGA survey of the US restaurant and bar sectors.

Focusing on independent concepts and small chains, the survey of over 100 on-trade businesses sought to “Understand and reflect how US owners/operators of bars/restaurants have been coping throughout the pandemic, their financial positions, their ability to reopen, anticipated changes to their offering and specifically, the support they want to see from suppliers through this unique transition to some kind of new normal.”

The findings revealed that, as various US states begin to allow on-trade premises to reopen in various and often limited ways, such businesses are likely to need several strings to their operational bows to ensure a chance of survival, as table bookings go unfulfilled and footfall remains low.

Fast fixes look to be in short supply, reflected in a recent UK-focused CGA survey that found a third of on-trade senior executives anticipate permanent closure. 

During lockdowns only 11% of US operators were able to generate sustainable profits through takeaways, with high fees for third party delivery – reports of up to a 35% cut by such US services have been reported recently in the Economist – leading 60% of those surveyed to call for reduced fees to allow this side of their business to be sustainable.

However, 52% of operators said they would continue takeout/delivery once reopened, “expecting demand for these services to continue”.

Delivery of premium pre-mixed cocktails and wines, either with food and/or by opening up the list online for old and new customers alike, often backed by online video content and customer-staff (or even producer) interaction, has boomed in both the US and UK during lockdown.

Honing in on drinks, a majority of businesses are seeking support from their suppliers, with 52% aiming to reduce their range of both food and drink, while calling on those suppliers for “clear, evidence-based, recommendations” as to what will best sell through both in-house and delivery/takeaway channels.

“Only 35% of operators surveyed expect they will keep all of the usual brands stocked pre-Covid-19. So, there is a massive 65% of the market that suppliers are potentially going to need to fight for in order to keep their listings,” found the report.

A majority, some 58%, said they are seeking short term discounts from their suppliers.

A further 46% of those surveyed also said they are looking for help in driving footfall and in marketing to encourage people to return to bars and restaurants.

Scott Elliott, senior vice president at Nielsen CGA, said that the on-trade was in for a “bumpy ride” as the industry transitions towards reopening, adding, “the suppliers that offer exceptional support now will gain the kind of loyalty that may have seemed impossible before this crisis”.

Elliott, however, also flagged up the necessity for transparency from the on-trade, with hard-pressed suppliers “in need of facts to help remove the risk through this unprecedented operating period”, saying that those that rise to the challenge of offering “real value” now would gain long term loyalty.

With on-trade suppliers and their customers very much in the same straitened circumstances, those that forge close partnerships, servicing a significantly altered consumer landscape (and very likely for quite some time), will likely fair best as some weaker businesses inevitably fail.

As Elliott said: “The stakes are high.”