The UK food-to-go market has performed better than predicted since the Covid-19 pandemic and is set to be worth £23.4 billion by 2027, up 26% from its 2019 value according to insight provider IGD.
The forecast comes as the channel will be worth £18.9 billion this year, a 3% increase from pre-pandemic levels.
However, this research shows that growth will begin to slow by the end of 2022 and throughout 2023 as the cost-of-living crisis will continue to see consumers spending less on food.
“Foodservice businesses were the biggest beneficiaries of pent-up demand for food on-the-go last year because of all the innovation they put into working around lockdowns, such as flexible delivery solutions and click and collect offers,” IGD forecast author and food-to-go senior analyst, Nicola Knight said.
“But as the cost-of living-crisis comes in these operators will be under pressure as they become more of a premium option compared with lower priced food-to-go alternatives from a retailer, or preparing food at home.”
READ MORE: 50% of Brits spend less on food amid cost of living crisis
At present, inflation is set to be the main driver of growth over the next 18 months, however Knight predicts, “Inflation is already affecting many consumers but until now food-to-go has continued to perform strongly.
“This will change as the true impact of rising prices really kicks in in the last quarter and takes hold next year. So, while inflation will boost the overall value of the market, volume will, at best, stay the same in 2023.
“The next 18 months will be a challenging period for the sector, mainly for coffee and food-to-go specialists, as operators attempt to balance rising costs with helping consumers to save money.”
Key opportunities for retailers, outlined by Knight within IGD’s analysis, include strengthening meal deal offers, creating tailored offers using customer data and increasing food-to-go ranges.
She added: “During the pandemic, retailers deprioritised food-to-go space in favour of in-demand categories, leaving them on the competitive back foot as footfall returned and consumers sought a change from homemade meals.
“However, if they can get their price, offer and format right, by 2027 retail could more than regain the share lost to foodservice operators during the pandemic to claim 23.7% of the food-to-go market, compared with 22.9% in 2019 and 20% in 2020/21.”
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