The Covid-19 pandemic will cause the Irish food service market to contract in size by nearly half this year, new estimates from Bord Bia have found.
However, the report predicts that the sector will experience a recovery next year, even in the worst case scenario.
The food service market includes food and drink consumed and prepared outside the home in places like restaurants, pubs, hotels, coffee shops, workplace canteens, hospitals, education and from vending.
According to the Bord Bia 2020 Irish Foodservice Market Insights Report, this so-called out of home industry will be worth €4.5bn this year.
This will represent a drop of €4bn compared to the performance of the industry last year.
The contraction, caused by a collapse in demand following Covid-19 restrictions, follows eight years of consecutive growth in the market.
"The performance of the foodservice industry is intrinsically linked to economic conditions, tourism and employment all of which will continue to be challenged in 2021," said Maureen Gahan, Bord Bia Foodservice Specialist.
"The changing landscape will have a long-term impact on revenue and profitability - everything from the drive from consumers for keener value pricing, to the shift away from city centre and high street locations, to the challenge of recruiting and training new staff."
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Bord Bia is predicting something of a recovery next year and the report sets out a range of scenarios about how that might play out.
In the worst-case scenario growth will be around 16%, but in the best-case scenario it will be as much as 41%.
To prepare them for the bounce back, Bord Bia has recommended food service providers consider new restaurant layouts, a focus on safety and sanitation and think about growing off-premises alternatives like takeaway, home delivery, click and collect and drive- through.
It also suggests that companies prepare for bumpiness on their supply chain and consider reinventing their business model.
Food producers should consider reassessing their portfolio, focusing on critical targets like high priority customers, resetting customer knowledge base and prepare for a rejuvenated industry.