FDBusiness.com

Findings from Bord Bia’s annual Foodservice Market Insights report, show that the Irish ‘out of home’ sector increased by 5.2% in value and overall industry turnover surpassed €9.8 billion across both the Republic of Ireland and Northern Ireland. While this is the highest level seen within the industry over the past ten years, much of this increase has come about due to inflation and higher menu prices driven by significant cost pressures in the sector.

Providing context for the figures, Maureen Gahan, Foodservice Specialist, Bord Bia said, “Looking back over the past four years, it is clear that the foodservice industry across Ireland has seen a great deal of disruption and recovery. Since 2021, the industry has risen in value every year, based on a combination of greater footfall and annual increases in menu prices to the consumer. There remains steady consumer demand for dining out-of-home; however higher menu prices have started to deter some people from eating out. In addition, the operating environment is increasingly daunting for many restaurants and foodservice operators.

“The industry remains challenged from an operating cost and margin perspective – and this is the concern voiced by many. It is clear that suppliers, distributors and operators need to have a more targeted business strategy when looking ahead to the next 12-18 months. An ongoing focus on cost reduction will be critical.”

Foodservice Challenges

The most pressing challenges outlined in the report are as follows:.

• Cost structure – while they have learned to deal with higher food costs, other costs have risen significantly leading to increased financial strain, especially for small, independent operators who are more vulnerable to closure. Larger operators, including restaurant chains, are financially better positioned to operate in today’s cost environment. Sustainability initiatives are still important (particularly for contract caterers operating in workplace restaurants) but they are often taking a backseat to cost-cutting measures.
• Labour costs impacting profitability – although the availability of workers has improved, finding qualified candidates for skilled positions remains difficult. Rising minimum wages have increased labour costs significantly, impacting operators’ profitability. This, combined with higher rents and pension costs, has meant many operators are struggling to maintain profitability.
• Impact of slower in-bound travel and tourism – the Irish foodservice industry is heavily dependent on travel and tourism, and 2024 has been a “disappointing” year for overseas visitors to Ireland. This has had a knock-on impact on many businesses – from hotels and  restaurants to pubs – that are highly dependent on foreign tourists.

Foodservice Opportunities
Despite these challenges, the report also highlights a number of opportunities. These include:

• Consumer experiences, innovation and building customer loyalty – while overall spending has slowed, consumers are still willing to invest in ‘experiences’ that are unique or different. Operators are responding by focusing on innovative service models, unique menus, and immersive environments. Building customer loyalty remains crucial. By providing value and demonstrating care, operators can retain and attract new customers.
• Look to technology for solutions but do not replace human interaction – front-of-house technologies like ordering kiosks and mobile apps can enhance the customer experience and streamline operations. Back-of-house innovations, such as AI-powered inventory management and video training can optimise labour utilisation and reduce waste. However, the focus must remain on using technology to enhance staff capabilities and deliver exceptional hospitality experiences, not to replace them.
• Menu engineering – given the food and labour cost situation, many operators continue to engineer their menu for the best impact on profit. This has involved taking higher cost items off the menu and shrinking menus to focus on core items that can drive profitability.
• Taking advantage of new routines – the shift towards hybrid work has significantly impacted the foodservice industry. Some businesses are using food as an incentive to lure employees back to the office, investing in higher-quality offerings. However, maintaining affordable prices for captive audiences remains a challenge. The shift has also led to increased business on Mondays and Fridays in suburban areas.

Ms. Gahan continued: “The report identifies a number of key considerations for Irish food and beverage suppliers to familarise themselves with in order to future-proof their own businesses and remain relevant to industry and consumer needs. Unsurprisingly, there needs to be a continued focus on cost control and delivering value. In addition, suppliers should consider innovation in the context of helping their foodservice customers deliver greater efficiencies and profitability.”

Bord Bia Foodservice Supports  

Bord Bia provides a range of ongoing supports to the Irish foodservice industry including market updates and insights, networking and collaboration opportunities, and an annual Foodservice Directory containing over 100 detailed profiles of foodservice operators and distributors.