Limited-service restaurants overall outperformed the otherwise severely declining market in 2020, due to the inherent focus on takeaway orders, although some limited-service categories were better-positioned than others. Pizza chains, for example, benefitted from existing expertise in delivery and were top-of-mind for consumers in 2020 when looking to place orders for home consumption.
Bakery products, particularly bread and bread rolls, are very much staple foods in Germany and are highly present in retail through bakeries and in-store bakery sections, as well as commonly sold through bakery products limited service restaurants in the market. As a staple of traditional consumer spending, these outlets were deemed as essential to consumers, much like grocery stores and pharmacies, and were allowed to remain open and available to consumers, although they had to adhere to strict hygiene restrictions.
One of the worst-performing limited-service categories in 2020 was convenience stores (c-stores), which consists of both standalone c-stores in dense urban areas and travel locations, and foodservice sales at retail shops located at petrol stations. Whilst standalone c-stores are relatively uncommon in Germany, this segment overall is still large as it mainly contains petrol station shops.
Limited-service restaurants, more than any other foodservice channel in Germany, incorporates a relatively high proportion of chained outlets. This makes it more resistant to the effects of short-term economic shocks such as the pandemic and government-imposed lockdowns.
After years which saw c-store and petrol shop owners incorporate more and more higher-margin foodservice offerings in their stores to increase the sales per outlet, these sales are expected to take years to recover, even though the shops themselves are likely to remain open and available through the rest of the pandemic. More than ever, consumers will be taking more precautions with regard to food safety and hygiene, prioritising these factors over things such as convenience when choosing to spend on foodservice in the months and years after the pandemic.
Despite the broad differences and models across the category, limited-service restaurants overall are likely to recover fastest from the effects of the pandemic, simply due to their focus and positioning on takeaway and, increasingly, delivery offerings. More consumers will choose to have meals either at home or outside the restaurant, shunning dine-in options in the months and years even after the worst of the pandemic is over.
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