2021 Outlook: The State of Franchising in the Restaurant Sector

Alice Tuffery, writer

Published at 22/03/2018, Updated on 04/05/2022 , Reading time: 5 min

2021 Outlook: The State of Franchising in the Restaurant Sector — Photo © restaurant-franchise-success.jpg

The restaurant sector has been badly hit by the Covid-19 pandemic - but, unlike some other industries, it has been able to rely on remote solutions like delivery options during lockdowns. So, how has the food service industry fared over the past year and what’s the post-pandemic outlook for restaurants?

We all know just how devastating the pandemic has been for businesses in the restaurant sector, but 2021 could offer some reasons to be cheerful. Here, we’re looking at the current state of the food service industry and expert predictions for the coming year.

The restaurant sector in 2021

At the moment, the restaurant sector is still reeling from the impact of the coronavirus. Let’s revisit the start of the pandemic to see how it has affected operations.

Back in March 2020, when Boris Johnson encouraged people to avoid eating out, sales at restaurants fell to be 56 percent lower than in March 2019. At the time, many people turned to delivery companies. Six in 10 people aged 18-24 used delivery services more frequently, and four in 10 consumers between 35 and 54 said they planned to rely on them more often (Statista).

Then came an official lockdown, and although businesses were allowed to reopen on the 4th July, they only attracted around 65 percent of the number of seated customers as usual (Statista).

The sector experienced rapid growth in outlets during 2014 to 2017 as successful chains added additional branches, but they frequently paid too much, while maintaining quality standards proved difficult. The need to cut costs caused by over-expansion, increased competition and weak consumer demand produced a crisis in the industry before the pandemic. —Prof Joshua Bamfield, CRR Director

By August, over 76 percent of restaurants had reopened again and were able to take advantage of the government’s Eat Out To Help Out scheme, which encouraged people back onto the high street. Throughout the month, sit-down dining venues in the food service industry claimed £522 million in total (Statista).

Despite the government’s furlough scheme and various financial support packages, UK restaurants recorded just under 30,000 job losses in 2020, signifying a 163 percent rise in redundancies (The Guardian).

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The post-pandemic outlook for restaurants

Now we’re starting to emerge from the pandemic, businesses are preparing to reopen. According to The British Beer and Pub Association, the British Institute of Innkeeping and UKHospitality, 72 percent of their member businesses are worried they won’t be able to survive 2021.

But while some people are concerned about returning to restaurants and other busy venues, it’s likely most consumers will be keen to eat out again after an initial transition period. Our enthusiasm to socialise and meet with friends, as well as support local businesses, should fuel a boom in restaurant sales. People have been relying on home cooking and deliveries for months on end, and eateries can offer an exciting social experience.

Of course, it will probably take some time for the restaurant sector to reach its previous level of productivity. But while experts don’t think the restaurant sector will reach its full potential in 2021, they do suggest it will make a full recovery by 2024 (Statista). In fact, many franchises have celebrated key milestones and other notable achievements during the pandemic.

Businesses in the restaurant sector have been able to expand and reorganise their boards to prepare for the challenges of the virus outbreak. Meanwhile, takeaway and delivery franchises have seen unprecedented demand and been able to reach a larger audience. Plus, new concepts such as the 1930s railway-inspired Centenary Lounge have broken through to diversify the sector.

As the UK adapts to post-pandemic life, the food service industry is likely to make a number of key changes:

Deliveries and home meal kits are currently the norm, but they’re likely to continue to be popular throughout 2021, thanks to their convenience and affordability.
Restaurants have rapidly altered their working practices to incorporate remote collection and delivery services, contactless payment methods and other technologies, such as QR codes. In many cases, these measures could make life easier for business owners and become a permanent part of the restaurant sector.
After a year of business closures, personal struggles and support for local communities, many people are likely to champion authenticity and empathy in brands throughout 2021. Restaurants should focus on displaying these traits and demonstrating sincerity across both operations and marketing material.
As consumers are more aware of hygiene and health than ever before, there may be an increased focus on immunity-boosting foods. Restaurants could drive up sales by offering nutritious dishes designed to improve our protection against illnesses (Polly Robinson Communications).
The pandemic isn’t the only event to affect the restaurant sector in 2021; Brexit will also have an impact on the way businesses operate. As a result of increased customs tariffs, franchises will have to spend more on imported ingredients, which could encourage the use of locally-sourced produce.

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Advantages of running a restaurant franchise

Despite the challenges created by the pandemic and Brexit, there are still many benefits to joining the food service industry. We’ve rounded up the advantages of running a restaurant franchise business in the past, but there are a few specific reasons why the sector could offer great opportunities in 2021.

Firstly, many restaurant franchises have already capitalised on the 2021 food service industry trends listed above, selling meal kits, immunity-boosting foods and locally-sourced ingredients. Also, people are raring to get back out and eat in restaurants again, and if the sector doesn’t bounce back as quickly as hoped, you could provide delivery services too.

What’s more, franchisors can offer a wealth of extra support to business owners in their networks, from initial operations training to ongoing development opportunities, which helps franchisees stay on track.

Franchise opportunities in the restaurant sector

If you’re interested in running your own business with a restaurant franchise, now is the time to start preparing for the reopening of the economy. Why not find out more about the sector by exploring the top food franchises in the UK? You may also want to check out our other articles for budding restaurateurs: