Foodservice sales in the U.S. may not return to pre-pandemic levels until the second half of 2022, predicts a new report from CoBank’s Knowledge Exchange. This could impact the recovery of the animal protein industry, which will need to remain adaptable as the market shifts
“Trends in consumer demand for at-home and away-from-home consumption are central to the profitability and viability of the U.S. animal protein supply chain,” said Will Sawyer, lead animal protein economist with CoBank.
“As the U.S. foodservice sector climbs out of the hole left by 2020, the animal protein sector will not only need to realign itself with the survivors of the last year, but also remain flexible.”
A slow recovery for foodservice
The COVID-19 pandemic had a dramatic impact on foodservice sales in 2020, as consumer demand for at-home food consumption abruptly shifted to levels that have not been seen since the 1980s. This abrupt change forced the animal protein industry to swiftly convert foodservice lines into retail.
Foodservice sales have begun to recover but are still lower than pre-pandemic levels. Some channels, like quick-service (QSR) and fast casual concepts, showed increases in comparable-store sales in the second half of 2020.
Other channels haven’t recovered quite as quickly. Full-service restaurant sales were down 36% in November 2020 compared to the year before.
Recovery by protein
Beef has been the animal protein affected most by the shift away from foodservice.
Specifically, depressed sales at full-service restaurants, hotels and education channels in 2020 had the largest impact on the beef sector. High-value steaks and roasts are primarily sold at these locations. While these high-value animal proteins make up only a quarter of the total volume of beef sold through food sales, they total nearly half of all beef sales.
The beef sector is set up to be highly adaptable though since most processors sell products to retail and foodservice consumers.
Flexibility between retail and foodservice is more challenging in the poultry sector. Historically, most poultry plants focus on one or the other, but not both. As a result, the poultry producers that specialize in retail or QSR have done well during COVID-19.
“Poultry producers that focus on retail and fast-food chains have fared reasonably well during the pandemic but others will need to continue their focus on cost and supply reduction until foodservice demand normalizes, which may very well be one or two years away,” warned the report.
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