« April 2013 Table of Contents
Global Foodservice: Jump start
Eurozone restaurants seek alternatives to boost business
By Anthony Fletcher
April 01, 2013
European restaurants are continuing to feel the pinch of the economic crisis. This is especially true in the Eurozone, the group of 17 countries that share the euro as their common currency.
“The interesting thing is not that it was a ‘good’ or ‘bad’ year for the foodservice sector in general, but that there was huge variance across the markets,” explains Michael Schaefer, head of consumer foodservice research at Euromonitor, a global consultancy specializing in consumer markets. “Those outside the Eurozone had a good year, in the sense that the sector wasn’t exceptional, but it held up well.”
In contrast, the foodservice sector in the Eurozone — especially in Greece, Ireland and Spain — has been decimated. “The situation has been particularly bad in the independent sector,” says Schaefer. “There have been thousands of outlets — pubs and cafés — closing.”
Ensuring the sector remains economically viable is important. There were almost 1.5 million food and beverage service enterprises in the Eurozone in 2009, according to the European Commission, employing some 7.6 million people. The sector generated €125 million ($166 million) in profit, representing two-thirds of the accommodation and foodservice total.
But what can be done in tough times? Schaefer believes that restaurants capable of making their service more flexible may fare better. “What is interesting is that all across the region, quick-service formats have performed strongly,” he says. “It’s a cliché, but consumers are trading down. People are happy to go more informal if the food is good.”
While this trend has certainly benefited large foodservice chains such as McDonald’s, it has not necessarily been easy for the seafood sector to capitalize on changing consumer demands. As Schaefer points out, the sector does not traditionally lead with innovation. Furthermore, apart from Germany’s Nordzee fish chain and a few others, Europe’s seafood restaurant sector tends to be highly localized.
There is still room for experimentation, which the seafood sector should not discount. Foodservice outlets in Spain, for example, are experimenting with happy hours, coffee menus in the morning and ways of attracting more lunch traffic. A popular Brussels seafood establishment, Noordzee, serves fresh fish, fish soup and white wine to customers at a sidewalk bar. By midday, the place is so popular it can be a struggle to get served.
The Noordzee concept works because it recaptures the festive atmosphere of an open-air bar, and as a result has become a hip place to meet. “Restaurants are asking themselves: How can we be relevant at all occasions?” says Schaefer.
While restaurants need to appeal to evolving consumer demands, trade association FoodDrinkEurope also believes that things need to change at the European level. It stresses in a new competitiveness report that a true single market for food needs to be created, which would help the foodservice sector source cheaper ingredients and encourage competition.
“The industry’s ability to grow sustainably and cater to the ever-evolving needs of Europe’s over 500 million consumers is crucial not only for European food security but also for the longterm viability of the sector,” says FoodDrinkEurope President Jesús Serafín Pérez. “An industrial policy for food would enable the industry to grow and take full advantage of a proper functioning EU single market.”
National government measures targeted at the restaurant sector have had limited success. The French reduced the Value Added Tax (VAT) on restaurant meals in 2009, but recently reversed the initiative, increasing the rate from 7 to 10 percent. “I think national measures such as cuts in VAT can help, but the sheer magnitude of the crisis means that such measures just get swamped,” says Schaefer. “With the debt crisis, governments have more pressing considerations.”
Given the economic climate in Europe, regulation will have limited impact on reviving the foodservice sector. The reality is that restaurants face many of the same issues that other sectors face: rising costs and declining consumer confidence. While many restaurants are doing just fine, those situated in tougher markets must find new ways of attracting and retaining customers. Contributing Editor Anthony Fletcher lives in Brussels