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Agricultural News

Uneven Recovery in U.S. Foodservice Sector Implies the Same for Animal Protein

Thu, 28 Jan 2021 06:19:18 CST

Uneven Recovery in U.S. Foodservice Sector Implies the Same for Animal Protein As COVID-19 spread across the country last year, it spurred the “great grocery grab of 2020” - a shift to at-home food consumption not seen since the early 1980s. The abrupt change also forced the most significant shift in meat supplies the industry has experienced, diverting massive volumes of meat and other food originally intended for restaurants into retail distribution channels and grocery stores.
U.S. animal protein supplies have returned to normal and foodservice sales have improved since the onset of the pandemic but may not return to pre-pandemic levels until the second half of 2022, according to ’a new report from CoBanks Knowledge Exchange

“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.”

The importance of individual foodservice channels varies significantly by animal protein species and by producer. Some foodservice channels have rebounded to achieve sales growth, as evidenced by the quick-service (QSR) and fast casual restaurant concepts that have recorded positive comparable-store sales since the summer.
Full-service restaurants however continue to face double-digit declines in sales. In November, full-service restaurant sales were down 36% compared to last year while total foodservice sales were down 17%. In-restaurant dining will be vulnerable as long as consumers remain wary of dining indoors and COVID-19 cases remain elevated.

Varying performance of the different foodservice channels is especially evident in U.S. beef consumption. While ground beef makes up a majority of beef volume through foodservice, it represents only about one-third of the value due to its low price point.

In the limited-service restaurant channels, ground beef has performed quite well, but the beef sector continues to be hurt by the depressed full-service restaurants, hotels, and education channels. High-value steaks and roasts that are primarily sold in these channels only make up a quarter of the volume of beef sold through foodservice but account for nearly half of beef sales.
The beef and pork sectors have some flexibility to adapt, as major packers sell their products to a variety of retail, foodservice and export customers. In the poultry sector, however, many integrators and poultry plants focus either on retail or foodservice, but not necessarily both. Poultry producers that focus on retail and fast-food chains have fared reasonably well during the pandemic. Others will need to continue their focus on cost and supply reduction until foodservice demand normalizes which could easily be one or two years away.

Read the report, The Great Grocery Grab of 2020 and the Ongoing Impact to U.S. Animal Protein



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