Latest Eating In vs Dining Out report reveals that both retail and foodservice will grow in 2021

Date : 30 April 2021
  • Food and drink industry forecast to grow 12% in 2021, taking it to 97% of its 2019 pre-COVID level
  • Both retail and foodservice will grow
  • Foodservice to be boosted by 54% (£18.6bn) reaching 71% of 2019 levels
  • Retail value to increase by £1.8bn
  • Total forecasted value of food and drink market is £195.4bn in 2021
  • K-shaped economic recovery creates a complex landscape for both retailers and operators

The latest Eating In vs Dining Out report – produced by insight and analysis providers IGD, in collaboration with foodservice consultant Peter Backman – forecasts 12% growth in 2021, for the UK food and drink market.

The forecasted increase is driven by strong retail growth from January to March and foodservice sales which will begin to strengthen from July onwards as pent-up demand for socialising boosts the sector. Foodservice will grow by 54% (£18.6bn) vs 2020. Some of this growth will impact retail, but elevated levels of home working, at-home social gatherings and financially stretched shoppers who are unable to divert spend to eating out, will see the retail sector continue to grow.

Nicola Knight, Senior Retail Analyst at IGD, said: “The latest industry growth forecasts, combined with the Office for Budget Responsibility predictions for a slightly quicker than expected economic recovery, are reassuring for both retailers and operators. The reopening of the eating out sector and lifting of social restrictions will increase social dining both in and out of home and will give the market as a whole a significant boost. The value of retail is up £1.8bn on 2020 and £14.5bn on 2019.

On dining out, Peter Backman, Foodservice Consultant said: “Foodservice will see low levels of sales for almost half of 2021, due to a combination of lockdown restrictions and alfresco-only eating and drinking. But, as we move into the second half of the year, growth will set in, with pubs and restaurants leading the way. Hotels, leisure and travel-related hospitality will continue to be negatively affected, as will workplace dining, driven by working from home.”

According to the report, the key to unlocking opportunity for both retailers and operators is understanding the K-shaped recovery and its influences on shopper behaviour. The recovery will see higher income households who have accrued substantial savings – estimated to be a significant “pot” of over £100bn* –contrast to lower income households who face financial challenge due to the ending of government support and rising unemployment, particularly amongst younger people.

Nicola continues: “Discount is likely to be the fastest growing channel in retail as financially-challenged shoppers look for value. Yet, on the flipside, more affluent shoppers, particularly amongst older age groups, will be looking to “trade-up” on both every day and occasion products, to utilise their disposable income. Retailers will need to pay close attention to pricing strategy and product innovation to keep shoppers engaged and loyal.”

Peter adds: “Affordability and accessibility will be the two watchwords for the eating out market. Those under financial pressure will be less likely to eat out, but when they do, QSR and food-to-go are the most likely options. On the whole, operators in these sectors have been in a much stronger position than most during the pandemic, thanks to takeaway and delivery and this continued demand will potentially enable them to prosper.

“In the medium term, people in robust financial positions are likely to benefit higher spend outlets, particularly whilst travel restrictions apply and other spending options are limited.”

Nicola concludes: “The findings from the report show that behaviours and spend continue to shift, creating an ever-complex landscape.”

The report takes a quarter-by-quarter analysis to help businesses in both sectors plan for the year ahead.


* Personal and Economic Wellbeing in GB, ONS, April 2021

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Notes to editors:

  1. IGD is an organisation of two interconnected communities. The profits from Commercial Insight are reinvested into Social Impact, which together work to drive change that makes a tangible difference for society, business and the individual.

    Commercial Insight is delivered through six core areas:
    1. Retail Analysis – providing trusted data and insight, straight from the heart of retail;
    2. ShopperVista – providing insight that creates the foundation for progressive shopper and category thinking;
    3. Events – providing compelling experiences that connect people and ideas together;
    4. MarketTrack – the most trusted, rigorous market read in the retail sector;
    5. Supply Chain Analysis – providing answers and unlocking potential;
    6. Solutions – personalised solutions that address the critical customer and commercial challenges.
    Social Impact from IGD is delivered in four key areas:
    1. People
    2. Health
    3. Sustainability
    4. Economics
  2. Peter Backman is an expert and commentator on the structure and dynamics of the foodservice sector and its supply chain, both in the UK and internationally. For over 30 years he has been involved in the sector as a researcher and consultant, blending his knowledge with a deep understanding of the trends, key players and challenges of organisations with an interest in foodservice
  1. IGD defines retail as food and drinks sales through supermarkets, convenience stores, discount, online retailers and other (butchers, bakers etc). This is split by physical stores and online.
  1. Peter Backman defines foodservice as Commercial: Restaurants, quick service, pubs, hotels, leisure, staff catering (some). Non-commercial: Healthcare, education, services e.g. prisons, staff catering (some).
  1. All content is owned by IGD and Peter Backman. If you use or refer to any content in this press release, please credit IGD and Peter Backman.