What does the future look like for the recipe box market post-pandemic?
Restaurants earned vital revenue during the lockdowns by providing meal kits for consumers to cook at home. Even though they’re reopening, few want to end this fruitful diversification
While its eight steakhouses in London, Manchester and Edinburgh were closed during the Covid lockdowns, the Hawksmoor restaurant chain was grateful for the income generated by the arm it established in July 2020 to sell meal kits for cooking at home.
The operation has been able to shift between 2,500 and 3,000 Hawksmoor at Home steak boxes, priced at between £60 and £180, each week since then. The business also expects that its revenue from selling steaks via online supermarket Ocado, a partnership established in February 2021, will top £3m this year.
Jo Fleet, former MD of restaurant chains Flat Iron and Wahaca, was appointed in March to lead the division. The income the company earned from its non-restaurant activities during the lockdowns has been “crucial”, according to Fleet. “But this is not only about revenue; the venture has also been important for keeping our teams engaged,” she says.
The company has managed to build its brand during one of the toughest periods for the hospitality industry in living memory, Fleet says, noting that orders have come from all over the UK. “This has given us the chance to reach people who weren’t familiar with our brand or had previously visited our restaurants only once a year because they live far away from them.”
Balancing home and restaurant demand
After a busy period in mid-June fulfilling orders in time for Fathers’ Day, Hawksmoor at Home is preparing a summer barbecue range and has already started planning for Christmas. Now that the company’s restaurants have reopened, the importance of having a separate arm dedicated to the home market has become even more apparent.
Fleet explains: “Since reopening, many restaurant chains have lost the facility to produce at-home boxes. You don’t want your core business to be affected, so that’s why I have my own division where we can continue to grow at pace, rather than taking capacity away from the restaurant business.”
It’s a balance that Dobson and Parnell, a fine-dining restaurant in Newcastle, is trying to strike. The business started a service offering local meal-kit deliveries and collections in 2020 and, although it has noticed a slight dip in demand for this since the government relaxed trading restrictions on eateries, it has no plans to stop providing it.
Ruth Terrington is operations manager at Dobson and Parnell’s parent company, the Hooked-on Group, which runs two other restaurants in Tyne and Wear. She reports that some customers “still like to treat themselves to a high-quality restaurant meal at home. In fact, we have some regulars who still order a takeaway every week. Those extra sales help to make up for the reduced capacity in the dining room owing to social distancing and all the months we were closed.”
Growth in the retail market
The larger restaurant chains have also found success in the home market during the pandemic. Market research company Savanta has even found that consumers’ awareness of several brands’ meal-kit fare has been largely similar to that of their restaurant offerings over the past 12 months.
One of them is Japanese fast-food chain Itsu, which has about 90 outlets around the UK. Its nine-year-old grocery arm, selling food for home preparation mainly through supermarkets, has just recorded a 59% year-on-year growth in turnover – an “exceptionally high” figure for a well-established brand, according to the operation’s UK and international sales director, Chris Ford.
Noting that the business has just released a new range of chilled products targeting the lunchtime market, he says: “People aren’t going back to their office desks anymore. With hybrid working, they have the flexibility to continue working at home. We’re seeing a growth in the trend of heat-to-eat lunchtime options, as people want to try something a bit different from the sandwiches they regularly make.”
The continuing strength of Itsu’s grocery market has led Ford to believe that it could grow by 60% next year.
“We’ve seen penetration into our products double on a lot of our key lines,” he says. “And the people who have bought into us during the pandemic have stuck with us.”
Can the home market’s growth be sustained?
Among Itsu’s competitors are Leon, Wagamama and Pret A Manger, which recently created a new bake-at-home range. Unsurprisingly, their non-restaurant offerings have generally performed well during a period in which many Britons have spent most of their time at home. The real test is whether consumers will continue cooking these foods now that they can eat out again.
Although the lockdown restrictions are now minimal, there seems to be continued potential for growth in the recipe-box market, according to market research group Kantar.
The company’s head of insight, Anne-Véronique Benoist, says: “The huge increase in engagement with meal kits may be the precursor to significant growth in this sector against a backdrop of changed meal-preparation habits as we emerge from lockdown.”
Recipe-box supplier Pasta Evangelists has seen fivefold growth in its sales income over the past year. Its founder and MD, Alessandro Savelli, modestly explains: “We found ourselves in the right place at the right time, as more people were ordering food to their homes.”
The company has invested in expanding its channels to market, partnering with delivery service Deliveroo to offer takeaway food and with retailers including Ocado and Amazon to supply its cook-at-home range.
In a move that might appear counterintuitive to some, Savelli opened Pasta Evangelists’ first restaurant, based in the food hall of Harrods, this May. Explaining the decision, he says: “With lockdown restrictions easing, people will spend a higher proportion of their wallets in bricks-and-mortar shops and restaurants. As a result, ecommerce will inevitably decrease.
Savelli continues: “If you operate in more than one channel, it hedges the business and makes it less prone to fluctuations in different areas, from a change in Google’s algorithm for ecommerce brands to something like Covid, which shuts down your bricks-and-mortar offering.”
The Covid crisis has certainly focused the minds of many restaurateurs on risk management. Maintaining a diverse set of revenue streams once the pandemic is over may prove to be just as important to them as providing meal kits was during the depths of the crisis.