By Robert Carter
Executive Director of Foodservice
The NPD Group
Another Year Has Come and Gone
2017 was another difficult year for the Canadian foodservice industry. Traffic and spend remained relatively flat across most of the market, while certain segments, such as full service restaurants, continued to struggle. On the other end of the spectrum, segments such as fast casual and home meal replacement continued to see strong growth – successfully stealing share from traditional FSR and QSR categories.
With all that said, 2017 is now behind us and the question quickly becomes “what can we expect in the coming year?”
The foodservice landscape is shifting across the globe. The supply chain is evolving, consumer needs and tastes are changing, the channels offering foodservice are plentiful, and technology is enabling convenience and service at the speed of light. So as we prepare for 2018, let’s take a look at some of the top themes that The NPD Group anticipates seeing in the foodservice industry.
The first theme we expect to see continue in 2018 is the growth of technology-enabled convenience. Convenience is among the chief reasons why consumers visit restaurants and use foodservice, and in today’s highly developed foodservice landscape, technology has enabled an unprecedented level of convenience for consumers. With a few scrolls, taps, and clicks, they can get what they want, when they want it with great speed. Digitalization — mobile ordering, delivery, apps, order kiosks, the internet — is growing rapidly across all global foodservice markets that The NPD Group tracks.
It’s no longer a question of whether or not to invest in digital ordering since it’s now a consumer expectation. Brands must move beyond participation in order to develop a deeper understanding of who is using digital ordering, what methods they’re using, when they’re using them, at which daypart, at what type of restaurant/foodservice outlet (segment), and for which categories (i.e., coffee, main entrée, etc.). Don’t forget that while technology represents a huge challenge for the industry, it also represents a huge opportunity.
Expanding Access to Foodservice
The second trend we expect to see continue in 2018 is expanded access to foodservice. Globally, there is strong consumer demand for foodservice; the convenience/time saving aspect of having someone else prepare your meals is a significant driver of growth in the marketplace. This need has given way to numerous access points for sourcing foodservice, including third-party aggregators who handle delivery logistics for restaurants, foodservice offered at non-traditional channels, meal kit delivery services, food trucks, vending machines, and direct foodservice delivery. Although increased access to foodservice through both traditional and non-traditional channels broadens the competitive set, it also creates opportunities as consumers blend foodservice purchases with items cooked at home to make a meal.
As operators adjust to this new reality there are a few basic questions that you need to ask yourself/your team.
- What is my competition from non-traditional channels?
- What is the impact of third-party aggregators on the industry overall, my business and my competitors’ business?
- Who is using these delivery options - when, where, and why?
- How can I expand my delivery revenue to dayparts other than dinner?
As you work through the answers to the above questions you will find yourself better understanding your consumer, his or her needs, and how they interact with your offering.
Changing Consumer Attitudes and Behaviors about Foodservice Use
Third or our list of hot themes for 2018 is changing consumer attitudes and behaviors. Consumer attitudinal and behavioral shifts are impacting global foodservice markets in both similar and different ways. Generational attitudes and behaviors can have a significant impact depending on the size of the cohort in a given country. For example, Millennials, born 1981-1996, a large population group in most countries, are in their prime years for restaurant use but they cut back during the global economic crisis and although they are returning, they are visiting foodservice outlets less than the previous cohort did at their age. There are also structural, long-term behavioral shifts, like consumers spending more time at home, called homing, cocooning, or nesting, that will have a lasting impact on the foodservice industry. Furthermore, in Canada we are beginning to see growth in individual dinning occasions compared to group dinning occasions, which suggest that some consumers are beginning to leverage foodservice more frequently and in different ways – it all comes down to convenience.
Fads and Trends
Last but not least, we believe that the ongoing growth of fads/trends will continue in 2018. Which consumer attitudes and behaviors are lasting and which aren’t? Which behaviors have mass vs. niche adoption? These are the questions we need to ask ourselves when analyzing new trends in foodservice. Some examples of recent fads in the foodservice industry include plant-based food consumption, meat alternatives, clean eating, “feel good” consumption, claims-based eating, like grass-fed beef, natural, or organic eating, food trucks, etc. While some of these fads may be more of a novelty than anything else, they do represent a challenge for operators who are forced to constantly assess and adapt to new and often unexpected consumer demands. When it comes to fads and trends, it’s important to consider which behaviors you should focus your attention on/invest in. Ask yourself, where are my white space opportunities? Which behaviors are threats to my operations? How can I best plan for future investments?
In summary, while 2017 was certainly a challenging year for many operators, it is important to kick off the New Year with a positive outlook and a willingness to shift and re-strategize on the go when it comes to some of the themes mentioned above. Let’s make 2018 a year to remember in Canadian foodservice!For more data and insights about the Canadian foodservice sector, contact us at 866-444-1411 or firstname.lastname@example.org.