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Digital Disruption in Foodservice is Just Getting Started

By Robert Carter
Canadian Foodservice Analyst
The NPD Group

Restaurant visits in Canada paid by mobile apps increased by 50 per cent in 2017

The NPD Group’s latest research shows digital orders now drive 15 per cent of all foodservice growth in Canada, despite accounting for only 2 per cent of foodservice traffic. New convenience-enabling technologies, like mobile ordering and delivery apps, have become a bright spot in an otherwise stagnant industry. And while foodservice traffic has been flat for several years, restaurant visits paid by mobile apps increased by 50 per cent in 2017. Digital technology has also become a significant visit motivator. Here’s a closer look at what NPD research reveals:

  • 9 per cent of Canadian consumers are influenced by a digital media platform before making a restaurant choice. Facebook, YouTube, and Instagram are the most influential platforms.
  • 14 per cent of consumers are influenced by some digital means before buying. These include digital coupons, emails, apps, and online flyers.
  • Millennials are four times as likely to search for or post an online restaurant review compared to other generations.

Just as it has entered every other aspect of our daily lives, technology is now transforming the foodservice industry and changing the way Canadians dine out. The use of digital technology has been growing rapidly for several years; mobile apps and other technologies have helped to meet the needs of time-strapped consumers and have given new meaning to the term “quick service.”

Digital technology is also changing where, not just what, consumers eat. Off-premise foodservice occasions are up 5 per cent year over year while on-premise occasions have posted declines (-2 per cent). In fact, 58 per cent of all foodservice occasions in Canada are now off-premise (the highest on record). This trend has been driven by the emergence of digital technology that allows consumers to order, pay, pick up, or arrange for delivery quickly and efficiently.

Who’s Winning the Digital Race?

Several leading foodservice brands have committed to strengthening their digital strategy in recent years.

Nearly a decade ago, Starbucks revolutionized the foodservice industry by launching an innovative mobile app. Fast forward to 2018, and the app is responsible for generating $100 million per week across its business, globally  – all by improving ordering, payment, rewards, and personalization. In addition, Starbucks has been able to prove its clients increase their overall spend by between 20 and 70 per cent once they’ve signed up for the app.

YUM Brands 
Another best-in-class example of digital innovation in foodservice is Yum Brands, which owns Pizza Hut, Taco Bell, and KFC. Over the last five years Yum Brands has proven an investment in digital technology can help to bolster the bottom line. In fact, all three of the company’s brands beat expectations for same-store sales growth across all of its restaurants during the most recent quarter, thanks in large part to investments in digital tech. Perhaps most notably, Pizza Hut has now recorded five consecutive quarters of positive same-store sales growth after the company announced it would invest $130 million toward improving restaurant technology and boosting online and digital advertising through 2018. This turnaround is no coincidence; in fact YUM took the same approach in 2015 when it announced it would invest $180 million into KFC to help revive deflated sales. The chain has since seen 13 quarters of same-store sales growth.

As these examples demonstrate, a strong digital strategy is no longer a nice-to-have –  it’s a need-to-have. Restaurant operators seeking to gain more visits and grow the bottom line must decide which convenience enablers are worth their investment and whether or not they can afford not to invest in technology.

To get more insights like this, contact your NPD account representative, call 866-444-1411, or email contactnpd@npd.com

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