Canadian Foodservice Industry To Grow Less Than One Percent In 2015, Reports NPD

2015 will be battle for market share in quick and full service restaurant segments

Toronto, January 20, 2015 — The battle for market share in the Canadian foodservice and restaurant industry will continue in 2015, according to foodservice market research by The NPD Group, a leading global information company. In Canada, the foodservice industry is expected to grow at a modest rate of less than one percent per year over the next five years, which means any growth will be derived by stealing visits from the competition, says Robert Carter, executive director of Canada Foodservice at The NPD Group, a leading global information company.

“There are going to be winners and losers in the restaurant industry this coming year,” says Carter. “Restaurant operators who remain relevant by giving consumers what they want can be the winners, but it will require continually staying on top of trends and understanding what is resonating most strongly with consumers.”

Convenience, value, unique menu items, and service remain high on the list of foodservice consumers’ must-haves and wants and that won’t change in 2015, but how consumers define these are continually changing, he says. For example, convenience is generally about portability, time-savings, and order accuracy, but the recent unprecedented technology revolution has raised the bar in all these areas. Online marketing is no longer a nice-to-have for restaurant operators, it’s a necessity. This year will bring an increased proliferation of mobile apps for ordering and payment, and other technologies that enable greater convenience for restaurant customers.

The quick service restaurant (QSR) segment in Canada, which currently accounts for 4.3 billion annual consumer visits and generates $23 billion dollars a year, will grow only modestly over the next seven years. QSR visits, which increased only one per cent over the past several years, are also forecast to increase a little less than 1 per cent per year from 2013 through 2020, based on NPD’s 2020 Vision: The Future of QSR report. The slight traffic growth expected is driven by population increases and not actual visits since per capita visits are forecast to decline. Also contributing to the overall QSR traffic growth over the next several years are off-premise QSR visits, mainly carry-out and drive-thru, which are forecast to grow by 10 per cent versus on-premise visits, which are expected to increase by only one per cent.

“The challenge over the next several years will be for quick service operators to incent their customers to eat on-premise,” he says. “QSR operators must be prepared to deal with this continued shift towards off-premise occasions by providing consumers with convenient, flexible meal solutions throughout the day while focusing on fast/convenient service.”

Both QSR and full service restaurant operators will need to focus on value this year. Value has been redefined by foodservice consumers and it’s far more than price. Food quality remains the most important value driver when choosing restaurants and should be viewed as a cost of entry. Carter explains that in 2015 operators must go further and offer more choices, like portion size, right price; deliver on customization and fresh ingredients; different preparation styles, and there should be more focus on quality and service.

“A changing, complex marketplace sometimes requires peeling back the layers and revisiting the basics,” says Carter. “The New Year surely will bring more changes, but if operators go back to the basics of understanding and focusing on customers, it will be a more successful and prosperous year.”

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