Carry-Out and Drive-Thru Visits Main Contributor to Modest Growth Forecast
Toronto, December 3, 2014 —The quick service restaurant (QSR) segment in Canada currently accounts for 4.3 billion annual consumer visits and generates $23 billion dollars a year, and according to a recently released forecast by The NPD Group, a leading global information company, the segment will grow only modestly over the next seven years. QSR visits, which increased only one per cent over the past several years, are 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. Total commercial foodservice traffic, of which QSR represents two-thirds, is also expected to grow less than 1 per cent annually through 2020.
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. On-premise visits, on the flip side, are expected to increase by one per cent. The slower growth forecast for on-premise will be a challenge for QSR operators since eater checks tend to be lower for off-premise occasions, and operators will be challenged to consider ways to boost average check, according to the NPD report, which bases its forecast on aging and population dynamics as well as trend momentum.
“The challenge over the next several years will be for quick service operators to incent their customers to eat on-premise,” says Robert Carter, executive director, NPD Canada Foodservice. “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.”
In terms of meal and snack times, QSR lunch, which accounts for nearly a fourth of all visits, will show very little growth over the next seven years. Affected by higher unemployment, brown-bagging, and the impact of more consumers working from home, lunch traffic has only grown by one per cent over the past six years. NPD’s forecast shows breakfast, which has been the only meal time, showing consistent and strong growth, and PM snack growth keeping pace with QSR’s overall visit growth.
“Given this outlook, the ‘battle for market share’ will become very intense for QSR operators,” says Carter. “In this competitive marketplace, foodservice marketers need to discover growth opportunities, mitigate risk, and fine-tune long-term strategies in order to succeed.”