2015 Foodservice Industry Year in Review

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No matter how you slice it, 2015 was a challenging year for the Canadian foodservice industry. According to The NPD Group’s most recent CREST data, consumer spending at Canadian foodservice outlets in Q3 2015 was flat compared to the same period a year ago, indicating a decrease in momentum from Q2, when total spend increased by nearly two per cent. The third quarter’s lacklustre consumer spending performance was heightened by a decrease in overall consumer traffic, down by 1.5 per cent for the quarter. This traffic weakness has been an ongoing challenge for the Canadian marketplace, with similar rates of decline occurring over the past six quarters.

While overall spend and traffic data do not bode well, positive news can be found in average eater cheque size, which increased by one per cent compared to Q2. However, this increase lags behind the three-per-cent lift seen in the second quarter. While somewhat reduced in Q3, the continued momentum of average cheque size appears to be helping to stabilize overall consumer spend, which would have declined even further if average eater cheque sizes had dropped in Q3. Unfortunately, the summer quarter did little to bolster the first half-of-year results therefore performance for the full year will likely remain flat, if not down, in Canada. And while the release of updated Q4 data is not yet available, the foodservice environment in Canada is still challenged.

This trend is seen across all foodservice segments in Canada when it comes to overall spend — with the exception of QSR. Looking at segment spend for the quarter shows an increase in QSR spend of five per cent compared to Q3 a year ago. Unfortunately, other major segments didn’t experience the same lift; FSR spend was down 3.5 per cent compared to the same time period last year, onsite spend declined by 15 per cent and retail spend dropped 4.6 per cent. Traffic performance for the quarter paints a similar picture. QSR experienced modest growth of two per cent, while FSR saw a decline of 3.5 per cent. Onsite traffic was down significantly by 20 per cent and retail traffic dipped five per cent compared to the same time period last year.

At the end of Q2, there was talk that the Canadian foodservice industry was beginning to make its way out of the proverbial slump. However, as the data suggests, one strong quarter doesn’t necessarily lead to a turnaround. The industry still has a long way to go before it begins to see the light at the end of the tunnel.

As Canadians cut back on restaurant visits, the challenge for foodservice providers continues to be the ability to find appealing ways to both draw them back in and increase cheque size. While many global foodservice franchises may be able to weather the current storm, the reality is the market downturn has had a strong effect on smaller, independent operators. Unfortunately, more than 4,000 independent restaurants have closed in Canada over the past four years, with even more facing a similar fate in the year to come.

Written By: Robert Carter

Volume 48, Number 10

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