TORONTO — At this week’s Restaurant Realities Redefined conference, approximately 270 members of the foodservice industry gathered at the Hyatt Regency, Toronto to discuss innovation and change in the Canadian restaurant landscape. Presented by NPD Group and CWB Franchise Finance, the sold-out event was dedicated to revealing deep insights and new opportunities for the restaurant industry.
Restaurant Realities Redefined is a fusion of the Canadian Restaurant Investment Summit (CRIS) and the Canadian Foodservice Summit and was developed in partnership with The Toronto Stock Exchange and Foodservice and Hospitality magazine.
State of the nation
Robert Carter, industry expert, Foodservice, NPD Group and Carman Allison, VP Consumer Insights, North America, Nielsen set the tone with their second-annual 360° Total Food State of The Nation address, highlighting convenience as the most influential trend driving consumer behaviour in foodservice.
With the foodservice industry in Canada boasting 72,000 restaurant units and $50 billion in annual spending, Carter said it’s no wonder international brands are taking a closer look at Canada. “The Canadian foodservice marketplace is a stable and solid industry,” he said. “Canadians love going out to restaurants — 45 per cent of our population visits a restaurants every single day.”
But, although it’s stable, Carter pointed out that the industry is experiencing change, including consolidation and new technology, which is impacting the industry. Both Carter and Allison used the “M” word when discussing change.
“Millennials aren’t just driving change on the consumer side, but also driving change within the industry,” said Carter. “It’s young people who are launching food start-ups and disruptive brands that change consumer perceptions about what restaurants should look like.”
The pair then walked the audience through the “three stages of disruption,” which include managed complacency, appealing convergence (we’re in this stage now) and complete re-imagination.
Number crunching
The first panel of the day, called Impact Indicators: Economic & Finance, brought together three of the industry’s leading authorities on lending/finance, economic realities and consumer spending. Panelists included Nielsen’s Allison; Jacob Mancini, AVP, Restaurants, CWB Franchise Finance; and Chris Elliott senior economist, Restaurants Canada.
Moderated by Robert Carter, the trio discussed how restaurant brands are evolving their approach to financing based on micro/macroeconomics and examined the impacts of rising food costs, tariff wars and rising wages on areas such as menu inflation.
“In terms of leading indicators, one of the leading ones is consumer confidence,” said Elliott. “If we look at what’s been happening over the last couple of months, consumer confidence has been a bit shaky, largely because of what’s been going on with tariffs, the global trade war and the uncertainty around NAFTA.”
At the regional level, Elliott noted, demographics also play a large role. “If you look at Atlantic Canada, for example, there isn’t a lot of population growth, there’s an aging population and no migration — all of that does weigh on foodservice sales and we’re not expecting to see the strong gains we’ve seen in previous years.”
On the flip side, he said, provinces that do see strong economic growth or population growth, those are the provinces that will witness stronger foodservice sales growth.
Finally, household debt — currently 170 per cent of disposable income — will have a huge impact on foodservice sales growth. “When you have that level of household debt, plus rising interest rates, that’s almost a perfect storm where consumers will start watching their wallets,” Elliott explained.
Overall, he said foodservice sales are projected to slow down in 2019. “It’s going to be a much tighter market going forward and we’ll probably see flat traffic.”
From a banking standpoint, Carter said the financial stability of the restaurant marketplace seems to be strong, with many restaurants expanding or doing renovations. According to Mancini, it’s a positive perspective from a lender point-of-view. “We’re seeing a transition from independents to brands, chains and professional groups, which we see as a good thing, he said, adding there is a concern about shrinking margins in the industry.
Power players
A powerhouse panel of restaurant CEOs took the stage to discuss challenges and opportunities facing today’s operators. The panel included Susan Senecal, president and CEO, A&W Food Services of Canada; Frank Hennessey, CEO, Recipe Unlimited Corporation (formerly Cara Operations); Eric Lefebvre, Chief Financial Officer, MTY Group; and Mike Cordoba, CEO, Mr Mikes SteakhouseCasual.
The discussion kicked off with the panelists sharing how they are tackling delivery within their operations. “It’s evident that our guests are time-crunched,” said Senecal. “Delivery is just one more way for them to get food conveniently — in the end, people want great, hot food so we’ve been really focused on quality.”
For Cordoba, “the execution from the back of the house is an important component. You have all this incremental revenue so it’s trying to figure out how you deliver properly, conveniently and efficiently, [while] not overloading the back of house.”
Hennessey said, for his company and its large stable of brands, it’s a channel they have to focus on. “It acts a little differently — the unit economics of that channel are a little different,” he said. “But it’s very clear that consumers want that convenience.”
He said as restaurants get into the delivery channel — whether through a third-party delivery service or their own delivery system — it’s important to realize “how the mechanics of it work and who owns that customer.”
For MTY and its more than 70 brands (mainly QSR), delivery is still fairly new. “It’s hard for us, logistically, to manage delivery when you have 50 people lined up at Thai Express and then get a delivery order for Pad Thai for 10,” said Lefebvre. “It’s a challenge we’ve been working on since delivery is here to stay and we need to adapt and find way to work with technology and with our suppliers to have better packaging for delivery.”
The next topic tackled was creating Instagram-worthy food for the social-media generation of consumers. “You eat with your eyes,” said Senecal. “When we changed our packaging in our restaurants a few years back and bought in baskets for fries and onions rings, as well as making it easier to see our burgers before you ate them, customers told us that the food tasted better — and if you want to take pictures of it, that’s great, too.”
Creative staffing
With low wages, a lack of benefits and long hours leading to higher employee turnover rates in the food-and-beverage industry, restaurant operators and hospitality groups are getting creative to find ways to draw and retain people.
During a breakout session, industry executives came together to discuss year-long recruitment strategies, the importance of compensation and flexibility in scheduling.
“Organizations have to define what their compensation model is,” said Jerrett Young, partner and CEO with Equal Parts Hospitality. “Let’s stop looking at compensation as just salary. Do we look at compensation as what kind of benefit plan do we have? As what kind of vacation? As are they able to eat in the restaurants? We’re not going to get better cooks if we’re paying them $2 more because someone else is going to come along in six months and pay them $2.50 more. There are far better practices that, as an industry, we should start talking about to remain competitive.”
Coming up with new ways to offer value to employees might help to keep people in an industry that continues to face challenges, especially in pay. Most recently, the Ontario PC government announced a freeze in minimum wage, holding the per-hour rate at $14. Meanwhile, Alberta recently bumped its minimum wage to $15.
With the turnover rate at around 24 to 30 per cent annually, wages, compensation strategies, opportunities for advancement and a company’s culture can dictate who stays and who goes.
“We don’t have the number of people we need to fill all of the spots available,” says Calum MacDonald, VP of Labour Market Intelligence at Tourism HR Canada. “It’s not just food-and-beverage services and tourism that are dealing with this. We’re all trying to get these people as we’re expanding rapidly.”
Laura Darrell, director of Operations of Western Canada at Boston Pizza International, says that a continual recruitment strategy is key for restaurants in today’s environment because of the high turnover rates. She added that it’s also important to create a culture where employees want to work and offer flexible schedules to people who need it.
Worlds collide
Restaurant-brand leaders, retail experts and landlords came together on stage during a morning breakout session to discuss the restaurant sector’s position at the centre of the retail evolution/revolution. Andreas Antoniou, managing partner, Assembly Chef’s Hall; Lee Jackson, senior manager, Restaurant and Entertainment Leasing, Oxford Properties Group; Craig Patterson, founder and editor-in-chief, Retail Insider; and Filippo Anselmo, Canadian regional restaurant manager, Nordstrom addressed the challenge of increasing the integration of retail within restaurants. The panelists touched on how landlords can creatively deal with the physical, technological and legal/lease requirements and explored the impact of the converging restaurant and retail sectors.
View from the top
Foodservice and Hospitality magazine editor/publisher Rosanna Caira brought together a panel of leading Top-100 executives to explore what the industry’s leading companies are doing to innovate and grow their market share. Topics included key trends of the past year that have influenced sales, success strategies and industry predictions for 2019.
Panelists included Camille Borody, Brand Manager at Monarch & Misfits; Duncan Fulton, Chief Corporate Officer for Tim Hortons; and Nick Veloce, president & COO of The Chopped Leaf.
The discussion began with identifying some of the key factors contributing to the success of these Top-100 companies in what has become a challenging industry in Canada.
“The Chopped Leaf was ahead of its time when it first opened but now we’re right on trend,” said Veloce. “Being in the franchise world, one of the things we did when we acquired this brand was put in a very stringent process around how we choses franchisors. Once we put that in place, we began to see some really strong results. Currently, 50 per cent of our franchisees own 80 per cent of our units, which has really helped propel our growth.”
Tim Hortons has had “a complete executive changeover since January,” said Fulton. “We sat down with franchisees and [came up with] a three-year strategy, starting in 2019, that’s anchored in the restaurant experience, product innovation and good old-fashioned Tim Hortons brand communications.”
As a relatively young brand, Borody said her company’s success came about largely due to dedicated small teams. Creative content and innovative menu items have also been key. “We can’t jump on every trend so we deliberate a lot internally and find things that align with us,” she explained. “We want to go our own way so what’s important for us is not being concerned with what other concepts are doing.”
During the session, Caira presented Foodservice and Hospitality’s annual Tops in Hospitality awards to the two companies that recorded the strongest growth on the magazine’s annual Top 100 Report. McDonald’s Canada won the award for highest dollar growth, adding an amazing $500 million to its year-end gross sales for a total of $5 billion. Chopped Leaf received the award for highest percentage growth (47 per cent), recording gross sales of $39 million — up from $26.5 million the year before.
Tech talk
A panel of four tech experts took the stage next to discuss how the technology explosion in Canada is impacting the foodservice landscape. The panel included Ralph Matlack, senior director of Product Management, OpenTable; Jeff Adamson, Chief Restaurant Officer and co-founder, SkipTheDishes; Mandeep Mand, senior product manager of Mobile Software and Services, Interac; and Alex Barrotti, CEO and founder, Touch Bistro.
They discussed the future of consumers’ interaction with technology and how that is changing food-related behaviour.
Prepping for pot
The day ended with a lively discussion about how the foodservice industry needs to be preparing for the legalization of cannabis on October 17. Amy Wasserman, senior director of Marketing, Recreational Cannabis, Canopy Growth; Terence M. Donnelly, chairman & CEO, Hill Street Beverage Company Inc.; and Rebecca Brown, founder and CEO of Crowns dissected the upcoming legislation and addressed the stigma traditionally attached to cannabis use.
The general consensus? Currently, there are more questions than answers but opportunities exist for operators looking to cash in on cannabis legalization.
-With files from Jordan Maxwell
