Canadian Foodservice Showing Signs of Recovery — NPD

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TORONTO — After taking a relentless beating for the past 22 months, brought on by the crash of the global economy, Canadian foodservice operators can stop licking their wounds and start getting back to making money.

The NPD Group is reporting that Canadian restaurant traffic grew modestly for the first quarter of 2010, up 2.3 per cent versus the same period last year. This increase comes on the heels of four consecutive quarters of weakness. Consumer spending also increased slightly for the second consecutive quarter, seeing a one per cent gain.

Meanwhile, the news is not as positive in the U.S., where restaurant traffic declined for the seventh consecutive quarter, the longest streak since monitoring began in the late 1970s.

Results from NPD’s CREST — a tracking service that monitors consumer purchases of commercially prepared meals and snacks — revealed that every segment of the Canadian industry experienced traffic growth in the quarter. QSRs enjoyed a three per cent gain, casual dining and retail was up two per cent and family/midscale increased one per cent. Much of that positive growth was due to discounting menu items, especially in the QSR and family/midscale sectors, where deal-related visits demonstrated increases of seven per cent and six per cent respectively.

“While deal-related visits have exhibited growth for eight consecutive quarters, it is important for foodservice operators to remain innovative with their use of promotional offers,” said Linda Strachan, restaurant industry analyst, NPD Group. “Promotions/deals that have grown in importance this year include discounted prices, daily specials and discount coupons. Value-priced menu items also remain popular and continue to be added to menus by many chain operators.”

Breakfast items, coffee and alcohol saw significant growth in the quarter, as did the sandwich segment. But while restaurant traffic and consumer spending were up, there was a slight decline on check averages during the quarter, as consumers pared back on menu choices. Check averages were down 1.3 per cent per personal meal compared to the same period last year.

“Overall it was an encouraging quarter, with signs emerging that the Canadian restaurant industry is poised for recovery,” said Strachan.  “As the economy continues to strengthen and consumers return to more typical behaviour, operators will be looking for ways to move beyond discounting to deliver value that resonates with customers. Price aside, it is critical to understand which areas need more emphasis when marketing to consumers, whether that means emphasizing the food itself, the service, the atmosphere or a combination of all three.”

 

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