By Amy Bostock & Danielle Schalk
TORONTO — Last week’s virtual Canadian Restaurant Investment & Leadership Summit, presented by CWB Franchise Finance, brought together more than 540 industry leaders to discuss the future of the foodservice industry in Canada.
The four-day event kicked off with the annual State-of-the-Nation report. Delivered by Jacob Mancini, AVP, Restaurants & Breweries, CWB Franchise Finance and Vince Sgabellone, industry analyst – Canada Foodservice, NPD Group, the session discussed where the industry was prior to the pandemic, how it’s performed in the last eight months or so and provided an outlook for the path ahead.
“If you had asked me at the beginning of 2020, I would have happily told you the future of the foodservice industry would be changing in so many ways based on current trends,” said Sgabellone as way of introduction. “What I never could have predicted, of course, is just how fast that future was set to arrive. And so, it’s this theme of accelerated trends and rapid evolution that is going to prevail during our presentation today.”
Mancini painted a picture of how the industry looked at this time last year. “[For] example, food halls and entertainment concepts were growing and providing some new forms of customer interaction and engagement, while giving operators access to new revenue streams and different channels they didn’t have before,” he said. “The real-estate market was very tight and getting harder and there were a lot of brands with aggressive growth strategies driving rental vacancies to an all-time low. And with such little supply in the market, rates were probably as high as they’ve ever been. And similarly, the M&A market was very hot — we saw a lot of deals in the restaurant segment — thanks to private equity being more engaged and involved as well as operators really starting to look at ways to improve margins.”
Fast forward to today and, said Mancini, “it’s pretty ugly, right? Unemployment reached a high in May, two-and-a-half times what was before and it’s certainly now twice what it was pre-COVID-19. And consumer confidence that was once so high, has dropped to 60 per cent.”
According to Sgabellone, the pandemic “really did expose some areas of weakness in the industry and I think operators really are motivated to figure out ways to pandemic proof,” he said, adding the one thing the pandemic has taught us is that “drive thru is king.”
“CEO Panel – Canadian Restaurant Leaders Reflect
There is no question 2020 has been an unprecedented year for restaurants and the foodservice industry. It has required leaders in the business to combat uncertainty, embrace creativity and develop strategies just to survive. As we move towards a post-COVID environment, how has the foodservice industry in Canada changed and what does the future entail?
These were some of the questions posed to the panel of industry leaders during Day 2 of the Summit. “The CEO Panel – Canadian Restaurant Leaders Reflect”, included Ken Otto, CEO, Redberry Restaurants; Peter Fowler, CEO, SIR Corp.; PJ L’Heureux, founder & president, CRAFT Beer Market; and Susan Senecal, CEO, A&W Food Services of Canada Inc.
Moderated by Ed Khediguian, senior vice-president, CWB Franchise Finance, the panel addressed topics such as new concepts, revenue streams and profit models; industry trends that have been accelerated or abandoned; supply chains, menu items and pricing; partners, landlords and agreements; and the workforce and the consumer.
“[COVID-19] was a huge blow [to the foodservice industry] and there was a sense of fear, but the resilience of the industry continues to impress me,” said Senecal. “Obviously different people, different concepts, different areas and regions have had different challenges. But what really stands out to me is the resilience, the ability to kind of pivot to transform ourselves. And I’ve seen that from restaurants and in all walks of the industry — whether that’s turning themselves into grocery stores or embracing delivery or whatever it took to navigate those waters through the summer and into the winter now.”
The leaders agreed the key to meeting the pandemic challenges lies in their teams and the ability to maintain effective communication.
“There are so many heroes out there — from our restaurant staff that took transit [to work], served our guests in all of our restaurants and all of yours — and they have to be acknowledged and rewarded,” said Otto. “One of the most interesting things we did and that we will continue I hope forever, as long as I’m around, is we added coaching and set up mentoring groups at Redberry. Everyone’s working really hard, so we took this as an opportunity to accept people that wanted to help others and partnered folks together to help each other out — not only for people learning new ways to do their job, but e learning new ways to run their life.”
Investment, Finance, Growth and Development Panel
Moderated by Jacob Mancini, Day 3’s panel featured Mark Eaton, Chief Development Officer, Recipe Unlimited Corporation; Lee Jackson, VP, Retails Business Development, JLL; and Larry Weinberg, partner, Cassels Brock & Blackwell LLP. The group discussed a range of topics, including franchise trends, landlord relationships, market rates and mergers and acquisitions.
While 2020 has been trying for the industry, the consensus was there will be opportunities, going forward, for those who are well positioned. “The people who survive this will be rewarded and there will be room for growth,” said Weinberg, siting pent up demand. He also pointed to franchisors as a key beneficiary, noting, “Franchising loves a good recession.”
In this environment, the panelists agreed that communication between tenants and landlords is paramount. “[Communicating] how you’re trying to shift and pivot and what changes you’re making to try to drive revenue — showing [your] resilience — is absolutely key,” said Jackson, who noted the pandemic has created an operators’ market.
“Landlords are prepared to work with and invest in brands they think have longevity and will survive this,” Weinberg added.
Looking at recent activity, including the sale of Dunkin’ Brands, Weinberg noted he expects to see more consolidation in the industry. However, there won’t likely be a flurry of deals. “The market is ripe for a lot of activity. There are lots of funds with money, willing to spend it, and now they’re looking at opportunities,” he explained, noting companies will be looking to take good brands and make them great. But, he adds, “I’m not sure the sellers are prepared to sell at distressed prices. They can sit and wait [for this to] blow over… I also believe that there’s enough competition in the market, enough money to invest — especially in the U.S. — that there’s going to be competition for some of these brands.”
And, when it comes to growing in the new reality, Eaton says market data is very important. He also points to off-premise/ghost kitchens as “a really unique way of testing a brand in a new market for low cost of entry.”
Jackson added that monitoring customer behaviour will be important. “Watch the customer migrations and watch it closely,” he said. “I think that’s going to be fundamental in helping us to understand where you need to be going forward.”
Technology in Foodservice Panel Discussion
The summit’s fourth day featured a technology-focused discussion moderated by Robert Carter, managing partner, The Straton Hunter Group, with panelists Manoj Jasra, Chief Marketing & Digital Officer, Northland Properties; Brian Deck, CEO, Smooth Commerce; Royal Nasager, VP Marketing, St. Louis Franchise Ltd.; and Dan Nielsen, president, Attitude Marketing & AT2 Media.
The current environment has accelerated shifts to the ‘digital door’ and omni-channel operations, which Jasra said are born of necessity, driven by changes in consumer behaviour.
“If we can build our own platforms, we can leverage our databases, our content, our marketing offers…it’s going to be a really big business for us going forward,” said Jasra, pointing to full-service operations in particular. “But, if we don’t put really good attention and focus to this area, it’s going to be hard for us to gain the type of adoption we need for online ordering for what to be successful.”
Nasager also noted that his experience has shown that the lifetime value of consumers is greater with more channels are made available to them. “I think the mistake is to carve out consumers or guests and say one of the digital guests, one is brick and mortar or one cannibalizes the other,” he said. “You have to look at them as a 360 with respect to the shift in consumption habits.”
Nielsen stressed that, in order to win in the digital frontier, it must be proactive, as it is ever changing. “Be constantly looking at the data and letting the data do the work for you,” he explained. “The other reality is, as we start using the data-management platforms that we have available to us, the capacity of machine learning and artificial intelligence to tell you the true story is quite amazing.”
Deck pointed out, that with delivery and takeout being more crucial than ever, operators are increasingly leveraging their own channels. “When you look at the ROI on doing the delivery through your own channel versus the marketplace, it’s absolutely staggering,” he said. “There’s a huge amount of opportunity here in terms of doing it yourself and doing it right…That’s all the more important. Once you get away from QSR.”
Carter added, “The path of purchase of how consumers are choosing restaurants is really changing and it constantly comes up that they’re going to the website of a brand or that food shop first and then going down to other digital platforms as they make that decision process.”
Building on this, Nielsen added, “We need to really realize that a website is the centrepiece of an entire environment that’s going to help you manage everything from client acquisition to brand experience to loyalty [and beyond].”
Panelists agreed that customer experience is a key aspect of building loyalty, noting frictionless experiences as key. Jasra also highlighted the importance of listening to the customer and integrating feedback in real time.
When executing these digital efforts, panelists highlighted the great importance of data and analytics. “It’s not just about collecting data, it’s about knowing what you want to do with it and then deciding which data [to focus on] because otherwise you can be swamped,” explained Nielsen.
And, in closing, Nielsen noted, “Digital is a great democratizer. You don’t have to be a major player anymore to have an impactful campaign or to use tools creatively to grow your business. The playing field has been evened and the small players can do some pretty incredible things.”
