Millennials Are Influencing the Growth of the Foodservice Industry


As we celebrate the advent of spring, which brings new life and new hope, it’s encouraging to see the Canadian economy improving as consumers boost their spending at restaurants. In fact, according to the “Canadian Chain Restaurant Industry Review,” produced by NPD, Toronto’s FsStrategy and GE Capital — to be released at GE Capital’s Canadian Restaurant Investment Summit in Toronto May 7 — there was a year-over-year dollar growth of three per cent in 2013, with the Canadian foodservice industry sales representing 3.7 per cent of the national gross domestic product.

Looking ahead, the dollar growth this year is estimated to outpace 2013, gaining an additional $3.2 billion, which will result in four-per-cent dollar growth in 2014. Much of this upswing in 2013 appears to be coming from independent restaurant operators as well as regional chains. Alternatively, the same-store sales for publicly traded chain restaurants in Canada declined in 2012, and again in 2013, underlying the competitive environment of the Canadian restaurant market. And that competitive pressure is top of mind across Canada.

According to FsStrategy’s survey, which captures opinions from industry leaders, 50 per cent of respondents feel sales will grow by three per cent or less this year, while 14 per cent of respondents feel sales in 2014 will increase by five per cent. When asked to identify the biggest short-term changes in the foodservice industry, “intensifying competition” and “industry consolidation” were amongst the top issues cited.

Opportunities In 2014

These days, Canadian restaurateurs are focusing on attracting the growing population of 18- to 34-year-olds, or “millennials,” which represent 28 per cent of restaurant visits or more than two billion annual visits a year. This consumer group is motivated by bold flavours, quality menu offerings and menu innovation, the latter of which survey respondents name as a large growth area this year. In fact, menu innovation and limited-time offers are spurring an increase in average eater checks, resulting in continued dollar growth.

Building on the theme of innovation, restaurant concepts will continue to evolve as more restaurateurs establish a key point of difference. Many operators are learning what’s driving consumers to fast-casual and home-meal replacement (HMR) options, since both have outpaced all other restaurant segments in Canada in the past five years. In fact, during 2013 the fast-casual segment grew nine per cent in dollars and seven per cent in customer traffic. According to survey respondents, fast-casual and HMR categories are cited as the second-greatest growth opportunities in the Canadian restaurant market during 2014.

Moreover, as the economy improves, increased spending at restaurants will lead to more innovation, which will entice and excite consumers, giving them new reasons to visit the more than 72,000 restaurant units across Canada.

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