The Canadian foodservice market is very mature. Prior to the pandemic, approximately 40 per cent of Canadians consumed a meal, snack or beverage away from home on an average day and we’re quickly heading back to that benchmark. Plus, we’re creatures of habit, consuming those old restaurant standbys of hamburgers, fries, sandwiches and, of course, coffee. This makes it difficult for a new category such as plant-based proteins to break through.
I won’t get into the nuances of plant-based versus vegetarian, since my experience is that the consumers reporting on their consumption in The NPD Group’s CREST consumer panel won’t necessarily make a clear distinction. Instead, I’ll focus on a broader definition of “vegetarian” that includes vegetarian sandwiches, vegetarian burgers and vegetarian entrées.
“Vegetarian” is not a new concept in Canada’s foodservice market. It takes many forms — from a simple green salad to one of the favourites from my mom’s kitchen, pasta fagioli, to any number of plant-based entrées and meatless offerings. Numerous legacy companies have offered meat-substitute, vegetable-based products for decades; many of your favourite foodservice establishments have long included them on their menus.
The vegetarian menu grouping accounted for about 70 million servings per year in Canada, representing an incidence of about one per cent (share of occasions that included a vegetarian item). These servings were split primarily between entrées and sandwiches. The shiny new player on the vegetarian stage in recent years has been plant-based protein.
When the first crop of these meat-replacement items burst on to the Canadian foodservice scene in summer 2018 in the form of plant-based burgers, they were met with a lot of interest and initial trial. Additional offerings soon followed, and the tide of publicity began to lift servings for all the vegetarian subcategories. Peaking just before the pandemic hit at more than 100 million servings, incidence had jumped to 1.5 per cent. Plant-based burgers captured about one-quarter of this growing market. Then COVID-19 turned down the heat on this burgeoning segment, and incidence fell back to historical levels.
Vegetarian product marketers face two key challenges. The first challenge is their dependence on lunch to attract more than 40 per cent of their foodservice customers. Lunch was the hardest-hit daypart in the past two years and has been the slowest to recover. With work-from-home activities expected to continue for the foreseeable future, returning to pre-pandemic traffic levels, and thus servings, will be a challenge.
The second challenge is a reliance on health-minded consumers. Just five per cent of restaurant consumers think about healthy options when they select their restaurant destination. When they’re not out of the home doing other things, such as going to work or school, these health-minded, and sometimes vegetarian, consumers are more inclined to simply fulfil their unique food demands at home. Instead of healthy options, an increasing share of restaurant consumers look for indulgent offerings to treat themselves.
Vegetarian may not be a big niche, but it is likely a niche with a future. The dominant age cohort across all the vegetarian subcategories is 18- to 34-year-olds. Several NPD studies show this cohort chooses vegetarian for several reasons — health, sustainability and animal welfare among them. Increasingly, they seek menu options that meet these needs. As this group continues to age into the prime earning years, they will visit restaurants more often, generating even more demand for vegetarian offerings. All the while, they’ll influence their young kids, the next generation of restaurant customers and vegetarian consumers.
For plant-based and other vegetarian menu offerings to grow significantly beyond their health-conscious roots, they’ll need to offer so much more than a healthful nutritional profile. It will be essential to encourage more vegetarians to make regular restaurant visits, and more non-vegetarians to choose this menu category. A focus on great taste and indulgence will help this niche menu category succeed in carving out an even bigger piece of the mature Canadian foodservice market.
By Vince Sgabellone is a foodservice industry analyst with The NPD Group. He can be reached at [email protected]
