By Nicole Di Tomasso
TORONTO — The 12th annual Canada Restaurant Investment & Leadership Summit, hosted by CWB Franchise Finance, was held in-person earlier this month at the Bisha Hotel Toronto, bringing together approximately 100 CEOs and executives from leading brands along with industry experts to share their perspectives on the future of the foodservice industry in Canada.
The summit kicked off with opening remarks from Ed Khediguian, senior vice-president of CWB Franchise Finance. “We started this conference about 12 years ago, and we’re proud to bring it back live after two years of virtual events,” he said. “As good as virtual has been from a technical and tools perspective to keep us connected, there’s so much value that goes beyond those technical capabilities to have face-to-face interaction with clients and colleagues. Well done on persevering through the last two and half years and staying within the industry.”
The first session, The Foodservice State of the Nation, was presented by Jacob Mancini, AVP Restaurants & Breweries at CWB Franchise Finance, and Vince Sgabellone, industry analyst, Canada Foodservice at The NPD Group and explored Canadian foodservice industry sales and traffic, consumer behaviours and attitudes, new industry trends, the economy, markets and key financial trends and the outlook for the future.
Overall, Sgabellone said the foodservice industry is seeing “double-digit growth for the last 12 months ending August 2022 of 13 per cent in terms of visits, but still down five per cent in terms of visits compared to 2019. We’re definitely moving in the right direction and back up over eight billion visits a year.”
However, the industry is still facing economic headwinds with labour shortages, inflation, high mortgage rates, et cetera. While these challenges run through the minds of operators, Mancini and Sgabellone pivoted to explore what’s running through the minds of their customers and how to attract them. With that, the duo presented four consumer segments – moving targets, the frantic family, the kitchen warrior and the social butterfly – to further understand some of the trends in the market, and encouraged attendees to think about where their business fits into the equation.
“The moving targets are the folks who are leaving their homes again to resume their hurried lifestyle,” said Sgabellone. “These occasions are functional in nature and consumers want to grab something quick to satisfy a craving. There’s not a lot of emotion involved. Our recent Future of Foodservice report indicates that about half of office workers will continue hybrid- or remote-work models for the foreseeable future. If your business depends on these workers, you need to adapt and change the way you’re communicating and attracting consumers. Before the pandemic, just under 12 per cent of the market was represented by consumers grabbing food while at work, and now that’s dropped to just under 10 per cent, translating to 200 million lost visits.”
Next, the frantic family segment is concerned about money, inflation and rising menu prices. However, Sgabellone said that more families are having dinner together, but the majority of these visits are off premise. In fact, family visits are one of the only cohorts that grew during the pandemic, despite all of the declines.
“Consumers are looking for value, especially when feeding their family and friends, so there’s an opportunity to increase value by offering a combo deal, but don’t just stop there,” said Sgabellone. “Imagine other ways to sell some of your pre-packaged grocery items or extra entrees for people to take home and fill their freezers.”
“When it comes to family visits, digital ordering has tripled,” said Mancini. “Families have been really important in re-building this industry and they are engaged with restaurant technology, so operators need to focus on digital implementation and loyalty programs to engage with this particular group of consumers.”
With regard to the kitchen warrior segment, Sgabellone said “it’s all about taking that food experience into the home. Consumers have re-discovered their kitchens and thought maybe they don’t need a restaurant. It’s up to you to make sure that doesn’t necessarily happen. Our data shows that over an average six month period, about one in five households buy meal kits. Depending on who’s estimating, it’s somewhere between $500 million and $1 billion a year in terms of food spending. And why is it significant for us? Because about 27 per cent of people who bought a meal kit said that it replaced the restaurant meal because about 27 per cent of people who bought a meal kit said that it replaced a restaurant meal. There’s a competitive factor going on here.”
“If you’re just a meal kit or subscription, who knows if that’s going to work?” said Mancini. “You could also be doing things like pop-ups in different locations and partnerships with industries and players in completely different segments to widen that audience.”
Finally, the social butterfly segment is made up mostly of 18 to 24 year olds (Gen Z), who are willing to go out to restaurants to socialize with friends and family. “Are your restaurants ready to welcome these Gen Z’s? The cohort is also driving the growth in FSR, which used to be the 45-plus cohort, but now we’re seeing this huge influx of younger consumers with more disposable income,” said Sgabellone. “Are you ready to include shareable and sociable menus? Do you have harvest tables available for big crowds? Are you offering free Wi-Fi? Do you have apps to get them coming back? Are you Instagrammable? It’s important to understand what’s going on with these younger cohorts and how you can reach them.”
Looking to the future, the presentation wrapped up with an idea about evolution. “Disruption has been so meaningful and it’s really changing the DNA of brands and segments that are at the core of this industry,” said Mancini. “Today’s new models are exploding with common themes – it’s all about convenience, it’s all about drive thru lanes and it’s all about technology. The message is clear. Pick your lane and what you want to focus on. Most importantly, let’s keep getting together to network and talk about these common issues to build the next best business models.”
The second session, The CEO Panel, was moderated by Jamie Berryman, vice-president, National Sales, at Sysco Canada and included Peter Mammas, president and CEO of Foodtastic, and Hadi Chahin, CEO of MBI brands, which includes Mary Brown’s Chicken and Fat Bastard Burrito. Together, the speakers discussed the evolution of the restaurant industry, the lessons they’ve learned along the way and insights into how technology is shaping the future of the industry.
“Within 10 days, we had roughly 95 per cent of our system on third party delivery, which is something we would have never imagined three or four years ago,” said Mammas. “We learned how to adapt, how to talk to our people, how to trust our people and how to hire our people.”
“We had to keep everybody moving forward and make sure doors were kept open and planned for the future,” said Chahin. “We changed everything from operations to marketing to support our system. It really showed the resilience of our franchisees and the fact that they held the ground. The biggest learning curve for us was improving communication within our system.”
Out of three major challenges – labour, inflation and supply chain – the panellists agreed labour was the most cause for concern.
“You can’t blame people for not wanting to come back to our kitchens,” said Mammas. “They’ve got families and loved ones to feed and they want stability. They’re going to other companies and getting health plans, regular hours and weekends off – they’ve found a balance. After we re-opened the second time, maybe 75 per cent of our workers came back but the 25 per cent we lost definitely aren’t coming back.”
“We’ve got full-time staff working on foreign worker programs to bring people into our systems and support three lobby groups petitioning the government to allow more people in for a longer period of time,” said Chahin. “We did a big Ukraine initiative and basically told our apprentices that if they hired people from Ukraine, we’ll pay for their flight, rent for the first few months and their family’s flights. But there has been a lot of backlog.”
When asked about the next big thing for the Canadian restaurant industry, the panellists agreed that M&A activity and consolidations will ramp up.
“It’s the right time for people to start their own brands and grow them and it’s the right time to buy brands and grow them,” said Chahin. “There’s a lot of opportunity at both ends.”
The summit wrapped up with the Hot Topic Panel Discussion, featuring Jackie Ross, co-founder of JRoss Hospitality Recruiters; David Smith, president of Chartwells; Dylan Erlendson, vice-president of Sales at XTM Inc.; and Chris Elliott, senior economist for Restaurants Canada. Together, the panellists presented a holistic view of trends, obstacles, innovations and opportunities shaping the future of the foodservice industry.