Three important foodservice transformations to watch


As you may have seen in the media over the past few weeks, IRI and NPD have come together to form Circana. Our focus on transforming complexity into clarity for the industries we serve has forced me to think about other transformations. In particular, I have been reflecting on the transformations we’ve witnessed in the foodservice industry in the last three years and which we anticipate will continue well into the future. Here’s my take on three important transformations worth watching.

1. Digital Ordering
Online shopping, e-commerce, digital ordering — call it what you will, but there is no denying it’s transformed the way consumers shop. Digital ordering (orders placed on the Internet, through a mobile app, or by text message) in restaurants has been one of the fastest-growing traffic segments in Canadian foodservice for the past five years. Circana’s CREST data for the 12 months ending February 2023 reveals digital ordering accounts for 12 per cent of all restaurant occasions in Canada. This adds up to more than $10 billion in sales.

CREST also reports that about two-thirds of this volume is captured by third- party aggregators, which reflects their ongoing influence in this burgeoning marketplace. More than half of digital consumers report participating in a loyalty program, while almost the same share report taking advantage of a deal. This provides plenty of opportunity for marketers to develop diverse programs while they engage with this tech-savvy customer base.

As you might expect, digital volume is heavily concentrated among the youngest consumers. Consequently, this is one transformation that will continue as these consumers grow their economic influence and as the technology evolves.

2. Brick-and-Mortar Shopping
Despite the popularity of e-commerce, in-person retail visits have rebounded over the past year. According to recent Circana omnibus studies, consumers report they enjoy the experience of shopping, and others appreciate the social aspects of in-person shopping. From a foodservice perspective, this is promising, because about 12 per cent of restaurant visits originate with a shopping excursion. That’s about the same number of visits that originate from a workplace. Meanwhile, mall food-court traffic is almost back to historical levels, even if retail spending continues to lag.

For QSR operators that focus on these venues, this is good news. But it’s not all about QSR any longer. In Toronto, there is some buzz around two new food-focused investments launching at area malls. The Eaton Centre will transform its food-court experience by welcoming a new development by upscale FSR operators Oliver & Bonacini. At the same time, Eataly is building out its second location at west end shopping hotspot Sherway Gardens. Beyond Toronto, we see similar examples at The Post Vancouver re-development and Le Cathcart in Montreal. Malls used to provide food options to encourage shoppers to stick around and shop more. Now they are transforming into destinations unto themselves.

3. Independents and small chains
Small chain and independent restaurants have faced many challenges since 2020, resulting in thousands of closures. Even so, there is cause for optimism for these operator subsets. Sales volumes, traffic, and share grew in the past year. For example, the major chains (500+ units) that dominate QSR have been losing traffic share, while smaller chains are growing. This is transforming the landscape to match the restaurant consumer’s changing palate. Many consumers are now more inclined to visit a restaurant to treat themselves or seek out an indulgent menu item. These emotional visits demand more variety, more diversity, and more authenticity, as only independent and smaller operators can provide. Meanwhile, functional visits, driven by a need for convenience, have diminished. As with digital ordering, this trend toward smaller operators is over-indexed among younger consumers, thus ensuring these transformations will continue over the coming years.

By Vince Sgabellone is the director of Client Development and Foodservice Industry analyst at Circana. He can be reached at [email protected]

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