Foodservice is now the fastest growing sector in the country, according to new Foodservice Facts report from Restaurants Canada
TORONTO, May 23, 2019 – Canadians under 40 are taking the biggest bite out of the country’s restaurant business while showing an appetite for environmentally sustainable operations and menu options. Plant-based protein, sustainable seafood and locally sourced food are in demand, while plastic straws continue to disappear, according to the 2019 Foodservice Facts report just released by Restaurants Canada.
The report credits millennials (27-42 years old) and generation Z (19-26 years old) with helping to grow foodservice sales by 5.1 per cent in 2018, driving sales to nearly $90 billion. This marks five consecutive years of growth exceeding 5 per cent, which makes Canada’s foodservice industry the country’s fastest-growing sector over the past decade.
The newly released report reveals:
- 79 per cent of gen-Z consumers and 71 per cent of millennials order food or beverages from a restaurant at least once a week or more.
- Consumers under 30 years old spend 44 per cent of their food dollar on food and alcohol from restaurants, compared to 35 per cent for those between the ages of 30 and 39, and just 27 per cent for those 65 and older.
“The days when targeting a baby boomer was a can’t miss strategy is over. Those under 40 are now driving the industry,” said Chris Elliott, Senior Economist at Restaurants Canada.
“Whether they are looking for environmentally sustainable alternatives, tech friendly options or more diverse menu offerings, it’s vital for restaurant operators to adapt to their changing customer base in order to appeal to new guests and maintain brand loyalty.”
Millennials have a taste for sustainability
We have millennials to thank for the increasing focus on sustainability in the foodservice industry. Their preference to do business with companies that prioritize environmental stewardship and social responsibility extends to their dining habits — and restaurants are responding to this demand.
Eight out of 10 foodservice business operators across Canada now say environmental sustainability is important to their success and 72 per cent say they have made changes to their business operations to become more sustainable.
Nine out of 10 say they plan to continue or improve on their current level of environmentally sustainable operations over the next three years. Currently:
- 98 per cent recycle.
- 93 per cent use energy or water-saving equipment.
- 77 per cent track, compost, or donate leftover food.
“Finding ways to operate more sustainably is simply part of doing business in restaurants today,” said Shanna Munro, President and CEO of Restaurants Canada. “Though changes often take some upfront investment, many are seeing the benefits not only for the planet, but for their bottom line.”
According to the 2019 Foodservice Facts report from Restaurants Canada, 70 per cent of restaurant operators say they have made changes to their menu/selection of items. Growing appetites for plant-based dining have been a significant reason for this.
With Canadian consumers indicating shifts in protein consumption (vegan and vegetarian meat alternatives showing the highest growth), plant-based options appear here to stay as more diners make the switch to “do their part” for the environment.
Demand for delivery
With the rise in food delivery skyrocketing in 2018, consumers have no shortage of options when ordering in; everything from their favourite local restaurant to major franchise chains and even fine dining is on the table when it comes to delivery today.
The impact of the demand for delivery is mostly being felt in densely populated cities where foodservice is more economically viable. Foodservice orders made online, through websites and mobile apps, totaled more than $4.3 billion in 2018 (a 44 per cent increase from 2017) and can be broken down into the following categories:
- Quick-service restaurant delivery sales increased by 49 per cent.
- Full-service restaurant delivery sales increased by 54 per cent.
“As generation Z and millennials look for convenience, eating out or ordering in is appealing as a time-friendly alternative to cooking,” said Elliott. “We expect to see these generations looking to order food at lower price points, and while health is important, many want to indulge a little too.”
Beyond delivery tech, millennials and gen-Z customers prefer restaurants that offer free Wi-Fi access and online reservations. They also like to use social media platforms, such as Instagram and Snapchat, to interact with establishments, leave reviews, follow activity and tag photos. In order to attract this key customer base, restaurants should adapt their digital marketing and advertising strategies to keep customers hungry for more.
Despite industry growth, foodservice operators are struggling in some areas:
- Labour costs, as well as recruiting and retaining employees, are the top two challenges currently facing foodservice operators.
- Higher minimum wages, food costs and increasing labour shortages have resulted in higher operating costs, contributing to a 4.2 per cent increase in menu prices at restaurants across the country.
- A slowdown in average annual foodservice sales growth is expected, given rising household debt and slower job creation.
- Commercial foodservice sales in Canada are predicted to decelerate to an average of 4 per cent growth per year between 2020 and 2023.
- In recent years, the share of alcohol purchased at drinking places by those between the legal drinking age and 24 years old has dropped from 27 per cent in 2013 to 13 per cent in 2018.
- Retail foodservice (prepared meals in department stores, convenience stores and grocery stores) remains the fastest-growing foodservice segment in Canada, with projected annual sales increasing by 6.2 per cent to $2.9 billion in 2019.
- Canada’s foodservice industry is forecast to surpass $100 billion in annual sales in 2021.
Foodservice Facts is one of many research reports available exclusively to members of Restaurants Canada on the Member Portal. For access to the report, or to learn more about member benefits, please call 1-800-387-5649 or email firstname.lastname@example.org.
About Restaurants Canada
Restaurants Canada represents a growing community of more than 30,000 businesses, advancing their potential through services, research and advocacy. Canada’s foodservice sector is an $89 billion industry, directly employs 1.2 million Canadians, is the number one source of first jobs and serves 22 million customers every day.