CCentral-Main-logo-EN-trans

Convenience Central
Join our community
extra content
Shutterstock

C-stores and grocery turn to foodservice to stand out

Consumers on the go are turning to quick and easy food options outside of restaurants

Shutterstock

Shutterstock

Supermarkets and convenience stores are turning to foodservice to drive growth and keep pace with multitasking consumers looking for easy meals on the fly. And it’s paying off.

On-the-go is no longer an eating occasion, it’s a lifestyle, which means consumers are searching for food solutions beyond restaurants, said Donna Hood Crecca, a principal at Technomic, during a session this month at Restaurants Canada’s annual trade show and conference in Toronto.

“They want prepared food and beverages wherever they happen to be,” said Crecca.

Herein lies the opportunity for convenience and grocery store channels, each of which is currently faced with its own set of economic challenges. Convenience is looking for strategic growth opportunities as tobacco sales continue to decline, while grocery stores contend with the ongoing consumer shift to online.

Retail foodservice in the U.S. pulled in $72 billion in sales in 2019, said Crecca. Grocery foodservice accounted for half of that figure ($35.6 billion), convenience stores accounted for approximately one third ($24 billion) while drug stores, warehouse clubs and mass merchandisers made up the balance, she said. And sales will continue to grow.

Total foodservice sales is projected to increase in the U.S. by 3.6% in 2020, said Crecca. “When we look at the growth rates for retail foodservice it’s really driven by that grocery or supermarket segment, which actually is the second fastest growing segment of foodservice in the United States, growing at twice the overall rate.”

New build convenience stores in the U.S. are now foodservice centric, and many operators are upping their game in terms of the quality of food they’re offering and also the restaurant-type equipment they’re adopting, said Crecca.

Supermarkets are further along in the process and focusing on the consumer experience, she said. “[Supermarkets] are getting into open kitchens, they’re leveraging the theatre of food to make it inviting, to make it a destination. So, a lot of investment, a lot of excitement, a lot of prioritization, this is what they need to do to grow their business.”

The commitment to providing restaurant-quality food is paying off for both sectors. In a recent poll conducted by Technomic, 50% of consumers said C-stores are just as capable as restaurants in offering fresh food and beverages, and 41% said convenience store private-label food items are as high in quality as food from a restaurant.

And with supermarkets, 77% of consumers said the prepared foods department was really important in determining which store would become their primary destination. “Obviously this is where these supermarket operators are going to put their money as it goes to the long term growth and viability of their stores overall,” said Crecca.

Though foodservice enhances a store’s relevance, drives visits and spend, it’s important to build initiatives around the brand’s core competency, said Crecca. “Make sure what you’re offering is something the consumer gives you permission to do,” she said. “Play to your strengths–don’t offer full-service menu if you’re good at grab and go.”

Originally published at Canadian Grocer. 


Shutterstock

Plastics ban can’t be instant, restaurants warn Ottawa

Shutterstock

Shutterstock

Canada’s restaurant owners are eager to do their part to curb this country’s addiction to plastics, their association says, but they want the government to leave time for them to adapt to a ban on plastic take-out containers.

Environment Minister Jonathan Wilkinson said Thursday Ottawa’s promised ban on many single-use plastics is coming in 2021 after a scientific assessment of plastic pollution released Thursday found that the waste is harmful to the environment.

The list of what will be banned is still in development.

Carol Patterson, national vice-president at Restaurants Canada, said the industry needs a reasonable time to find and procure alternatives that are both affordable and better for the environment.

“We are really calling on the government to have an approach that takes into account the full life cycle of products but also providing those reasonable timelines for safe and functional alternatives to enter the market,” Patterson said.

At the same time as restaurants are grappling with finding non-plastic options, they are seeing a surge in demand for take-out containers from the explosion of online food-delivery services. Restaurants Canada reports between 2017 and 2018, ordering via apps and websites grew 44 per cent.

The Ipsos Foodservice Monitor found in 2018, sales via food delivery grew 54 per cent and take-out grew 18 per cent. While in-person dining is still a majority of restaurant sales _ 79 per cent in 2018 _ there is no growth in that segment of the market.

Patterson said restaurants need to make sure alternatives are also safe and accessible for customers. She said the government has been open to hearing from the industry so far.

Chelsea Rochman, an assistant professor of ecology at the University of Toronto whose lab specializes in water pollution caused by people, said when it comes to deciding what products to ban there is some “low-hanging fruit” like plastic grocery bags and straws. The bags, said Rochman, are easily replaced with reusable options and plastic straws can be eliminated for most people entirely. Many stores and restaurants have already replaced or eliminated both.

Paper-based take-out containers are already popular and are better for the environment than plastic or Styrofoam versions, even if the paper ones end up landfilled, she said.

Other items, like cutlery, may be harder to figure out, at least in the short term, because most people aren’t carrying around their own reusable forks and spoons.

“It’s a huge societal switch,” said Rochman.

She said questions is what is likely to happen to a product at the end of its first use. Some compostable plastics might be able to go industrial composting facilities in cities but there are few cities that offer that service, and there are no standards nationwide for what can be called “compostable plastic.”

The scientific assessment on plastic pollution released by Environment Canada found there was little evidence most packaging labelled as biodegradable will fully break down.

Plastic products that are really hard to replace with reusable options, like much of the packaging for shelf-stable foods such as condiments, need to be standardized so they can be recycled, said Rochman. It is hard for one recycling facility to turn bottles into plastic pellets for reuse if every bottle is made of different kinds of plastic polymers.

Only about a dozen firms across the country constitute Canada’s recycling industry. Policies that require more things be made using recycled materials are also needed to spur action, said Rochman.

Wilkinson said the plastics ban is only part of the government’s plan to eliminate plastic waste by 2040, noting standards and policies to make producers responsible for the full life cycles of their products are also in the works.


Retail foodservice is the fastest-growing foodservice segment in Canada

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.

This information is also valuable to the convenience sector, which is increasingly diversifying its offerings to include foodservice for busy customers on the go. The report found that 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% to $2.9 billion in 2019.

The report credits Millennials (27-42 years old) and generation Z (19-26 years old) for helping to grow overall foodservice sales by 5.1% in 2018, driving sales to nearly $90 billion. This marks five consecutive years of growth exceeding 5%, which, according to Restaurants Canada, makes Canada’s foodservice industry the fastest-growing sector in the country during the past decade.

The report reveals:

  • 79% of Gen-Z consumers and 71% of Millennials order food or beverages from a restaurant at least once a week or more.
  • Consumers under 30 years old spend 44% of their food dollar on food and alcohol from restaurants, compared to 35% for those between the ages of 30 and 39, and just 27% for those 65 and older.

Chris Elliott_Headshot“The days when targeting a baby boomer was a can’t miss strategy is over. Those under 40 are now driving the industry,” Chris Elliott, senior economist at Restaurants Canada, said in a statement. “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.”

 A taste for sustainability

Millennials are leading the increasing focus on sustainability in the foodservice industry. According to the report: “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% 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% recycle.
  • 93% use energy or water-saving equipment.
  • 77% track, compost, or donate leftover food.

Shanna Munro_Headshot“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% 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 convenience

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% increase from 2017) and can be broken down into the following key categories:

  • Quick-service restaurant delivery sales increased by 49%.
  • Full-service restaurant delivery sales increased by 54%.

“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 Generation Z customers prefer establishments that offer free Wi-Fi. 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 (and c-stores) should adapt their digital marketing and advertising strategies to keep customers hungry for more.

Foodservice challenges

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% 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% growth per year between 2020 and 2023.

Overall, Canada’s foodservice industry is forecast to surpass $100 billion in annual sales in 2021, presenting exciting opportunities.