Ipsos 2023 foodservice outlook

Despite economic pressures and consumers tightening purse strings, there’s an opportunity to grow this key category.
Kathy Perrotta
VP Ipsos Canada
Perrotta

Inflation is at the highest level in decades, underscoring a difficult road ahead for many Canadians, as they navigate soaring household costs in food, fuel, utilities and many common essential and discretionary household expenses.

All of this occurs as pandemic legacy adjustments and other distressing global events cumulatively impact future economic outlook and individuals’ confidence in personal circumstances.

At the same time, food sourcing and consumption habits are ever-changing, as consumers continue to traverse a hybrid world of in-store and online grocery shopping, consider a plethora of subscription models, and dip in and out of a changing foodservice landscape.

Ipsos reports that restaurant dining and delivery services top the list of intended spending cuts as consumers navigate this new reality.

However, it is important to note that retailers and operators should not base strategy decisions solely on stated future intent, as consumers don’t always behave as they report they will or want to. 

For instance, despite stated intent to cut restaurant spending, Canadian foodservice dollar spending in July 2022 outpaced spending during the same period pre-pandemic: Ipsos Foodservice Monitor (FSM) confirms that dollar expenditures in July 2022, buoyed by higher menu prices, increased 5% versus 2019. 

However, while channel dollars increased, all-important traffic rates or the share of individuals visiting the foodservice channel remained behind pre-pandemic levels (-8%), indicating a considerable growth opportunity for c-store foodservice.

According to Ipsos foodservice industry expert, Asad Amin, “there have been fundamental shifts in how we access foodservice, with dine-in slower to recover and new delivery habits gained during lockdown remaining flat that will need to be factored into growth strategies.”

The data bears out Amin’s comments with almost three-quarters of all traffic in 2022 (70%) occurring via take-out or drive-thru channel, while on-premises dining has slowed a whopping 38% versus pre-pandemic levels. Further, the storied advent of delivery services, which doubled in size as people cocooned at home over a two-year period, remains flat.

Further, while foodservice traffic rates at both dinner and snack occasions have improved over the past year, lunch and, to a lesser degree, breakfast visits remain soft—no doubt this is impacted, in part, by close to a third of adults (29%) continuing to work from home.

However, even in the midst of unprecedented headwinds, FSM forecasting work reveals channel upside.

Several key indicators support future channel growth led by strong pent-up demand.  While this demand score has slowed somewhat over the past couple of months, it remains well-ahead of 2021.

Further, as concerns over safety in gathering size, eating outside the home and cleanliness factors have all pulled back, the desire to return to restaurant quality and experience dining together, as well as the desire to support local businesses, improves considerably.

Moving into 2023, as concerns over safety in the size of gatherings and eating outside the home decrease, people want to return to restaurant quality food and dining together, as well supporting local businesses.

The annual outlook for the QSR segment is fuelled by lower price points and demand for affordable indulgences. Conversely, the return of FSR may be stalled by higher cheque size and lower weekly visit frequency.

In this ever-changing environment, it will be key for operators in all segments, including convenience, to build foodservice strategies that target emotional and functional benefits.

·   Make it easy and convenient

·   Serve quality food that is tasty

·   Provide a casual, informal environment where people can socialize

·   Position take-out or on-premises dining as an opportunity to connect or catch up with friends or colleagues

Even during the darkest days of the pandemic lockdown when access was denied, foodservice operators held tight to a recurring theme which holds true today amid rising financial pressure—Canadians love to eat out and want to enjoy the experience again and again.

- Originally published in the January February 2022 issue of Convenience Store News Canada

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