Under-40 diners driving restaurant sales to record levels
By Canadian Pizza
By Canadian Pizza
Toronto – Canadians under 40, who eat out often, are driving restaurant sales to record levels and are showing an appetite for environmentally sustainable operations and menu options, according to the 2019 Foodservice Facts report 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 five per cent, which makes Canada’s foodservice industry the country’s fastest-growing sector over the past decade, Restaurants Canada said in a news release.
According to the report, 79 per cent of gen-Z consumers and 71 per cent of millennials order food or beverages from a restaurant once a week or more.
Canadians 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 are 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.”
MANY RESTAURANTS MAKING SUSTAINABILITY A PRIORITY
Millennials customers are driving an increased focus on sustainability in food service, the report suggests. 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, and 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 the association. “Though changes often take some upfront investment, many are seeing the benefits not only for the planet, but for their bottom line.”
DEMAND FOR PLANT-BASED MENU ITEMS STRONG
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 STRONG
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 food service is more economically viable. Foodservice orders made online, through websites and mobile apps, totalled more than $4.3 billion in 2018 (a 44 per cent increase from 2017) and can be broken down into two trends: quick-service restaurant delivery sales increased by 49 per cent and 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 technology, 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 slow to an average of four 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 its Member Portal. For more information, visit restaurantscanada.org.