An appetite for more gourmet burgers and fewer pizzas will change how Canadians spend their money when eating out, says a new study from research firm NPD Group.
The shift in habits could add extra pressure to the restaurant industry as popular chains like Tim Hortons, McDonald’s and Subway battle to stay relevant in a rapidly changing market that has experienced very little growth, NPD said in the report called “2020 Vision: The Future of QSR.”
Traffic at Canada’s fast-food restaurants is forecast to increase by less than 1% annually over the next five years, a “modest rate” that signals an era of more intense competition, the report said.
Fast-food chains, known within the industry as quick-service restaurants, generate $23 billion in sales in Canada each year, with about 4.3 billion visits from customers.
But changing tastes have more people gravitating towards high-end burgers, breakfast sandwiches and Chinese food, while popularity is expected to wane for traditional fast-food items like pizza, cheaper burgers and desserts, NPD said.
The study also highlighted a surge in the popularity of “fast-casual” restaurants, like Panera Bread, Chipotle Mexican Grill and Freshii, where total locations are forecast to double by 2020. Customers generally spend more at fast-casual restaurants, which serve food that’s considered better than their fast-food peers.
The NPD Group said customer demands are evolving, with more people looking for restaurants that offer take-out and drive-thru options. Overall, that part of the business is expected to grow 10% against in-store visits.
“There are going to be winners and losers in the restaurant industry this coming year,” said Robert Carter, executive director of the NPD Group’s Canadian food service division, in a release.
“Restaurant operators who remain relevant by giving consumers what they want can be the winners, but it will require continually staying on top of trends and understanding what is resonating most strongly with consumers.”
Over the past several years, the food services industry has generally witnessed a decline in customer transactions.
Growth will be hinged mainly on a larger Canadian population rather than an increase in the total number of visits per capita, which is expected to decline, the report said.
Former Tim Hortons chief executive Marc Caira highlighted the urgency of the downturn last year when he unveiled a slate of new menu items designed to draw customers in for lunches, rather than just their morning coffee.
Others in the food services industry broadened their menus, like Subway which launched a more aggressive promotion of its breakfasts and McDonald’s which brought in wraps for more health-conscious diners.
On Tuesday, Canadian restaurant operator Imvescor Restaurant Group announced plans to reduce its corporate staff by 10%, though it didn’t say how many jobs were affected. The company, which operates Pizza Delight, Mikes, Scores and Baton Rouge restaurants in Atlantic Canada, Quebec and Ontario, said it will concentrate all head-office functions in Montreal, among other changes.