FOODSERVICE FUNDAMENTALS The future looks bright

4 Foodservice Trends And What They Mean For Convenience

In 2022, the world began its return to normal. The pandemic was challenging foodservice operators, including convenience stores. In 2023, the pandemic seems all but behind us (at least in terms of restricting daily routines), but the foodservice landscape has shifted significantly. Several trends are impacting commercial foodservice operations; however, many of these trends do not severely impact c-store foodservice.

1. Inflation

Food inflation is significant, peaking at 11.4% in November 2022. Fortunately, it is decreasing, projected at 9.2% by the end of Q1 2023 and is forecasted to normalize at about 2% in 2024.

The increased cost of food, unsurprisingly, has an impact on foodservice. Early in the inflationary period, foodservice operators were able to increase prices. More recently, as consumers worry about disposable income in the face of inflation and fear of a recession, operators have been adjusting menus and recipes to substitute lower cost ingredients and reducing portion sizes.

Even as inflation rates decrease, the impact is ongoing (i.e., the 9.2% inflation forecasted for 2023 is incremental to inflation rates in 2022).

Foodservice operators will continue to refine recipes and menus to control costs. A renewed focus on controlling food costs through procurement, inventory and production controls will also continue throughout the year.

2. Labour shortage

Labour, along with food, is the other major expense for foodservice operations. Labour shortages, especially back-of-house positions, have long been an issue. The labour

BY JEFF DOVER

challenges have spread to most industries. People are comfortable applying, and are being hired, for positions they would have not considered in 2019. As a result, service industries with entry-level and low wage positions are adversely impacted. Few, if any, foodservice operations are fully staffed. They are offering pay rates and benefits previously unseen to attract and retain staff. As options increase, many people are not willing to work long hours, nights and weekends, etc. for minimum wage.

While this is a major challenge for commercial foodservice, c-store foodservice is less impacted. Sure, it’s difficult to find employees; however, with the right menu items, limited incremental labour is required to offer foodservice. In turn, there’s less upward pressure on prices, which is a competitive advantage.

3. Technology

Technology is increasingly a key part of foodservice operations and delivery. Adoption was accelerating prior to the pandemic, then increased significantly, as customers got more comfortable. Now, technology is used in ordering (mobile order pay, kiosks, online), as well as delivery (robots and drones), production (robots) and more.

Technological advances continue to infiltrate foodservice, however, given the foodservice labour cost advantage, c-store operators are not yet able to realize significant cost-savings by investing heavily in such innovations.

4. Sustainability

Sustainability is increasingly important and Canada’s single-use plastics ban, for example, targets foodservice operators. However, foodservice sustainability can take many forms, including waste reduction, energy efficient equipment, sustainable procurement initiatives, hyper-local food initiatives and increasing plant-based menu offerings. For c-stores, waste reduction by using compostable or recyclable service ware should be considered (make sure that your municipality’s waste management can recycle or compost these products). And, let your customers know about your sustainability initiatives—tell the story. A benefit of practicing sustainable foodservice is that many potential employees want to work for an organization that shares their values. Of course, sustainable business practices would have to extend to the core retail operation.

In conclusion, the foodservice industry has changed significantly in recent years. Part of this is due to consumer demand: retail foodservice customers have adopted a “what I want, when I want it” attitude to which operators have had to respond. Another driver is the challenges operators face with respect to increasing food costs, labour costs and labour scarcity. At the core, providing good food and good service remains the key to success; however, how one accomplishes these feats is changing. Fortunately, for c-stores, the challenges aren’t as daunting as for their commercial foodservice competitors. The 2023 outlook from a convenience foodservice perspective is bright. CSNC

Jeff Dover is president of fsSTRATEGY, a consulting firm specializing in strategic advisory services for the hospitality industry, with an emphasis on food and beverage. Jeff is a Certified Management Consultant and a member of the International Society of Hospitality Consultants.

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More than 50% of c-store shoppers visit a convenience store at least once a month, but the reasons behind those visits are shifting compared to pre- and peak- pandemic times.

Longer hours and changes to routine remain the top drivers for shopping more at c-stores today versus pre-pandemic, however, both decreased significantly when compared to a year ago. That makes sense—grocers and other stores are now open longer (remember when everything closed at 6 p.m.)—and as people return to regular routines, the pandemic plays a lesser role in shaping daily habits: 26% compared to 41% previously.

That said, visits to and spending at convenience remains strong. Shoppers spent an average of $18.06 on their most recent visit (excluding the costs of gasoline), compared to $15.46 in last year’s report and $13.56 in 2019.

For further signs of pandemic recovery, look no further than foodservice. Foodservice as a driver of c-store visits increased 6 percentage points year-over-year to 18%, compared to 12%. Digging deeper, 13% of shoppers say they typically visit to purchase lunch (up from 8%) and purchasing dinner has more than doubled—to 11% in 2023 from 5% previously, according to insights from the 2023 C-store IQ: National Shopper Study from Convenience Store News Canada and the research team at EnsembleIQ.

Now in its third year, C-store IQ is the only convenience and gas specific study delving into the wants,

TOBACCO ADVERTISING IS NOT AVAILABLE IN THE DIGITAL ISSUE needs, perspectives and habits of consumers in Canada.

This year, we doubled the number of participants to more than 2,000 convenience shoppers across the country. It’s a true snapshot of Canada’s convenience landscape, with comprehensive coverage by age demographics and geographical locations.

This is a topline report. We will be digging into the data throughout 2023—in the magazine and online, as well as events and special reports—to analyze consumers’ attitudes, habits and expectations regarding key categories, foodservice, technology, fuelling, loyalty and more.

Looking for specific data about categories, demographics, urban versus rural shoppers? Reach out. The goal is to provide valuable insights into the evolving wants, needs and habits of your customers to better inform business decisions and drive success.

Reasons shopping at convenience stores more today vs. before

Convenience stores are open longer hours

Changes in daily routine due to COVID-19

Convenience stores are one of the only stores open or available in my area

Trying to consolidate or make fewer shopping trips overal

Feel shopping at convenience stores is safe

Satisfied with the safety + sanitation measures implemented at my preferred convenience store(s)

Shopping convenience stores more for foodservice items

Choosing to shop for groceries at a convenience store instead of a larger store

My preferred convenience store offers contactless payment options

My preferred convenience store offers curbside or pumpside pickup

Store Type

What ‘convenience’ means to shoppers

For more than one-in-four shoppers, convenience is defined as a store that is in close proximity followed by affordable prices, quick to shop and offering essential items.

Aspects that influence a visit to a convenience store

71 %

Proximity/close by Longer hours

To purchase gas

Loyalty program

Has products can’t buy anywhere else Coupon

Foodservice quality

Word of mouth

Mobile app offer

Social media promotion

Like their private label

Availability of contactless shopping

Availability of drive-thru

Occasions typically shop at convenience store

When

I need to purchase gas

While running other errands

For a late night snack

Special trips to store from home

For an afternoon snack/break

Travelling for pleasure

Although location, longer hours and need for gasoline still have the most potential to sway shoppers to visit a store, when compared to last year, all dropped in influence. In turn, social media, private label, mobile ordering, email and curbside pickup increased. Shop

Travelling to/from work or school

To purchase hot beverage / breakfast

To purchase lunch

While working from home

To purchase dinner

Travelling for business

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Usage of expanded services at convenience stores

Significantly more shoppers are using expanded services versus a year ago, with indications that these behaviours are being driven by younger generations, who embrace Wi-Fi, video games, passport photos, mobile ordering, drive-thru and self-checkout. Millennials are most likely to use storage lockers.

68 %

Of Shoppers Regularly Use At Least One Expanded Service At Convenience Stores

New this year, we asked shoppers how long they typically spend in store: Shoppers embrace the quick and easy shopping experience. 65 %

Cash ATM

Car wash

Postal services

Internet access/Wi-Fi

Self check-out

Mobile payment

Drive-thru

Video games

Passport photos

Home delivery

Pick-up lockers

Mobile ordering

Copy/fax

Curbside pickup

Money transfer/wire

Bitcoin ATM

Time of day

Like last year, trips increase throughout the day and peak in late afternoon and evening, however lunchtime occasions appear to be on the rise. As shoppers return to school and work, retailers should pursue opportunities to attract more morning occasions.

26 %

%

Importance of ‘experience’ when choosing which store to shop at

Very important /Important

46 % Moderately important

27%

27%

Slightly/Not important

Areas where convenience stores must improve to encourage more shopping

Product pricing

Variety of products offered

Products needed in-stock

Loyalty program

Store cleanliness

Healthier/better-for-you items

Prepared food quality

Employee friendliness

Variety of prepared food/beverages

Store look/feel

Employee helpfulness

Store organization

Speed of shopping

Local/Canadian-made product offering

Coffee program

Larger pack size/more bulk

Better sustainability commitment/recycling

Fun to shop

Delivery

Contactless shopping options

Embraces cutting-edge tech

Significant increase / decrease

Likelihood of visiting a different store if items are unavailable at current store shopped

It’s now more important than ever to gather the right data to undersand your target shoppers’ wants and needs, or risk losing them to the competition. Shoppers in Atlantic Canada are most likely to go elsewhere if desired items are not in stock.

40 % Very likely

41 % Somewhat likely

19 % Not very/Not at all likely

The survey was fielded from December 7, 2022 – January 10, 2023 and responses were gathered from 2,008 people, who were required to be 18+, reside in Canada and shop at convenience stores at least once a month. Quotas were imposed to ensure measurable base sizes for age generations and provinces or territories.