TOMORROW

This article has been edited for length and clarity.

What are some of the main things that consumers are looking for from restaurants right now?

Vince Sgabellone, NPD Group Canada: As ‘functional’ visits (on the way to work, while out shopping, or running errands) continue to lag at historic levels, ‘emotional’ visits are on the rise, including entertainment-related venues like movies, amusement parks, and concerts, as one of the fastest-growing segments of the market this past quarter.

Mike Kostyo, Datassential: The keyword for consumers right now is value, but that doesn’t always mean the lowest price. In fact, operators shouldn't become over-reliant on offering deals. Consumers are looking for the experiences they missed over the last three years but are also dealing with high prices. ‘Eatertainment’ is a top choice because the combination of food and fun offers a high perceived value. That's the overall value-focused package that’s getting consumers excited.

Katie Belflower, Technomic: When it comes to menu, 61% of consumers report that they like to try new and unique flavours when dining out, and restaurants will have to try to appeal to that desire to attract customers. Operators will need to figure out a way to balance this desire for innovation with rising costs and other challenges that could prohibit these menu changes.

David Hopkins, The Fifteen Group: On the operational side, COVID-19 highlighted the importance of clear communication and sharing relevant information like how staffing shortages are impacting your business, hours of operation changes, menu changes, health and safety protocols, and more. Transparency is important to consumers.

William Kazura, Paytronix: Nearly one-third of all food orders are coming in digitally, and this suggests that it’s a powerful channel that’s here to stay. Brands must think through their full guest experience across all channels. Digital ordering isn’t just about a menu, it's become a true taste of the brand.

What are some of the major ways you are expecting the Canadian foodservice landscape to shift for the rest of the year?

Kostyo: With the Bank of Canada raising rates, we all want to know if we'll officially enter a recession. That's going to be a big factor when it comes to holiday spending this year.

Asad Amin, IPSOS Canada: At some point, I think that a tightening of discretionary spending will trump the desire to dine out for some. The frequency of visits may be impacted, particularly for FSRs, potentially benefitting QSRs in the short term as consumers still satiate their cravings and treat themselves.

Sgabellone: Third-party reports suggest that some companies are recalling their workers back to their physical offices. If this happens, we’ll see more functional visits, including mornings, lunches, and for coffee. Business events and travel could also return, resulting in more professional lunches, dinners and more travel-related spending.

Hopkins: In terms of front of house, we expect to see more restaurants continuing to shift to smaller menus with fewer offerings, streamlining their inventory and labour and honing in on executing select dishes very well.

What is one major new or evolving challenge you expect Canadian restaurants to have to grapple with in 2023?

Kostyo: There is a sizeable percentage of consumers who want to get their health back on track as well as some who took the opportunity to start new, healthy lifestyle changes during the pandemic. At the same time, they want to get out to restaurants and have those fun, indulgent experiences. As a result, there's a real opportunity for operators to capture consumer interest with things like healthy, global, flavour-driven foods, dishes that swap in healthier ingredients for traditional options and healthy dishes that are very texturally and visually exciting, so they don't seem like a trade-off.

Kazura: Staffing shortages are an evolving challenge that will continue through 2023, creating the need for restaurant operations and technology to be streamlined and easy to use. New staff need to be equipped to quickly learn their role regardless of their experience, or primary language. The combination of limited staff along with increasing guest visits and ordering in 2023 will require restaurants to have the right technology and operations to succeed.

Hopkins: As costs continue to rise, restaurant operators must rethink their pricing strategy to remain profitable. But that’s only one side of the coin. Guest expectations are higher postCOVID-19. It’s a consumer market, and restaurants must set themselves apart from the competition in terms of service, offerings, programming, transparency, and safety. This will be a very fine line for operators to walk, as they balance a business model that makes sense while keeping guests happy.

Belflower: Supply chain issues (delays and the inability to procure certain items) have been impacting menus this year, and that could continue into the next year as well. If this happens, we’ll see more menu pivots, including strategies like protein swaps (think seafood in place of beef or pork in meatballs) and creative cross-utilization (such as using common kitchen ingredients for creative takes on cocktails) for continued menu innovation without having to add several new SKUs.

Sgabellone: The economic headwinds faced by the Canadian consumer remain a wildcard. Past recessions suggest that consumers will modify their restaurant spending during an economic slowdown. We are already seeing signs that people are ordering fewer items and/or using other strategies to downsize their foodservice spending. As the industry continues to recover, an economic downturn could make the situation worse.

Amin: The ability to sustain business and growth in this environment long-term will continue to be a challenge. One issue could be diner backlash to higher prices. As many struggle to understand why operators need to continue to raise prices in an environment of economic uncertainty and tightening budgets, this could present a tough challenge for the industry.

For example, in the past few years, we’ve seen the rise of Sriracha and gochujang. Going forward, expect other, lesser-known global sauces or condiments such as Indonesian sambal to see more mainstream growth on Canadian menus as consumers continue to seek new experiences and flavours.

Amin: As the industry evolves, I think the resilience of smaller operators will see an explosion of new operators and new types of cuisines, growing especially in the suburbs, as large volumes of younger cohorts move out of the cities, where real estate is more affordable. These cohorts will drive trends like conscious consumption (think of the plant-based movement) and diversity in authentic food types (think of the appeal of ramen, Korean fried chicken), and more.

Hopkins: We foresee a continued rise of hybrid concepts with the convergence of foodservice and retail. One-stop shops for dining and shopping offer convenience and new, engaging consumer experiences. We expect to see this market segment continually emerge in 2023. As well, to combat global supply chain challenges and to promote traceability and community, localization of food and produce will grow in popularity. This will manifest in the form of seasonal menus, partnerships with smaller, local producers, and a celebration of regional landscapes.

Kazura: Finally, restaurants now understand that technology is a key part of their overall process. Data indicates that at least onethird of food orders come in digitally. As we move into 2023, brands will need to understand how to deliver a branded digital experience beyond simply offering online menus to match their on-site guest experience.

Mod: September 22, 2022 3:58 PM Print: 10/03/22 page 1 v2.5