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What’s hot, what’s not, what’s next
By Linda Strachan
January 4, 2012
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 Looking back on industry trends over the past year, the economy has driven consumer behaviour. At the end of 2010, it appeared we were emerging from the economic crisis. However, 2011 has delivered generally weak, sputtering restaurant traffic in every country that NPD tracks, outside of China.
While Canada fared better than most countries, traffic here is barely above 2008 pre-recession levels. The job market has stalled and consumer confidence is shaky, leaving Canadians cautious about discretionary spending.
Young adults were once the heaviest restaurant users but have cut back dramatically in the last two years. They are also the group facing the highest unemployment rates.
Parties that include kids have experienced three years of decline. It begs the question of whether this is simply an economic response, or if restaurants are not meeting the needs of families. And if families have lost the restaurant habit, what will it take to win them back?
Supper has declined for three consecutive years, particularly affecting FSR but also QSR. The only segment with supper growth in the past year has been prepared food from grocery stores, presenting further challenges for traditional restaurants.
Major chains are generally feeling less impact than smaller chains and independents. They have fallen less dramatically and are picking up faster.
Trends for 2012
- Breakfast
Breakfast has been booming over the past five years. The attraction for consumers is convenience. The attraction for operators is the opportunity to tap into a new daypart, one that is a habitual occasion with potential to create loyal customers.
There's plenty of room for foodservice to gain share in the morning. Only seven per cent of breakfast opportunities in Canada are satisfied by foodservice. In fact, more breakfasts are skipped than are purchased from restaurants. According to NPD data, indications are that much of the growth for foodservice is sourced from skipped breakfasts.
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- Value
Consumers continue to expect deals and seek the best value. You have to deal to stay in the game, but it is important to understand how the consumer defines value. Four features are key to the value definition at quick-service restaurants: food quality, taste of food, price, and convenience.
- Burgers
Consumers ordered more burgers in the past year. They’re affordable, portable and craveable. Value menu burgers became a staple during the recession and continued to grow: 13 per cent of all burgers are ordered from a value menu.
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- Innovative beverages
Specialty coffees and smoothies are popular. When it comes to alcohol, only wine is making gains.
- Afternoon snacks
Increased snacking is a behaviour that NPD is seeing both in-home and away from home. Consumers are using snacking differently. It’s not only about indulgence; it’s about choosing smaller meals / smaller portions at non-regular mealtimes. The flexibility of snacking allows consumers to fit eating into their busy schedules. Small portions with a price point to match are key: $3 - $4 is the ‘sweet spot’ for a snack. Keep it portable, non-messy and easy to eat on-the-go.
- Boomers
In the past, ages 55-plus were among the lightest users of restaurants. Now their visits are on the increase, which can be expected to continue as boomers take their restaurant habits with them into their senior years.
*Source: The NPD Group / CREST
What’s next?
Over the next few years, restaurant industry traffic is expected to grow about one per cent a year, a little more than population growth. In the long term, plan for slow growth. It’s a share game, and value is key. Can consumers afford to visit your restaurant? Can you exceed their expectations?
Make it new and exciting. When consumers are being selective about how to spend their precious restaurant visits, how do you stand out?
These growth products may be adaptable to your venue:
- Mini anything.
- Specialty coffee. Make it high quality, preferably branded, and affordable.
- Breakfast program.
- The right options for the 55-plus crowd.
- Healthy alternatives. Teens/young adults and seniors are the groups most interested in better-for-you options.
- More flavourful food choices. Tap into Canadians’ interest in Asian, citrus, berries, and Chipotle chili flavours.
In the coming year, those who stimulate interest with both innovative products and services while addressing the consumer’s need to feel they are receiving value will win more visits.
See also:
About the author
Linda Strachan is a restaurant industry analyst for the NPD Group. The NPD Group has more than 25 years of experience providing reliable and comprehensive consumer-based market information to leaders in the foodservice industry. For more information, visit www.npd.com or contact Strachan at linda.strachan@npd.com.
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