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Fortune Hunters
Canada’s leading foodservice consultants and
operators offer a preview of the years to come

by Corinne Lynds

This has not been a good year for futurists. Even if a psychic had been consulted for last year’s predictions piece, never would anyone have believed the horrors slated to ravage the foodservice sector in 2003. At this point, the descent of a pack of locusts or even a visit from the Loch Ness monster doesn’t seem so far-fetched after the year Canada’s foodservice industry has endured.

As for this year’s predictions, assuming no major catastrophes (knock on wood), the foodservice sector is once again on the road to recovery. The Toronto-based Canadian Restaurant and Foodservice Association (CRFA) is forecasting total foodservice sales to expand 4.2 per cent in 2004. “That’s actual dollars,” explains Jill Holroyd, vice-president of Research and Communications at the CRFA. “When you factor out menu inflation, we’re looking at real growth of 2.1 per cent. That compares to the negative 0.7 per cent we’re projecting for 2003.”

According to Holroyd, the single greatest factor driving a turnaround in 2004 is “that the shocks we faced in 2003 just won’t be there.” It’s a simple concept, but if you think about it, it makes a lot of sense. After a year like the last one, the industry should do well. This may sound cautious, but who can blame industry pundits for being a little gun-shy?

Canadian restaurateurs are also counting on the U.S. economy to pick up. “The really big factor is how the U.S. economy does because it has such a spill-over effect into the Canadian economy,” explains Holroyd. “We need their rebound to drive our rebound.”

Counting Calories

Economics aside, old and new trends are slated for growth in the years ahead. At the top of that list is a desire for healthier foodservice options. According to Doug Fisher, president of Toronto’s FHG International foodservice consulting firm, this trend — like many before it — is being driven by the aging baby boomers. “We’ve got a generation that has money to spend, and is realizing they’re closer to death than they are to birth.” Vancouver-based consulting firm Floody and Associates’ president Richard Floody agrees. “I think a lot of them (baby boomers) are being forced into [lighter living] because of health reasons. They are checking fat contents and they probably aren’t eating as much triple-cream Brie as they once did either.”

As a result, quick-thinking chains such as McDonald’s, which now has nearly 1,330 stores in Canada, are adapting their menus to accommodate growing demands. According to Fisher, just last year around Christmas time the burger giant’s stock dropped to about $14.50. Now following the launch of its Lighter Choices menu in April, the company’s stock has increased by nearly 50 per cent.

Not to be outdone, Toronto-based Burger King Restaurants of Canada Inc. just launched its BK Under 7 Combo menu in October (combo meals contain seven grams of fat or less). The meals feature a choice of a main item, side dish and cold drink. “Burger King has always been committed to customer choice,” explains François de l’Etoile, general manager of Burger King Canada. “We wanted to offer our calorie-conscious customers a clear, low-fat alternative that goes beyond the introduction of a single item.” The first BK Under 7 Combos include a veggie burger or grilled-chicken sandwich, combined with a soft drink or bottled water and a baked potato or side salad.

Carbs are the Enemy

Although this healthy eating trend is most apparent within the QSR sector, it is beginning to impact the casual-dining market as well. With 64 locations in Canada and 24 in the U.S., Vancouver-based The Keg is experiencing increased sales thanks to popular diets that are based on avoiding carbohydrates.

“There has been a tremendous trend towards the Atkins and South Beach diets,” says Jim Croteau, COO at The Keg. “That has been great for us, being a steakhouse. We have seen a big trend towards people saying, ‘I don’t want the potato. Can I get sliced tomatoes or a salad instead?’”

In direct contrast to this increased consumption of meat-based protein, both Floody and Fisher predict vegetarianism is on the rise. “Twenty years ago two per cent of the population said they were non-meat eaters and we classified them as vegetarians,” explains Fisher. “Now we’re looking at a population that has five- to seven-per-cent vegetarians and approximately 15 per cent who would state they are non-meat eaters or non-red meat eaters.” Floody believes the younger generation is driving the trend towards meatless meals. Along with the rising number of non-meat eaters, foodservice consultants predict an increase in vegetarian dishes within existing foodservice operations.

Ingredient Detectives

In their quest for healthier food options, consumers are becoming increasingly conscious of what goes into their favourite dishes. As a result we can expect to see more detailed nutritional information on menus, including ingredient breakdowns and fat content. This demand for details is also the result of an increased awareness of food allergies. In 2004, The Keg will release an allergy awareness booklet for its restaurants, while QSR operators such as McDonald’s, Licks and Subway already have detailed product information posted in stores and on their Web sites.

Group Dynamics

However, a demand for ingredient information is not the most significant trend unfolding in Keg restaurants. Rather, it’s the diner group sizes and demographics that have shifted most noticeably.

Croteau explains in the past people hosted cocktail parties at their homes and mom made Sunday dinners. But these days mom is working and golfing and people are just too busy to host a cocktail party, so we’re seeing them using casual restaurants as a place to connect with family and friends. “They don’t want to wear a suit and tie to Sunday dinner. But by the same token they don’t want fast food,” explains Croteau. “We’re seeing a trend of party size. Where we used to see big groups of either 15 or 20, we’re now getting groups of five to eight. Generally it’s an extended family — mom, dad, two kids, grandma and uncle Sam or whoever.”

Increased interest in a casual-dining experience may even lead to table service in traditional QSRs. “I think QSR operators will have to come up with ways to provide service,” says Fisher. “Maybe upscale some of their restaurants. McDonald’s could do table service very easily in some restaurants or come up with a Mickey D’s casual format.” When asked about the possibility of table service in the future, Ron Christianson, Corporate Communications manager at McDonald’s head office in Toronto, indicates a move like that would be based on the consumer. “There are so many factors that would come into play if we go that route. But it really comes down to customer demand, whether that is through updated, more modern restaurant decor or the services we provide. Our focus is remaining relevant and offering what our customers are looking for.”

Dashboard Dining

It’s no surprise that takeout and delivery will continue to grow over the coming years. “We are still in a convenience world,” says Fisher. “I think one of the reasons takeout is so strong is because people want a better family dining experience. So if you bring [fast food] home, then at least you’re sitting down in a nice atmosphere with your family having dinner rather than on a plastic chair.” But Floody believes traditional QSR takeout is going to feel some competition from urban fare, such as grocery stores and gas stations that offer complete ready-cooked meals. “I think you’re going to see a lot more non-traditional places competing with restaurants in the future. “

Classic takeout operations like McDonald’s aren’t concerned about non-traditional competition. “We’ve seen a dramatic rise in the use of vehicles, so I think our drive-thru will most definitely continue to play an important role in the business. It has increased over the years so much so that it now accounts for 50 to 60 per cent of our business.” To address this traffic increase, the chain has implemented new drive-thru concepts as well as double-lane operations.

Catching the wireless wave

Technology is still a lukewarm topic for foodservice operators. Although equipment upgrades in the back-of-house and computer inventory systems in the front-of-house are helping to streamline operations, the Internet continues to be under-utilized in the short term. To date, operators and consultants both state Web sites are being used as a place to post menu information and provide addresses and contact info, but online ordering is not something operators are focusing on. However, the addition of wireless hook-ups in restaurants looks promising. McDonald’s is currently experimenting with wireless connections at 10 of its Canadian stores and offers a promotion that gives 45 minutes of free wi-fi time for every $3-plus purchase.

Reluctant to lay detailed numbers and future forecasts on the table, industry experts believe current food trends, eating habits and new products will lead to a steady recovery for the foodservice sector over the months and years to come. But perhaps Fisher sums it up best: “SARS, the blackout, mad cow — this was just a God-awful summer. Is it going to stay God-awful? I can’t believe that. At the end of the day, dining out is a great way to get together with friends. And the reality is, people still want to go out — that hasn’t changed.”

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