QSR segment leads Q2 growth of Canadian restaurant industry

Canada's gradual recovery from the recession has translated into modest growth for the restaurant industry, where consumer spending at commercial foodservice in Canada trended up by three per cent in the March – May 2010 quarter. According to The NPD Group, a leading market research company, quick service restaurants (QSR) led the growth with increases in sales of popular food and beverage items – including breakfast sandwiches, hamburgers, sandwiches, hot coffee, soft drinks and bottled water – fueled by targeted marketing support at a number of QSR chains.

According to NPD's CREST®, which continually tracks consumer use of restaurants and non-commercial foodservice in Canada, overall, QSR and retail foodservice outlets were a particular bright spot this spring, enjoying traffic gains as consumers traded down from more expensive full service restaurants (FSR).

"As the market slowly turns, it is more important than ever for restaurant operators and foodservice manufacturers to present consumers with differentiated offerings,"said Linda Strachan, Restaurant Industry Analyst, The NPD Group. "Operators who stand apart on value, quality, convenience and other relevant attributes will successfully win more share than their competition."

During the recession, bargain offers have been one of the primary tools restaurant operators have used to drive traffic, causing deal-related visits to grow for nine consecutive quarters and leading consumers to spend 1.5 per cent more per restaurant visit than they did one year ago. However, trends for full service restaurants (FSR) weakened from March – May 2010, following modest, but encouraging growth in the previous quarter. The contraction at FSR was entirely in family visits, while adult-only occasions remained flat. Supper, the daypart with the highest average cheque, posted the weakest trend.

"There is no question that the foodservice market was a battleground for share in the spring quarter, with FSR losing out,"continued Strachan. "Looking ahead, it is those operators with strong marketing support and enticing new offers who will motivate consumers to dine out."

When it comes to why consumers choose a full service restaurant, Strachan explains that special price promotions are not the most important influence. According to a new report from NPD, Full Service Dining: How to Win Customers Back, 73% of FSR consumers would like to see greater menu variety and new or different offerings. Top flavours that are in demand include Italian, Asian and Latin influences.

Despite the FSR struggle, however, Canada's foodservice industry continued to fare better than that in the United States, where the industry has experienced traffic declines since January 2009.