Breaking down the anemic FSR market in Canada

Press release

According to the NPD Group, a leading global information company, it’s been a particularly challenging few years for Full Service Restaurants (FSRs) in Canada. Overall, traffic at FSRs has declined year over year, down 141 million visits compared to 2012.  Dollars are also down on the year and have been relatively flat since 2012.

And while the mid-to-long term trend has been negative, the short term trend has also been lackluster. Traffic is down three per cent year over year in 2016 and dollar growth is failing to keep pace with inflation (down two per cent versus last year). Further compounding this challenging marketing is the fact that Average Daily Penetration is the lowest it’s been in recent years at 10.5 compared to 11 in 2014 and 11.9 in 2012.

Research by the NPD Group suggests that FSR traffic declines are being driven by Independents, with only a few top chains in that space driving growth. This is significant when you consider the fact that Independents represent 62 per cent of FSR visits, and drive 76 per cent of FSR declines since 2012, down 107 million visits. Overall, independent restaurants declined by 2,000 units in 2015; and by 6,000 units since 2012. But there is a bright spot when it comes to independent restaurant traffic – the Atlantic Provinces. In fact, The Atlantic Provinces grew by seven per cent versus last year while other major regions, including Ontario and Quebec, experienced significant declines on the year.

FSR

Another driving force behind the declines is the fact that families are seeking new alternatives to FSRs. In fact, FSR traffic for parties with kids is down by 55 Million since 2012, averaging a four per cent decline year-over-year.  And while families still make up 23 per cent of overall visits at FSRs, they are currently driving 39 per cent of declines.

Millennials are also contributing to declines at FSR as the age demographic of 18-34 has seen an annual traffic change of 27 million since 2012. Many of these individuals have been drawn to Quick Service Restaurant (QSR) offerings, which is a troubling trend for FSR operators since the share of Millennials will increase in Canada over the next decade, while share of Boomers (who are currently driving growth at FSRs) will decline.

Graphic courtesy of the NPD Group.