trend report

Canadian foodservice’s midterm trend report

By Katie Belflower

At the start of the year, amid what was still significant COVID-19-related turmoil and evolving restrictions and operations, Technomic mapped out a predicted trend report for the Canadian foodservice industry.

Now, five months into 2022 and after so much has changed (again) in the industry and beyond, Technomic has compared its new year predictions with where we stand now in May 2022.

Forecasting the future

Canada’s pre-pandemic $95 billion foodservice industry was battered by sales losses of nearly 29 per cent as we entered 2021. While we thought COVID-19-related restrictions — influenced by new caseloads and the looming impact of virus variants — may directly affect consumer visitation and behaviour in 2022, Technomic research suggested the new year would also bring an upswing in the Canadian industry’s sales and overall performance.

Our data showed Canada’s foodservice sector was expected to reach $74.8 billion, reflecting roughly a 21 per cent increase over 2021 and just three per cent below pre-pandemic sales levels. From a segment perspective, limited-service restaurant sales were projected to rebound at a nominal growth rate of 7.3 per cent, and full-service restaurants were poised to grow sales by a nominal rate of 26.2 per cent in 2022.

Mid-Year status: Canadian foodservice sales have certainly begun to rebound in early 2022, with commercial foodservice sales up nearly 18 per cent over the last year and indexing showing that industry revenue will be at 97 per cent of pre-pandemic levels by the end of 2022. As COVID-19 restrictions have eased and indoor dining has begun to make a comeback, Canadian foodservice industry employment has also begun to recover, showing 12 per cent year-over-year growth in February 2022.

When it comes to segments, predicted nominal rebound rates have been adjusted to be slightly lower, with limited-service sales projected to grow 7.1 per cent, and full-service sales estimated to grow 20.9 per cent in 2022.

Leaning into leanness?

By the end of 2021, operators were getting leaner on multiple fronts, from downsized staff to smaller unit footprints to trimmed menu selections, in an effort to respond to changing conditions. In 2022, we expected restaurant chains to accelerate investments into more compact models that service delivery and takeout while operating efficiently with fewer workers on hand.

Ghost kitchen outsourcing was expected to emerge as a primary avenue to allow brands to expand without additional spending on real estate. And we were ready to continue to watch menus shrink in favour of optimization strategies that help make food prep simpler while reducing costs.

Mid-Year status: Restaurant chains have been balancing investments in traditional expansion and digital operations. As predicted, some operators have been leaning into technology-driven enterprises that focus on delivery and takeout models. For multi-concept operator Recipe Unlimited, for example, e-commerce sales have continued to grow, even as dining rooms have reopened.

On the flip side, rather than getting leaner, many operators — including Mary Brown’s, Popeyes, and Jollibee — have been expanding by opening units in new regions. And despite overall menu items decreasing two per cent year over year, the fact that this is compared to a nine per cent decrease from pre-pandemic to today signals that a slow road to menu recovery may be starting.

Menu pivots supporting supply chain-ges?

We expected persistent supply chain issues to inspire creativity and require flexibility in 2022. Specifically, quirky preparations of familiar ingredients were projected to allow for exciting menu additions without new SKUs — think pickled apples, candied garlic, or salt-baked root veggies to impart new flavours and/or textures while, in some situations, even extending shelf life.

We tipped inventiveness with favourite fare to also help operators stand out without overhauling entire menus, such as chicken sandwiches or pizzas differentiated with global toppings. And, because of ingredient shortages and sourcing issues, nimbleness would be table stakes, with operators ready to implement menu swaps that take advantage of more readily available and economical ingredients.

Mid-Year status: The menu creativity we predicted for this year is already apparent, with innovative preparations (e.g., grilled lettuce at Tanto in Toronto) and quirky takes on classics (e.g., Mucho Burrito’s Tandoorito featuring tandoori chicken and chutney crema stuffed into a burrito) popping up on menus.

We’ve also seen menu swaps when it comes to proteins, with limited-time offers such as Quiznos Canada’s Bison Reuben Sandwich. With enduring supply chain issues impacting operators, creative menus that embrace flexibility will continue throughout the year.

The evolving face of hospitality

We knew restaurant hospitality would look very different as we headed into another pandemic year. Some practicalities of on-premises dining were likely to continue to be stumbling blocks for operators who were – and still are – trying to balance safety and hospitality. And some of these decisions — whether mandated or not — could have caused controversy among consumers. For example, we wondered if vaccine passports or negative COVID-19 tests required for dine-in customers may be here to stay, along with charges for no-show reservations or last-minute cancellations.

Conversely, we predicted that gone by the wayside could be extensive staff interactions for ordering and payment (thanks to contactless operations), physical reusable menus (with QR menus taking permanent hold), and high-touch food and drink areas (such as communal condiments and fountain drink stations).

Mid-Year status: Within the first few months of 2022, as the Omicron wave seemed to slow, several provinces lifted mask and vaccine mandates, leaving restaurants to adapt to new hospitality requirements once again.

As we tentatively move forward, restaurants will continue to balance safety and hospitality — perhaps with hybrid operating solutions, such as restaurants defaulting to QR menus but offering physical menus for those who prefer them.

The future for the foodservice industry looks hopeful, but only time will tell how comfortable and confident consumers will feel in traditional hospitality settings.

All buttered up

Finally, with comfort food trending highly during the first 18+ months of the pandemic, we projected that many operators would turn their attention to butter, a versatile staple ingredient in most kitchens, with flavoured butter being grounds for endless culinary experimentation, ranging from umami-rich kombu or yeast butters to cocktails featuring herb-infused and browned butters.

Beyond the classic dairy product, other buttery ingredients such as buttermilk, butterscotch, and ghee/clarified butter were predicted to gain attention. Elevated versions and applications of nut butters were also in line to continue to grow in conjunction with the plant-based trend, with pistachio and macadamia butters finding momentum, with peanut butter also making headway in new directions, such as on burgers or in cocktails.

Mid-Year status: Our predicted butter trends have already made moves in 2022 in the form of funky-flavoured butters (e.g., sake kasu butter at Burdock & Co in Vancouver and Aura in Victoria), innovative uses of buttermilk (e.g., buttermilk sorbet at Biera in Edmonton) and elevated versions of nut butters (e.g., hazelnut butter at Toque! in Montreal).

Given that we’ve already seen operators get buttered up, expect further exploration throughout 2022. Additionally, look for innovation with new textures, such as butter powder, currently found at Straight and Marrow in Vancouver.

Katie Belflower is an Associate Editor at Technomic and a regular CRFN contributor.