Canadian grocers are a lot better at competing with traditional foodservice than we give them credit for. They take in over 75 per cent of food and beverage spending by Canadian households, while U.S. grocers take in only 58 per cent. Canadian foodservice operators lost $5 billion in market share to grocers over the past ten years, and the outlook isn’t any easier with Walmart and Costco pushing hard on established Canadian banners to become even more competitive. Canada is a highly concentrated grocery market with the top four chains capturing 60 per cent of the market as opposed to only 30 per cent from the top four in the U.S. With size comes power; Canadian grocers use their power to not only to beat each other up, but to take a big piece out of the restaurant industry. Canadians have less purchasing power than Americans do, despite a high Canadian dollar. Canadians generate a GDP per capita of $39,100 compared to the $46,300 generated by Americans. What that means is the average Canadian gets only 84 cents worth of goods and services for every dollar Americans get. Grocers use Canadian behaviours to their advantage. Their high concentration and their higher share of stomach gives them significant advantages when negotiating with food manufacturers and processors. Lower relative landed costs in grocery drives lower relative prices for foodservice in Canada, giving Canadians more reasons to eat at home. Grocers also use their size to drive innovation. Pizza is a category where product innovation has taken a huge bite out of the restaurant business in recent years. Grocers continue to get better at serving lunch and dinner day-parts with better tasting, fresher offerings, served more conveniently than ever. It is not uncommon for the lunch line at grocers to be as long or longer than the line at the quick service chain next door. Foodservice chains can also be one of their own worst enemies. When a foodservice operator develops a new product in the supply chain that eliminates prep time they often end up feeding that innovation into the grocery channel. Less prep time can work just as well at home as it does in the back of the house at a restaurant. | 
