On the surface, Canada’s foodservice industry enjoyed a strong year of growth, with total foodservice spending climbing by 5.1% to a record $89 billion in 2018. Once adjusted for menu inflation of 4.2% and unit growth of 1.0%, however, real foodservice spending at the unit level was relatively flat (-0.05%).
Nevertheless, in the past five years, nominal foodservice sales have increased by more than 5% each year. One of the main factors driving nominal sales growth are consumers under 40 years old, as they are the biggest spenders in the foodservice industry.
Households with occupants between the ages of 30 and 39, spent an average of $3,911 at restaurants and licensed establishments in 2017 (the most recent year available). Households with occupants under 30 years old spent an average of $3,780. In fact, those under 30 years old spend a staggering 44% of their total food dollar at restaurants. By way of comparison, households with occupants 65 years of age and older spend the least, with only 26% of their food dollar spent at restaurants.
Generation Z (born between 1993 and 2000) and millennials (born between the years 1977 and 1992) are more time- and cash-starved than other generations. Eating out or ordering in from a restaurant provides a viable, schedule-friendly alternative to cooking. Also important is choosing restaurants with lower prices given their lower disposable income. And, while health is important, many want to indulge too.
With this spending power, younger generations have a huge influence over what they order at restaurants, and how they are ordering as well. Here are a few examples of how younger Canadians are transforming Canada’s foodservice landscape.
Younger generations value sustainability
Gen-Zers and millennials prefer to do business with companies that prioritize environmental stewardship and social responsibility — and restaurants are responding to this demand.
Eight out of 10 foodservice business operators across Canada now say environmental sustainability is important to their success and 72% say they have made changes to their business operations to become more sustainable.
Among the hottest trends at restaurants are locally sourced foods, sustainable seafood, paper straws, and this next topic…
Younger generations want plant-based options on menus
For a combination of environmental, ethical, and health reasons, plant-based foods have surged in popularity in Canada. A study by Dalhousie University found that 6.4 million Canadians are following a diet that either limits animal products intake (often termed “flexitarian”), or eliminates it entirely.
Recent research by Technomic asked Canadian consumers about shifts in their protein or alternative protein consumption. Overall, 42% of Canadians said they will choose more vegetarian substitutes/options while 41% are choosing more vegan substitutes/options.
Younger generations want delivery
As generation Z and millennials look for convenience, eating out or ordering in is appealing as a time-friendly alternative to cooking. As a result, delivery foodservice sales by digital (online and mobile apps) or traditional telephone totalled more than $4.3 billion in 2018, a staggering 44% increase over 2017.
Younger generations want non-alcoholic beverages
Fewer young people are going out to drink, and those that do are going out less often. In 2013, those between the legal drinking age and 24 years old accounted for 27% of all orders at a bar. In 2018, that share dropped to just 13%.
There are many theories as to why, ranging from adopting a healthier lifestyle to the public dangers of social media. To attract the younger crowd, operators need to focus on menu innovation as Gen-Zers are more willing to try alternative beverages, such as organic and no- and low-alcohol beverages.
How to attract younger generations
When it comes to Gen-Zers, they are more likely than older generations to try new and unique flavour combinations and international ingredients and dishes. Generation Z frequently use social media sites like Facebook and Instagram to interact with restaurants by leaving reviews, tagging photos and following restaurant activity. Finally, consider expanding your menu as many of the brands Gen-Zers visit the most often are locations that specialize in snacking occasions.