November/December 2020

ROUGH
CUSTOMER DEMAND FOR LOCAL AND AUTHENTIC FOOD
EXPERIENCES IS DRIVING THE INDEPENDENT RESTAURANT SEGMENT
BY VINCE SGABELLONE
Vince Sgabellone is a
foodservice industry
analyst with The
NPD Group. He can
be reached at vince.
sgabellone@npd.com
uncertainty and new restrictions,
consumers hid in their homes.
Consequently, April foodservice-traffic
declined more than 40-per-cent compared
to the prior year. This figure had been cut
in half by the end of August, thanks in large
part to the industry’s ability to pivot to an
off-premise service model.
One might have expected the strongest
performers during this time would be the
major QSR chains. They were well established
with off-premise infrastructure and
were also less inclined to close their doors.
To some extent, this did happen. But something
else happened, too — people rallied
behind local and independent operators.
In the meantime, the very same small
operators were quickly scrambling to
re-invent themselves. In the FSR segment,
independents were the hardest hit in the
early months. Six months in, they’re
pacing the segment’s strongest-performing
chains, demonstrating the resilience and
entrepreneurial spirit that pushed them
into this business in the first place. In
the QSR segment, the small but mighty
independent operator group is holding
its own, performing almost as well as the
major chains. Interestingly, the mid-size
chains (100 to 500 units) are performing
strongest in both segments. By contrast,
the major chains are negatively impacted
by the disruption in consumers’ morning
routines and the associated decline in
breakfast and lunch traffic.
Technology has been a lifeline for many
operators and consumers during this period.
Digital-ordering rates jumped from about
five per cent of traffic to as much as 17
per cent at the height of the restaurant
restrictions. All operator groups have
seen their digital-ordering rates skyrocket,
but mid-sized chains lead the pack here.
Clearly, this is a key factor contributing to
their leading recovery rate. Interestingly,
the independent-operator set is trailing
when it comes to digital ordering, despite
a five-fold increase in penetration. Instead,
this operator set is using old technology —
the telephone — to help fuel its survival
plan, garnering almost one-third of all
off-premise orders.
Delivery is a key component of the
new foodservice landscape. It represents
approximately 20 per cent of all orders
within independent and smaller chains.
Once again, the major chains are the
outliers here, instead relying upon their
well-developed drive-thru infrastructure
for their incremental business.
It’s difficult to imagine (and even
harder to accept) that the potential loss
of restaurants — and particularly independents
— as a result of COVID-19’s
impact could result in several years of
attrition in just a matter of months.
Canada’s foodservice landscape will never
look the same as it did just a few short
months ago. But, smaller operators and
independent restaurants’ ability to
maintain and even grow their share
during these difficult times reinforces the
belief that the industry will rise from this
crisis stronger than ever. FH
FOODSERVICEANDHOSPITALITY.COM
NOVEMBER/DECEMBER 2020 FOODSERVICE AND HOSPITALITY 13