FOODSERVICE FUNDAMENTALS BY JEFF DOVER
The future looks bright
4 foodservice trends and what they mean for convenience
1. Inflation Food inflation is significant, peaking at 11.4% in November 2022. Fortunately, it is decreasing, projected at 9.2% by the end of Q1 2023 and is forecasted to normalize at about 2% in 2024. The increased cost of food, unsurprisingly, has an impact on foodservice. Early in the inflationary period, foodservice operators were able to increase prices. More recently, as consumers worry about disposable income in the face of inflation and fear of a recession, operators have been adjusting menus and recipes to substitute lower cost ingredients and reducing portion sizes. Even as inflation rates decrease, the impact is ongoing (i.e., the 9.2% inflation forecasted for 2023 is incremental to inflation rates in 2022). Foodservice operators will continue to refine recipes and menus to control costs. A renewed focus on controlling food costs through procurement, inventory and production controls will also continue throughout the year. 2. Labour shortage Labour, along with food, is the other major expense for foodservice operations. Labour shortages, especially back-of-house positions, have long been an issue. The labour
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challenges have spread to most industries. People are comfortable applying, and are being hired, for positions they would have not considered in 2019. As a result, service industries with entry-level and low wage positions are adversely impacted. Few, if any, foodservice operations are fully staffed. They are offering pay rates and benefits previously unseen to attract and retain staff. As options increase, many people are not willing to work long hours, nights and weekends, etc. for minimum wage. While this is a major challenge for commercial foodservice, c-store foodservice is less impacted. Sure, it’s difficult to find employees; however, with the right menu items, limited incremental labour is required to offer foodservice. In turn, there’s less upward pressure on prices, which is a competitive advantage. 3. Technology Technology is increasingly a key part of foodservice operations and delivery. Adoption was accelerating prior to the pandemic, then increased significantly, as customers got more comfortable. Now, technology is used in ordering (mobile order pay, kiosks, online), as well as delivery (robots and drones), production (robots) and more. Technological advances continue to infiltrate foodservice, however, given the foodservice labour cost advantage, c-store operators are not yet able to realize significant cost-savings by investing heavily in such innovations. 4. Sustainability Sustainability is increasingly important and Canada’s single-use plastics ban, for example, targets foodservice operators. However, foodservice sustainability can take many forms, including waste
March | April 2023 Convenience Store News Canada
reduction, energy efficient equipment, sustainable procurement initiatives, hyper-local food initiatives and increasing plant-based menu offerings. For c-stores, waste reduction by using compostable or recyclable service ware should be considered (make sure that your municipality’s waste management can recycle or compost these products). And, let your customers know about your sustainability initiatives—tell the story. A benefit of practicing sustainable foodservice is that many potential employees want to work for an organization that shares their values. Of course, sustainable business practices would have to extend to the core retail operation. In conclusion, the foodservice industry has changed significantly in recent years. Part of this is due to consumer demand: retail foodservice customers have adopted a “what I want, when I want it” attitude to which operators have had to respond. Another driver is the challenges operators face with respect to increasing food costs, labour costs and labour scarcity. At the core, providing good food and good service remains the key to success; however, how one accomplishes these feats is changing. Fortunately, for c-stores, the challenges aren’t as daunting as for their commercial foodservice competitors. The 2023 outlook from a convenience foodservice perspective is bright. CSNC Jeff Dover is president of fsSTRATEGY, a consulting firm specializing in strategic advisory services for the hospitality industry, with an emphasis on food and beverage. Jeff is a Certified Management Consultant and a member of the International Society of Hospitality Consultants.
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In 2022, the world began its return to normal. The pandemic was challenging foodservice operators, including convenience stores. In 2023, the pandemic seems all but behind us (at least in terms of restricting daily routines), but the foodservice landscape has shifted significantly. Several trends are impacting commercial foodservice operations; however, many of these trends do not severely impact c-store foodservice.
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