Evolving Food & Beverages Trends in Foodservice Prepared for November 22, 2018
North American Food & Beverage Trends Gen Z: Driving Next Level Trends Forward 1. Snacking 2. Flavour 3. Health 4. Local/Sustainable 5. Glocal Dining 6. Fun What s Coming in 2019 3 trends to watch
Change is HERE! Disruptors in the next 5 years: Tech-fueled competition Increasing rate of change for preferences and tastes Snacking Flavour Health Ethnic Indulgence Government US, Federal, Provincial, Municipal
The Next Consumer Wave: Gen Z Born Age 1993-2003 15-25 Diverse Entrepreneurial Individualistic Connected since Birth 4
What, Where and When They Want It Convenience Customization On-Demand Experiences 5
Impact of Anytime, Anywhere Third-party delivery rapidly changing customer expectations Key Players 2017 Canada Sales Largest Y/Y % Change Tim Hortons $5.5B* 3.8% McDonald s $3.7B* 4.4% Starbucks $1.8B* 6.4% Subway $1.4B* -2.1% A&W $1.2B* 4.5% Fastest-growing Freshii $107MM* 60.0% Chipotle Mexican Grill $43MM* 48.1% The Chopped Leaf $49MM* 46.0% The Burger s Priest $19MM* 45.0% Quesada Burritos & Tacos $40MM* 37.6% 6
No signs of slowing down Leading players have continued to expand services across Canada Just Eat acquires YummyWeb & Grub Canada Just Eat acquires Orderit.ca DoorDash enters Toronto & Vancouver UberEats enters Toronto 2011 2015 2017 DoorDash expands to Calgary UberEats expands to Vancouver 2009 Just Eat enters Canada 2013 Skip the Dishes launches 2016 Just Eat acquires Skip the Dishes 2018 Uber Eats enters Ontario *UberFRESH rebranded to UberEats in 2015 7
Snacking 8
Percent of consumers who snack at least daily 80% globally 75% Gen Z 89% +6ppts since 2016 9
Next-Level Fries 47% Of consumers purchase fries as snacks at least occasionally 53% of Gen Zers +27% Herb/Seasoned fries at Top 200 chains since 2016 10
Amped Up Veggie Snacks Cauliflower apps and sides have grown 21% since 2017 27% Montana s BBQ & Bar Of consumers say they d purchase healthful snacks more often if there were more unique flavours 32% of Gen Zers 11
Functional Snacks Consumers would purchase snacks that are High in Protein (38%) Energizing (35%) High in Fibre (35%) 12
Health 13
Of your last 10 restaurant orders, how many do you consider healthy? 5 globally 5.1 Of consumers are 29% ordering healthier items more now Gen Z 41% than two years ago 14
To Eat Healthier Away From Home I Skip 62% 53% 54% 51% 39% 38% 42% 42% Dessert Adult Beverages Appetizers Nonalcohol Beverages Canada Global 15
The New Health Desire to feel good about choices Deliver flavour and health: Clean, natural, fresh, local Of your last 10 restaurant orders, how many do you consider healthy? 5 all global consumers 5.1 16
What s healthy now? Perceived Healthfulness of Functional Claims (Top two box = slightly & much more healthy) Consumers definition of health is changing High in antioxidants Containing probiotics 67% 78% Having other functional benefits 61% Aiding digestion 57% Stress relieving 42% 17
Superfoods Mentions of superfood on menus are up 11% year over year Turmeric +37.1% Hemp Ancient Grains Coconut Water Chia Matcha Quinoa Charcoal Kale +17.6% +13.3% +9.4% +7.7% +7.6% +6.4% +4.5% +1.7% Blenz Tumeric Latte 18
Diversifying beverages, often with a better-for-you positioning Kombucha on tap Additivefree juice Slurpee with real cane sugar 19
Importance of Local Restaurants should always source local ingredients 67% Canada 54% Global Promoting they serve 100% Canadian cheese 20
Fast Fresh Foods Limited-Service Restaurant Fresh, Real Ingredients Healthy Fast Food Eco-Friendly Commitment Source Supplies Locally 8 Units Toronto Locations 21
B.Good Limited-Service Restaurant Sustainable No Artificial Preservatives, Antibiotics Or Hormones Company-Bought Farm Better-For-You Food 5 Units Toronto & Oakville Locations 22
Global Tastes s 23
Percent of consumers purchasing ethnic foods at least once a month 62% (Gen Z 77%) 59% Gen Z 69% Of consumers are eating more unique types of ethnic foods/ beverages now than two years ago 24
Global Flavours Through Condiments Korean Fried Cauliflower Mango Chutney (+50%) Harissa (+33%) Sambal (+13%) Peri Peri (+9%) Kimchee (+3%) Moxie s Grill & Bar These new cauliflower bites are sauced in gochujang and served with jalapeno lime dip 25
Asian & Latin Street Foods 65% Of consumers would order ethnic items described as street food Street Corn Pizza Blaze Pizza 70% of Gen Zers 26
Pho Hoa Limited-Service Restaurant Globally Recognized Health-Conscious Vietnamese Comfort Food 5 Units British Columbia Locations 27
Fun 28
Visiting restaurants is a form of entertainment for me. 69% globally 65% 24% Gen Z 29% Of consumers find desserts with an interactive element very appealing 29
New/Unique Options I'd like these restaurants to offer more menu items with new/unique flavours 23% 23% If a restaurant I typically don't visit offers a unique LTO, I'd be likely to visit to try it 21% 27% I like trying mashup dishes at LSRs 12% 20% of Gen Z 20% 26% of Gen Z 2017 Canadian Flavour Consumer Trend Report Fast food Fast casual 30
Globally, 47% Mashups call for more mashups Eye-Catching Limited Time Offers (LTO s) 38% say LTOs can drive traffic 31
Mashups in Action Waffle Double Down KFC (Canada) An out-there sandwich with Two Big Crunch fillets, real Belgian waffle and maple aioli sauce Croaburger Croasonho (Brazil) new offering features a beef patty, bacon, cheddar cheese and onion rings on a rounded version of the chain s signature croissant Vulcano Pizza TelePizza (Colombia) this returning special features dippable tortilla chips and nacho sauce on a pizza topped with a choice of two additional ingredients 32
Rolltation Limited-Service Restaurant A Hybrid Food Destination Customizable Sushi Burritos Poke Bowls & Salads 4 Units Toronto Locations 33
What to Watch in 2019 34
1. After Effects of Marijuana Legalization Wide-ranging yet unknown impact of legal cannabis on foodservice Development of creative hemp-infused offerings Potential for increased demand for midnight munchies and home delivery services Food industry employee legislation and rights 35
2. Demand for Alternative Proteins Non-animal proteins are gaining popularity as concerns around health, animal welfare and the environment rise along with continued global culinary tourism and influence 36
Consumption vs. 2 Years Ago Vegetarian substitutes/options Vegan substitutes/options Chicken Seafood 42% 41% 33% 29% 44% 42% 58% 58% 14% 17% 8% 13% Top reasons for eating more: 61% Trying to eat healthier & getting proteins from other sources like nuts, whole grains, etc. Turkey Pork Beef 24% 16% 15% 60% 60% 55% 16% 24% 29% 60% Vegetarian options are healthier 45% Greater variety available More Same amount Fewer Base: Varies by consumers who eat these proteins (consumption vs. 2 years ago), 98 (vegetarian) & 43 (vegan) who are eating these options more often Q: Compared to two years ago, would you say that more, fewer or the same amount of the meals you eat include the following? Q: Why are you eating more meals with vegetarian and/or vegan substitutes? Select all. Source: Technomic s 2017 Canadian Centre of the Plate Consumer Trend Report 37
Looking Ahead Edible bugs Cookie Martinez in Toronto: Patacones topped with grasshoppers and hormigas culonas (leafcutter ants) Non-beef imitation meats Westcoast Poke in Vancouver: First restaurant in Canada to carry Ahimi, raw ahi without the tuna (vegan tuna) 38
3. Sustainability 2.0 in Foodservice Environmentally friendly and multifunctional packaging Transparency Food Waste Local Sourcing Living Wages Community Engagement 39
Sustainability on the Rise, But Changes Total To the menu/selection of items 70% In how we communicate with our customer 53% Minimal 12% No 27% Have you made changes to your business model or practice in the past two years based on sustainability initiatives? Yes 60% In what we demand of suppliers 50% In what we demand of distributors 49% In our sourcing practices 46% To pricing 24% In employee benefits 23% In employee recruiting 18% Technomic 2018 Canadian Operator Research 40
Proving to be a Challenge What are your biggest obstacles to achieving your sustainability goals? Obstacle Total Higher costs 63% Lack of financial resources 32% Lack of time/personal resources 29% Product availability 24% Limits supplier selection 18% Inability to measure impact of efforts 15% Lack of customer interest 14% 41
Final Thoughts More intense competition coming faster Consumer expectations grow & shift Ethnic, Fun Health, Global, & Transparent the greatest drivers Will need to exhibit greater creativity, innovate Look and Listen, and Adapt to ever changing consumer needs 42
Thank You! Margot Swindall mswindall@technomic.com 416-809-0619 43