Vantage 2022: The New Dining Frontier

Foodservice sales in Canada were finally back up by a substantial 32% over the past 12 months ending February 2022 vs. same time last year. However, it’s still 12% lower than pre-pandemic levels. After two years into the pandemic, it’s fair to say that we unanimously have had enough. Even though the crisis is likely far from over there is an eagerness to get back to some semblance of ‘normalcy’, however elusive and evolving that definition may be.

A year ago, Ipsos identified the added focus on the homebound environment and shifting marketplace attitudes as the Great Reset for the Foodservice industry. Today, we find ourselves navigating a channel evolution as we start taking steps forward with no dining restrictions, vaccine passports or mask mandates. Will the Foodservice industry see a return of pre-pandemic levels of traffic?

Listen in as Ipsos’ Asad Amin shares research insights to empower your 2022 Foodservice strategies. He shares data from the 7th edition of our annual Vantage Foodservice outlook report, and covers trends which are expected to "stick" in the short and long term.

Despite unprecedented challenge and change over the past 2 years, the Canadian Foodservice industry has demonstrated unbridled resilience, innovative excellence and clever creativity making growth strides on many fronts. That said, 2022 will remain challenging with many macro trends in play: the impact of the global health pandemic and resulting lockdowns, inflationary pressures and confidence levels will all likely continue to impact diners’ beliefs, needs and priorities.

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Today’s AI-generated audio transcript is offered below. Apologies in advance for inconsistencies that have been included.

0:05

Thank you for joining us for today's Ipsos webinar, Exploring Canadian Food Service Industry Trends.

0:13

Today's webinar is being presented by Asad Amin, and you can read more about him in the slide in front of you.

0:22

Throughout today's session, you will remain in listen only mode. However, throughout the Webinar, you may submit questions online using the Q and A feature.

0:33

Time permitting, we'll answer questions at the end of today's session. However, if time run short, then your question will be answered by e-mail.

0:43

I also encourage you to check out the handouts we've uploaded into the control panel.

0:49

Today's Webinar is also being recorded and will be directly e-mailed to you.

0:55

OK.

0:56

So now, without further ado, it is my pleasure to introduce and welcome Asad Amin, SVP ipsos' marketing strategy team. Asad, you have the floor.

1:09

Thanks so much, Elen. Welcome, everyone.

1:13

We are going to talk about changes to the Canadian food service sector and potentially what's to come in the next month to the year.

1:24

So, the information I'll be sharing with you today is primarily derived from our 2022 vantage trends report, which will be releasing next year. It's our seventh edition, which were quite excited and happy about as well. So I spoke last year about how we're likely to see a wave of creative destruction based on the events that we've seen over the last 2.5 years. You know, as a result of a lot of those changes. I think there's definitely a fairly new landscape ahead of us, you know, to some degree What we see is very different to what was in existence prior to a pandemic.

2:07

I think the primary focus that we want to think about is about the diner.

2:12

You know, if we think about 21 days to develop any new habits. Just imagine the number of new things we've developed over the course of the last few years.

2:22

The diner of today and the future is likely very different from what we've seen in the past and there's a number of factors that's driving a lot of these changes. The the number 1 primary 1 right now is the fact that we've been home out for the course of this entire period. Sure, A lot of that's changing.

2:43

But there's a lot of impact that's happening on the industry, just from the restrictions alone to new habits that we've developed just because we have been cocooned them at home.

2:56

one of those results are the fact that there's been an exodus of people away from urban centers.

3:05

New market just outside of Toronto used to have a food hall, which continues to be growing and changing and evolving. There's also another one that opened up an Aurora. I was hard to come by any ... cold, pressed juices, pokey, No, even three years ago, when you come into the suburbs.

3:26

So, there is a influx of people leaving the city for a number of reasons, whether it's real estate prices or the fact that they are working from home and they need more space.

3:39

Now, there are certain barriers that are headwinds on the industry, and the top one, obviously top of mind for everyone right now, so, inflation will speak to that today for sure.

3:50

And as much as we'd like to be in denial, that covert is pretty much over.

3:55

Unfortunately, it remains, it's a concern. We'll see exactly how big it is. An active has, but it's still there.

4:02

But on the same time, you know, this has an impact on overall confidence levels, and we've seen, you know, sentiment in general, when it comes to confidence to be questionable at best. But what we want to understand is exactly how Canadian diners are looking at what's the ability for them to go out based on the climate that we see today.

4:23

And there's lots of things that we've seen accelerate that we're already going on that trajectory. Certainly, digital ordering is one aspect of it, will speak to that today. But it's an area that you want to be mindful of, especially when there's so much focus on off premise as well.

4:39

And finally, one of the trends that we've been seeing for some time growing, it's kinda back now, and that's around conscious consumption.

4:47

And while we go out to restaurants to get pleats, there's an evolution that's happening around that behavior.

4:55

Driven by younger cohorts that is likely to disrupted street moving forward, I would love to get into every single one of these points today. We only have 40 minutes. We have a lot of this detail report, but certainly I want to touch on a couple of key ones.

5:12

Everything I'll be sharing with you today it's not conjecture that said before, It is based on a slew of products that we have in our arsenal to give you an understanding of Canadian consumption behavior. The primary study that we use for our information as the Food Service Monitor study that we've been feeling for close to a decade malware field every day of the year. And we measure the food service industry.

5:36

But in addition to that, we have a suite of products that allow us to really paint a clear picture of what's happening beyond just our industry. So especially in the current climate, it's important to understand what's happening on home, what's happening with consumer sentiment, what's happening with inflation, to drive a lot of the changes that we're seeing in the industry. So certainly I'll be sharing a lot of that detail with you.

6:03

Now, based on what we've seen with all of our trends, there's really three phases through the pandemic that's impacted the food service sector in particular. And it's kind of clear that it's broken out into kind of like three years. So, you've got an unrestricted time, which was the first phase prior to the pandemic, 12 months to March. Then you've got the initial phase where we were adjusting to all the restrictions that were put forward to us, which was in the second year.

6:32

And then, finally, in the most recent year, we've seen a lot of easing of restrictions, which has also changed the behavior that we'd seen early on.

6:41

Now, when you look at this entire period, it's actually quite incredible to observe, just how we as humans have kind of been able to cope and survive through this.

6:55

I don't know if you guys remember, baking bread was quite a popular activity right at the start of the pandemic and there are data showed that it was skyrocketing. Me personally, what did I do to cope? I actually watched a ton of western's. These are bucket list ones that I've been wanting to watch forever. Now they're long. So I had a lot of time on my hand at that point.

7:18

My wife, on the other hand, just tells me that they're boring never-ending shots of sweaty men. So why do I bring this up?

7:26

Well, since we're talking about new frontiers, I just couldn't help bring in this theme for our presentation today. So, I wanted to actually include the iconic theme, music, from this movie, but unfortunately, I'm not able to convey that through a webinar. So, I'm imagining you're listening to this at your home, at your desks, wherever you are, that. the point is that it actually allows us to look at what is good, what's been bad, and really what's been ugly for the sector in total.

7:58

So let's start with the ugly. Ugly is a very extreme award. So, I'm not going to dwell on this too much.

8:05

I think the main point here is just the level of uncertainty that exists Just for not our industry but overall all sectors.

8:16

Know, individually if there was a challenge here which primarily was coded for last 2.5 years, you can manage that to some degree. But what we're seeing is that there's a number of headwinds that are impact, and consumers we're talking about global stock markets, jitters that popped up yesterday. Obviously, this is all driven by inflation. You've got the war in Ukraine, which is adding to the pressures with supply chain.

8:44

Overall, cov, it, obviously, still exists in some shape or form, and it's still at a global level, depending on which country, more than others.

8:54

And, for our industry, in particular, labor shortages, hipple, then a challenge to begin with, and especially when you're talking about an industry that is so dependent on leiber. And when you have fairly low profit margins, trying to manage that. It's been a really, really difficult. And as I spoke, the supply chain issues also continues when it comes to ingredients, but I don't think we are completely in dire straits at least not yet.

9:23

Having said that we kind of ignore a lot of these headwinds.

9:26

So I wanted to touch on some of the or bad science that we see on the horizon.

9:33

So overall performance in the industry now when we compare it to pre pandemic levels are still soft.

9:40

Yes we've started to recover.

9:43

Yes we start to heal but when we look at the latest 12 months compared to your pre pandemic time, dollars are still down by 7% and traffic and practice down by 14%.

9:58

Now, you can see first of all, that dollars obviously and check has been keeping the industry and flow to a large degree. But also keep in mind that same time last share, these numbers were double digit around 35, 36%. So, certainly, we've seen an improvement, as well.

10:15

And even within these kind of trying times, ...

10:19

have already recovered, dollar sales in quick service are up 3%, compared to the same time, two years ago.

10:27

Obviously, they're focusing on premise, the ability to be nimble has helped and they've been able to maintain throughout that period. The two sectors of the industry, that have been more challenged our full service, again, because of focus on ... and then the retail and other channels. So, this talks to the immediate consumption channels, relates to convenience and gas H M R. In Grocery stores, and you're still not seeing full salad bar available as well, and then a lot of this is being impacted during lunch, Which will speak to it or I'll remember. this is over the course of the last 12 months, there's a different story when we look at a little bit more granular information on, amongst the best basis, which I will speak to later on.

11:13

So, let's start with the biggest concern right now among Canadians events inflation. So, inflation hit 6.8% in April. It's been the highest in three decades.

11:27

It is the biggest concern and top of mind among both Canadians and just out of curiosity. You can see among Americans as well it's surpassed all other concerns in Canada including the pandemic.

11:39

Now, interestingly enough, you can see the concerns around the pandemic. In the US. It is a lot lower than what we see here. And I think that might reflect probably the the openness the US Food Service sector has been and will speak to that later on.

11:54

But I think the main takeaway is that you can't deny that.

11:58

Inflation is something that everyone is aware of.

12:02

And it's something that they are trying to figure out how to address asterix progress.

12:08

Now, the real question is: what is the real impact on inflation? With Canadian diners? Are they likely to pull back on their spending when it goes to food service? So we have data that allows us to understand if consumers are diners are going to spend less this time next month, And when we look at eating at restaurants, it's actually less than a fifth of Canadians that indicate that they're going to spend less. Now those that are more prone to be at risk with inflation, that's higher but not a significant amount more, and those that are low risk is less.

12:44

So the takeaway and point here is that, one, the sizes are relatively not large, at least at this time, and there is a two pronged story that certain consumers are going to be more impacted than others, which we know low-income households. Those with limited disposable income might be impacted, but when it comes to eating at restaurants, it's not as much, and when we look at general out of home entertainment, it's actually relatively small indication of people wanting to spend less. And the same with takeout or meal delivery, it's slightly higher. Whatnot.

13:20

Huge amount. So generally, we do see that the impact on food service right now, when it comes to inflation, is muted, to some degree, but it is what we see as of now. And that might change depending on how things play out.

13:35

Now, let's have a look at actual behavior data that we have, and what we've seen, is that the average check levels have grown through the pandemic.

13:47

So especially when we saw towards the summer of last year, check levels had pretty much shut up and it's been maintained throughout. Now, there's a couple of reasons for this.

13:58

Obviously, menu prices increasing our one factor, but the full service restaurant sector actually did bounce back quite a bit summer of last year And obviously they're driving higher checks. So when you're talking to total food separate service level, that's primarily the reason.

14:17

But on the Flip, and even though people are spending more money at food service, when we're talking about various concerns around spending, how has that change? So one of the consumer sentiment questions we have is around having a specific budget in mind.

14:33

And you can see after right at the start of the pandemic that's been remaining relatively stable and the same thing in terms of reducing dining at restaurants because prices are higher, has also remained relatively stable after the peak at the start. What has changed is wanting to save money. And the economic future is uncertain. And this is a monthly diner's specifically, so you can see over the last couple of months that steadily.

15:03

No, I don't think there's a way for us to deny that there are some levels of concern, but it's still not at that high level that we'd expect, And there are certainly ways to mitigate a lot of these concerns, and which is around dealing.

15:20

You know, 30% of all food service traffic included a type of deal.

15:25

And when we looked at a lot of those sentiment measures around financial consciousness, the top factors that people are probably going to address are not going to more expensive restaurants.

15:37

But beyond that, there are technical ways that you can try and mitigate those here, whether you were using coupons, many special's, focusing on main dishes in particular, just to maintain traffic among those that are concerned.

15:52

Another point is, don't forget, that emotions are much more developed on those digital channels.

16:01

It's it.

16:02

It's an easy way for consumers to be reached out, whether you're talking through a loyalty programs, Buy one, get one free, so on and so forth. So, we'll come back to the theme of economics: uncertainty. I think it exists.

16:17

There are potential ways to deal with it, and it differs depending on, you know, the the economic situation of the diner at sauce.

16:26

So, let's talk about another challenge, which is, again, the point that we've been in home through this entire period right now. In terms of sourcing overall foods and beverages, it's an 8, 10, 20 ratio, right? At the peak of the pandemic, it was 96% only 4% of all foods and beverages were sourced home.

16:48

Now, the main takeaways are that it's still higher than pre pandemic levels. Now, it's around 8% higher in terms of sourcing foods and beverages from home.

16:59

Um, there are improvements that we're seeing for out of home occasions, but the other double edged sword here is that carried from home occasions are outpacing those that are actually sourced away from home. And part of the reason for that is that a large portion of the population continue to work from home.

17:20

Now, of course, this has started to soften in the last few months, but it's still pretty high. You know, you're talking about a third of the population working from home, and just above a quarter right now, at this time, which might change.

17:35

Fortunately, we are starting to see people going back into the office gradually, and we'd seen that summer of last year, and that started to pick up in March. So, we're already at a higher place than we were a year ago and should things remain the way they are and the restrictions that remain low and that might continue?

17:55

There's also a portion of the population that are unemployed which was obviously higher at start, students are retirees but let's just focus on the individuals that are either at home or are going into work.

18:08

I think it's hard to determine how things will play out but that the hybrid model of having the flexibility of working from home is something that's going to be hard to give up. And depending on the type of consumer. So, think about all of those occasions that might not be at the same levels as they were prior to the pandemic Whether you're talking about business lunches morning, commute or even afternoon coffee runs. So it's a sizable concern depending on how things play out and evolve.

18:43

Now, when I shared this information with you last year, we knew that those that are working skewed generally towards younger cohorts, millennials in particular.

18:52

They're white color, urban. This is generally where there were developed in. Pretty much everyone is working from home to some shape or form.

19:01

But the challenge is that the day part this is impacting the most is a lunch and lunch was the hardest hit, the park right at the start of a pandemic.

19:12

And it's also been the most challenged in terms of regaining its place compared to say dinner and breakfast.

19:20

And, you know, there's a number of factors that are impact those carried from a whole bunch of agents, even those that are still going into the office or bringing their lunches. And if you're thinking about, you know, the economic uncertainty and inflationary pressures, maybe that might continue with its out obviously cheaper.

19:36

And if they've developed habits of making meals, they're going to bring those leftovers as well.

19:42

And off premise also still dominates. Dying in right now at lunch is only about a quarter of allocations. Prior to the pandemic goes half.

19:50

So it's a, it's a pretty big difference of trying to manage that lunchtime traffic and crowd. I've been coming into the office for the last couple of weeks. I've been coming on and off over the course of the year and unfortunately especially around the urban areas, there's a lot of small foodservice, operators that have shut down, and they've been around forever.

20:14

But it's hard because real estate prices are higher. And if they're not being able to drive home that traffic, it just gets that much tougher.

20:22

Now, the good news here is, one of the overarching trends that we're seeing, is, the changes in needs, that are evolving, and they're really around, a lot of emotional needs are, historically, lunchtime, there isn't functional element, where people needed to have that mid-day gut feel, Or they needed to have something that keeps them going until their next meal, but we're seeing the needs to have a break or or something reward driven, growing, drank the space.

20:54

So I think shifting these emotional needs are really key messages that you want to try and drive home for lunch, especially if you want to drive penetration.

21:05

So enough, with the doom and gloom, let's focus on the good stuff and there is plenty for the industry to be upbeat about.

21:15

Guess we are below the pandemic levels overall. But when we look at the more monthly trends for sales, there has been clearly a bounce back over the course of last year.

21:29

So, prior to the pandemic, the numbers you see at the top are the growth rates versus the previous theorem sales and it's for total food service. So right at the first half of the pandemic sales were down 30%. And in the current state, it has recovered 33% overall. Now, when we look at this by your full service, to us, our operators, remember, I had shown you that outward check had gone up around July and August of last year. And that's when full service finally came back.

22:01

Unfortunately, I'm an even with ..., you can see a pretty much lift that now on summer, that the challenge was around December holidays, the new year. Army came to time, and it would have been a different story, had not existed, but it was short-lived. Fortunately, and we are still seeing things bounce back.

22:24

And as you see, the latest period, we're still up head, where we were a year ago, especially for full service restaurants. So, that's one positive sign that we actually see in our data. And just yesterday, we really start April information, and what I am at least able to share with you within the last 24 hours is the incidence levels.

22:45

And we can see that incidence levels, even through the month of April, remain positive effect. It's been the highest. It's been in a long time, and the incidence represents the percentage of Canadians that indicated they will have to eat out yesterday, All positive signs, even up to the latest period.

23:05

Now let's have a look at our neighbors south of the border, again, just to give us some semblance of exactly what's going on there. We know they've been a little bit further ahead of us on the curve, in terms of finding out, you can see that there pandemic concerns generally are are lower as well.

23:22

And similarly, what we see is, when we look at the percentage of Americans going out to eat or even visited relatives and friends in the last week. This is all spiked up even from the latest week it relates to 11th.

23:38

If there's any indication of positive growth, even south of the border, to give us some level of encouragement, I think that exists. They peaked during summer of last year and they're also higher up right now than they were at the same time last year.

23:54

So there are, again, trends and signs, even with a lot of the uncertainty looming that things are still on a positive trajectory.

24:04

So, where do we expect to net out, in coming months?

24:08

We've developed a future casting model through our global data scientists, which, pretty much it's an Ipsos proprietary Advanced analytical tool. It evaluates long term trends and factors in triggers, tensions, and seasonal factors. So a lot of the information I'm sharing with you, whether we're talking about consumer sentiment, average your check, the seasonality between QSR an FSR, the in home out of home factor. The different types of channels on and off premise kind of feeds into this model. And what it does is it allows us to look at various scenarios in terms of how things might play out and what that prediction of change will be, to apologize. I don't know what happened there.

24:54

So, what we see are really three scenarios play out um, no worst-case scenario, worst-case scenario, I'm sorry.

25:08

Are you, Sorry, going back and forth?

25:13

Just bear with me some technical difficulties.

25:19

So at a worst-case scenario, we do see the forecast levels play out after March to be relatively steady.

25:29

Alright.

25:29

Even with summer we might be at a higher level, but certainly towards the end of the year we still might see a level of depth and maybe not bounce back by the end of the year.

25:41

Subsequently, if we look at a realistic scenario, the expectation would be that we see a proper surge in summer, as similar to what we'd seen last year, based on all the evidence that we see underlying. That might be a fairly realistic possibility, but the reason it's also realistic has that come fall, and winter months are colder, maybe covert might creep, and maybe the inflation pressure studies and higher. So those are things to consider as well, and best case scenario is that we reach a plateau in summer, and we maintain that to the end of the year. So overall for 2023 versus the current year. We do still see proper growth even in the worst case scenario and the expectation would be that by the end of Q one.

26:28

We go back to the trajectory with more pre pandemic and that's overall for the food service sector. Now, this is again, dependent on a number of factors and how they might play out in coming months, but this is where we stand at present.

26:42

So there's reasons for us to believe this might exist. We have a diner optimism scaled that we've been tracking from the beginning of the pandemic. And this allows us to understand among Canadian diners, who want to be the most optimistic, IE, enjoy life more than ever, versus those that want to be a little bit more cautious based on what they've been seeing and experiencing over the last couple of years. So, this represents the Top two Bucks sentiment among those people that agree with either a sentiment and the cautious dinars among us has been softening.

27:20

Keep in mind, that has been trickling up and it's evident you can't deny that. And that is, again, because of the uncertainty we see.

27:28

Having said that, when you look at optimism side, there is, again, a huge spike. It's the highest we've had since we've started tracking this and I think really one of the main points to illustrate here is that there is clear pent up demand because of that gap.

27:45

And it's a pretty important story to take into consideration when you're dealing with a lot of the information around what's happening on an economic level as well.

27:58

There are points behind and underneath these data points, that validates exactly why they exist. So, the top growing sentiments right now and it's been going for some time is that diners' indicate nothing will keep me no concerns about eating out.

28:15

At restaurants, that are 10.7%. On the other end of the spectrum in the past as the timing of our concerns, that staff handling, my food could be sick.

28:25

And really, when you look at the spectrum, what you see is that when we started, those kind of covert type concerns were the ones that were the highest in the world, the fastest growing, congratulate gradually there softening of time.

28:39

And when we're comparing that, 29% about people that are just eager to dine out, versus those that are scared to be infected, which are around 19%, That's a pretty wide gap. And there are, again, people that have them at home, that are eager to go out and enjoy themselves. And that fear factor has site, as well, even if it exists. I think everyone's pretty sick and tired of exactly what they've had to deal with. The reality could be very different, but this is exactly how consumers feel unspecific quickly, diners. Now, going back to that point I had mentioned earlier about economic uncertainty, we saw that kind of trickle up. People want to save money, and that's up 30%.

29:23

But in comparison directly to the pent up demand number around optimism that I showed you. That's about 40%.

29:30

So the point I want to make here is that as long as the equation tips in favor of demand, over that kind of fear factor, we should see a steady trickle in traffic and improvement back to the food service sector. And I think that is kind of the base value proposition for the industry.

29:48

Now people have had enough. they want to go out. They want to enjoy themselves. They want to be normal. And having a feat is one of those basic things that you took for granted that you haven't kept for awhile.

30:01

And these are the reasons that you want to try and drive those type of emotional needs to try and drive traffic back.

30:09

Um, so, there's also some interesting findings within these groups, as well.

30:14

Obviously, there would be some differences among those there eager to dine out, versus those that are a little bit more cautious. one is that their average, either check is very different, those that are eager are actually spending more. But the other interesting point is that both of them, their average check, has actually grown.

30:31

The check among the optimistic cohorts are up 5.5%, and those that even want to save are still up by 5.1%.

30:41

A lot of this could be driven, obviously, by hiring men and prices, but there are still people willing to spend more, even though prices are higher. And I think that's where we come to the point about understanding what consumers say versus what they do. And there are certain things that we see in our April data that indicates that there is probably a gap between the 2. 1 is that they're spending more. Yes. As I said, many prices are higher.

31:10

But respective of whether people are optimistic or not, they are stills. And, anymore, the focus should be among those that are eager to dine out.

31:18

But there's also evidence among those that are kind of on more of the negative side, that's gonna come up.

31:26

Frequency levels are also up.

31:28

So when you're looking about people that indicate they're going daily or monthly or weekly, I'm sorry, daily and weekly, the high frequency levels, they're actually going up for, not just, again, those optimistic consumers, but those that are concerned about economic uncertainty.

31:46

Think about it, I mean, we've been home, we haven't been going out as much. So inevitably, that is going to go up.

31:52

So if you're accustomed to going out for a habitual habit, whether it's a big breakfast run or you've been creating a sit-down meal with your wife or your date or whoever it is, that is going to go up no matter what concerns you might have.

32:11

And then also importantly, the needs for both of these consumers are pretty much the same.

32:17

They are both looking for treats and creative thing. Obviously they're looking at satisfy the hunger but they're looking for something that's tasty as well.

32:24

So again those emotional needs will be hard to give up completely especially when you've suffered through what we have in the last two years and these are some of the peer evidences that we have that indicate that not so far.

32:39

Things are actually relatively positive for the industry and there's still economic indicators just beyond our data that we need to be also mindful of beyond just inflation.

32:50

Um, we have not been going out to eat.

32:54

We haven't been socializing as much. We're not commuting as much, so there's a chunk of money. The Canadians have saved over the last reserves and packets around $363 billion. Of course, there might be putting into various savings and so on.

33:12

But that level of spending exists and they are willing to spend this looking forward as well.

33:18

Then on the flip side, commercial air travels, Travelers have gone up 17 times compared to the same time last year. So this is just around April the last week of April.

33:31

Of course this might explain with all the problems.

33:33

We're having a Pearson on delays and so on, but it kind of speaks to just the level of people coming into the country right now, 28% of those are actually foreign nationals.

33:47

We're seeing similar numbers when we talk to land travel as well also going up to that extreme in the last few weeks. So this bode well bodes well for the tourism sector as well. And I think there's those general indicators that you want to be mindful of that could improve.

34:08

Now, if we want to understand what are the top growing, priority products and services, if extra money was available number, one third of Canadian Senate would be Travel. Or Vacation about a fifth said, it would be home home improvements, and just under, if it said, it would be related to a meal delivery of a restaurant.

34:30

So you can see that if there is money saved, if you have that extra money, there is growth in each of these sectors.

34:39

Because, again, we have been limiting ourselves over the course of this time and there's going to be an immediate search and see in the short term at least for that need no matter how many headwinds we face.

34:58

Now, another important factor that I've been trying to build to when I mentioned this a couple of times is that when we look at the top growing is a drivers in particular, again, when we talk about those optimistic consumers, those are the ones that are willing to spend more money. They're looking for, again, a lot of that experience so anything related ambience, the ability for them to reconnect and socialize.

35:21

This is really what's going to help drive traffic among those consumers. And if we look at the top purchase reasons, driving highest check levels. So, what we looked at was, now, what's the average check paid by most consumers, and what are the top needs if we were to rank by each of these checks, obviously, these two drivers were on, I'll be honest, socializing are much higher. Of course, this is driven by the fact that a lot of this is in full Service Restaurants, but there are still other factors if on premises or focus, where trying new types of foods. So, the exploration of those factors could help drive traffic. So this is around innovation, around ....

36:05

This will allow you to justify pricing where it's relevant, and people are seeking these new experiences because they haven't had it for awhile overall.

36:17

Now, let's jump into how things look from a channel level.

36:23

So there's obviously been a decline ondine. And that's why you wouldn't try and bring in traffic there. Incidentally, you'd think that it would have gone up. Now, remember, this was the relative share, so each of the rows up to 100%.

36:38

So dining has declined by less than half. And it's still not going up, as of yet.

36:45

Um, 50%, close to it, is all takeout, and drive through, just under a third, which is pretty incredible. And think about it and even delivery, albeit still small, is double the size. It was two years ago.

37:00

So let's touch on one area of delivery that is, it's clearly developed on.

37:06

So digital ordering, where deliveries overdeveloped as skyrocketed over the last few years.

37:13

So it's grown triple digit over the last two years.

37:19

And what goes into digital ordering? It's mainly through a mobile app, online delivery or pickup.

37:26

And what we see is that this is something that, obviously, because of technological advances, it's being pushed by operators because they obviously need a channel to look at consumers and penetration opportunities. But consumers, and the adoption that they've had have been a lot more open. It's not just consumers. It's older cohorts that are willing to try out what's going on on upfront as well. So, the question is, is this going to be sustained?

37:56

So, what you see in front of you is a trend line between dining traffic versus delivery.

38:02

There's enough to scale, of course, because delivery would be a lot smaller. But the reason I'm showing you this map, showing you this in previous years is that correlation between dining and delivery as soon as Dine and goes Down, delivery, goes up, and vice versa. Out, that was true.

38:16

I would say until maybe end of last year, or middle of last year, but we're not necessarily seeing that same type of correlation still.

38:25

So, you know, one takeaway, obviously you can see, is that delivery really has reached a new level, and it hasn't gone back, and it's unlikely to.

38:35

But how things play out is really, I think, the biggest question for that channel. Now, Ipsos has a pretty cool and powerful social listening division called ....

38:48

And what I've shared with you here is looking at Google searches versus actual social media hits, so how many people are posting on a particular topic? So the solid lines represent the activity for both of these a year ago. And the hollow circle represents the current activity.

39:08

So the main takeaway here, you can see from the arrows most of the off premise channels are declining, both in terms of searches. Some social media hits to some degree, and indoor dining has been growing. Now, this is related to online platforms, obviously, primarily. And that's where that communication is. But, again, if you were to look at another type of source to explain what might play out, it's clear how evident is that people are eager to dine in, again, to a large degree.

39:40

The other thing to keep in mind, is the barriers for the delivery channel. The top three reasons are all related to price, and with the current economic climate. It's another thing to be mindful of how this channel might play out over time. Quality, timeliness, or concerns, but price is by far the most important factor.

40:04

So last point, and again, still on the positive side, is around breakfast.

40:09

And the reason I call this metal for breakfast, as you are fully aware that Wendy's has entered around last month on this space. The other reason is that it's actually grow quite, quite a bit compared to any of the other parts of the meal to particles dinner and lunch It's still slightly below pre pandemic levels. But it's gone up. And what's fascinating is some of the things that have evolved over the course of the pandemic one is that the check growth is actually the highest and what We want to understand exactly. what's driving that.

40:45

It's interesting that coffee only occasions are actually softening.

40:50

Um, and part of that is because we're making coffee at home, and it's not just your instant, which is certainly grown.

40:57

But there's all types of different coffee preparation methods that we've become accustomed to. And that limits what they're going to pay.

41:06

And so the focus really has been on foods, to a certain degree, to tie in, balance off whatever they're prepared at home. So, the morning breakfast usually was very functional in terms of needs. Kathy, who is an expert on the food and beverage sector. Cathy Prada talks about the four ages for years. It's about hunger, habit, health, and Hardy.

41:29

But again, the growth that we're seeing is around needing a break, rewarding oneself. And I think those needs are, again, important to consider when you are driving traffic. And of course, if you don't have a good food offering right now, I think it's something you are going to have to address in return.

41:49

So in conclusion, going back to the three themes that we're talking about. Certainly there's a lot of uncertainty still in existence. And I think what's important for businesses is to understand how they need to be nimble as things progress.

42:06

We are still below pre pandemic sales but it's still positive.

42:09

Inflation, the uncertainty is being driven by it is going to be something of concern. The fact that we are still working from home has an impact on lunch and over on premise as well.

42:21

But, again, I really want to emphasize the fact that there are still lots of positive things to take into consideration. But we are seeing sales growth, and if that trajectory continues and we should see by the beginning of next year going back to that total normal level. Pent up demand is clearly evident, as I've said. And then you've got things around savings, tourism that will hopefully help keep things afloat and growing. The experiential needs and the need for exploration. I think those emotional needs, that switch from this, having comfort to, I want to go and socialize and experience kind of what I've been missing for the last couple of years, are going to be top of mind for awhile. And you want to try and take advantage of that. And it's, again, those consumers that are willing to spend that money, going back for frequency, is exactly what you want to use to entice. The digital channel, again, continues to grow.

43:21

Obvious key leverage you can use to turn that off premise channel. And certainly, breakfast, we see continued to grow in the winter term. So, I think the overarching point I want to leave you with is that, you know, you want to think carefully what consumers care about now and really, particularly the current diner because they are looking for, you know, what brings to meetings. And if brands and operators are able to target that, then they will be able to entice them back and especially in context of the current landscape.

43:54

There's generally a two pronged strategy at our highest level.

43:57

You can take, you know, you're satisfied and experiential needs of consumers eager to return to the food scene, on the flip side of the offer deals, consumers who are more likely to be impacted by inflationary pressures.

44:12

So with that, I will conclude

44:56

Have a wonderful day, everyone.