How Independent Foodservice Operators Can Win Over Chain Store Customers
By Dwayne Reno
TORONTO - Large chain operators are on the rise, just look around your restaurant neighborhood. Many of your new competitors are part of a chain back by investors. According to the NPD Group, In the 12 months leading up to June, 2013, the country’s restaurant industry lost 905 independent places, but gained 52 chain outlets. Many of these chains are coming largely from the US, but some are also coming from other Canadian provinces and countries.
This week I would like to look at some of the conditions that are making it possible for chain operators to thrive in the current market and what independents can do to compete against them.
Reason for the invasion of fast food chains
As many debt lading Canadians continue to cut back on purchases, independent foodservice operators are likelier to feel the impact first. With the backing of investors, many chains operators are having a much easier time dealing with rising food costs while still be able to offer deal hungry customers cost effective bundle options and limited time promotions.
But while these promotions generate foot traffic they come at the cost of lower margins for large chain operators and their investors. This has led to many acquisitions of smaller chains as the larger chain operators look to grow shrinking margins. Furthermore in an effort to gain new customers chains are also looking at new markets i.e. Canada or England in the case of the Canadian chain, Tim Hortons who recently stated that they will be setting up shop in Great Britain and the Philippines.
Canadians are still dinning out
The Canadian foodservice marketplace is very appealing to large chains from the US, because while many Canadians are cutting back and choosing to cook their meals, another growing segment of the Canadian population still enjoys dinning out at restaurants, bars and cafes. This dinning out crowd is led by you guessed it, Millennials. This growing segment of the Canadian population eats out more than the rest of the population and is expected to help the foodservice industry grown in the future. They are also the largest single source of traffic growth among all age groups responsible for 154 million visits in Canada according to NPD Group.
These two are some of the factors that have stimulated the increase of large chain operators in the past three years.
How independent operators can win back customers
If you’re an independent foodservice operator and you’re doing good business that is great news, but don’t get comfortable - more chain operators will continue to pop up across Canada. Independents must be ready to compete with large chains and other independent operators and do so with rising food costs and lower margins. Here are some additional areas to focus on:
Furthermore if you operate an independent restaurant, bar or café and would like to do better business. BBA’s, Manage Mie Foodservice Manager can help. Weather your need is to make your menu items better or advertise to Canadians we can help, HERE.
Until next time your customers want to know why they should spend money at your restaurant, bar or cafe. So give them the goods!
Dwayne Reno CEO & Founder
Social Chat Blog
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