It was certainly a year to be forgotten for the food service industry. StatsCan numbers told us this week that sales in the food service industry dropped by a whopping 32 percent, from Q4 2019 to Q4 2020. The food retail/service ratio, an important metric to assess how important food service is in our lives, also saw a significant shift in Q4 2020. Before the pandemic, about 35 percent of all the money spent on food was in food service and restaurants. In Q2 2020, it went below 20 percent, the lowest in decades, and now it is back up to 24.3 percent. Still, it’s a very low percentage compared to before the pandemic.
Even if, across the country, the sector registered fewer than 20 bankruptcies since August, many restaurants have closed or given up on their business. COVID-19 has ripped away the dreams of many entrepreneurs and chefs. Heartbreaking, really. Even worse, a large number of new Canadians, who have brought more innovation and wealth into the sector over the last several years, have had to close shop. A lot of them were family businesses. It is happening around the world, including here in Canada.
Looking ahead though, COVID-19 may become the food service industry’s opportunity to experience a great reset. Like many other sectors, the food service has had to turn on its head to adapt, pivot, convert, and change over the last 12 months, in order to survive. It has been incredible. While the industry will come out of the pandemic with scars, the future presents a great opportunity to redefine its purpose in our overall economy.
Even with the pandemic’s end in sight, it is unclear if people will be comfortable going out and about and patronizing their favorite restaurants again. It will take a while before most Canadians befriend the virus and not fear it. The fear must be managed carefully by restaurant operators.
While many establishments have disappeared, the gap created by the massive exodus will provide room for more innovation. New recipes, new cuisines, new ingredients, new tastes, new ways of serving, new restaurant designs and more. Canadians, coming out of their kitchen-intensive days more food literate, will have different expectations. The need for more creativity will impact innovative vibes for years to come. Perhaps not at the very beginning when pent-up demand will get people out no matter what. But soon after, Canadians will expect more.
The way the competitive landscape is defined by operators will also change. With the pandemic, the supply chain is now much more open and democratized. Many companies can sell online, and not just food. Prepared meals and meal kits are being delivered at a record pace. With e-commerce becoming a legitimate strategic option for a growing number of operations, farmers, farmers’ markets, and processors can and are selling directly to consumers. Kraft-Heinz, of all companies, is now operating three ghost kitchens in Canada. Imagine, a multinational consumer goods company delivering meals to consumers. Profits are not the aim but rather it is about understanding the ever-changing customer. Loblaws, through its PC Chef app, is now in the meal kits business prepared by well-established restaurants in some parts of the country.
The pandemic has altered rules for everyone, including restauranteurs. Market access and consumers’ expectations will make things interesting. A combination of both always leads to more innovation.
On the human side of the equation, the sector will need to find a way not only to attract more talent, but also to offer people a chance to build a career. Salaries and how workers are compensated need urgent attention. During COVID-19, the no-tipping agenda was brought back into focus. Tipping is known to be discriminatory and can only benefit the few, when the experience, and the meal itself is the product of many people’s work, not just the server. To make the sector more attractive, and for equality’s sake, the practice of including the tip in prices, like we see in many parts of the world, will need serious consideration. It’s time for a great reset so the sector becomes a place of choice for a growing number of people who have lost their professional positions due to COVID’s wrath.
It is unclear when Canadians will back out in full force and once again spending at least 35 percent of their budget on food consumed outside the home. It could take a few years, perhaps more. But as with everything, humans will bounce back, and a different food service industry will surely be ready.