According to the recent industry forecast from Restaurant Canada’s annual Foodservice Facts, the outlook for the Canadian restaurant industry in 2023 is rather gloomy. The prediction from the industry association suggests sales at restaurants in 2023 will be stagnant at $95 billion, the same level as 2019. The reason for the softness in sales is primarily a result of Canadian consumers choosing to opt out from dining outside of the home, meaning most segments of the industry from Quickservice to Casual Dining to Fine dining will feel the effect of fewer customers coming through the door. The resulting slowing sales will have a ripple effect across all foodservice companies in Canada. Most foodservice manufacturers, suppliers and restaurant chains in 2023 will experience disappointing sales. Many will have negative growth. Yet, at the same time, a hand full of companies will see sales gains.
Why will some companies experience growth while others will not, especially in an overall declining market?
Many factors contribute to Restaurants Canada’s bleak forecast. Economic pressures such as high inflation combined with lingering pandemic concerns are weighing on the minds of Canadians. Consumer Confidence for September 2022 is 75, which is well below 2019 levels of 120. Low consumer confidence has historically, resulted in fewer people going out to restaurants.
Additionally, a shortage of qualified labour for foodservice companies is resulting in reduced operating hours, reduced production and the inability for companies to staff properly to maximize sales.
2023 is going to be a tough year in the Canadian Foodservice Industry.
But there will be winners. And foodservice companies and restaurant chains winning in 2023 will have one key attribute in common. They will have made some very strategic choices in how they tackle current market conditions, position their business for success and focus on key opportunities. It will be this collection of strategic choices that will become their “road map” and guiding compass. The analogy is not dissimilar to an explorer navigating through unfamiliar territory. Without a map and compass, obviously finding your way will be much harder, particularly in a storm.
Strategic Choices; a progressive narrowing of inputs from an organizations’ Executive Team that lead to a desired outcome for the business.
Most strategic choice inputs come from understanding and interpreting multiple forms of internal and external data (sales, POS, costs, consumer behaviour, spending patterns, economic conditions) as well as reviews on many areas of the business such as resources, product offerings, menus, pricing, revenue channels and target market segment.
With all this insight, it’s then time for Executives to ask the tough questions about what success looks like for their business. The more “in tune” a companies’ Executive Team is with market conditions, consumer trends and the overall business performance, the better chance the output of strategic choices will guide a business forward to success.
The process for collecting strategic choices and documenting them is more commonly referred to as Strategy Planning. The process of Strategy Planning is the most crucial formal planning process in a company’s growth success. Yet according to the Harvard Business Review, 86% of executive teams spend less than an hour a month discussing strategy and only 23% of companies use a formal strategic planning process. Even worse, over 82% of companies still follow a process of creating a 3 to 5 year strategy plan. In today’s fast changing and dynamic foodservice industry, 3 to 5 year plans are a poor fit with the realities of constant and rapid change.
2023 is going to be a year of sluggish sales for the Canadian Foodservice Industry. Foodservice companies and restaurant chains winning in 2023 will be those who follow a collection of focused strategic choices, based on understanding market conditions, consumer trends and overall business performance. It’s these focused strategic choices that will make winning a more realistic outcome.
Interested in learning how to develop winning strategic choices for your organization?
Speak to Robert Carter at The StratonHunter Group to learn more.
Over 100 strategic planning sessions and counting!
The StratonHunter Group breadth of experience, industry market insights and proprietary process in facilitating Strategy Planning session motivate and energize Executive Teams to share strategic choices that will ensure success for your business.
The StratonHunter Group. Experts in Foodservice. Professionals in Strategy Planning.
Robert Carter, Managing Partner
Craig Thompson, Managing Partner