Sit-down restaurants expected to struggle

MARKET RESEARCH

to $51-billion. In 2015, dollar sales were $50-billion, a one per cent increase over 2014.

The biggest full-service casualties came at independent restaurants, with a record 2,047 restaurant units closing in 2016, according to NPD.

But big, full-service restaurant operators did not fare much better: Cara Operations Ltd., owner of multiple chains including Swiss Chalet, St. Hubert and Milestones, said sales at its restaurants open for more than a year fell 1.2 per cent in the 39 weeks ended Sept. 25, 2016 compared with the same period a year earlier.

At Boston Pizza, year-todate same-restaurant sales as of Sept. 30 grew just 0.7 per cent. Both restaurant companies noted an impact from weak sales in Western Canada, hit by an economic downturn.

By category, quick-serve restaurants accounted for 51 per cent of restaurant dollar sales in 2016, and full-service restaurants accounted for 42 per cent of dollar sales.

Before the 2008 recession, full-service restaurants had a share above 50 per cent. The remaining seven per cent of dollar sales in 2016 were in the growing “home meal replacement” category, as grocery stores and convenience stores continue to expand their take-out meal options.

“At full-service restaurants we are not seeing the menu innovation that we are seeing in quick-service restaurants,” Carter said, noting smaller restaurant chains such as Cactus Club, Browns Socialhouse, Moxie’s, Joey’s, had been outperforming the rest of the full-service segment. “But even their traffic gains are not comparable to the quick-service segment.”

While consumers eschew full-service family restaurants for quick-service options, the biggest growth in the latter is coming in the breakfast category.

The analyst also noted quick-serve chains have been more forward-thinking than full-service establishments when it comes to digital options, allowing customers to order and accrue loyalty points through mobile apps. “We know that when consumers order through an app they tend to spend more money,” Carter said.