Quenching Thirst at Canadian Limited-Service Restaurants

Here’s one thing every restaurant operator can likely agree upon: beverage purchases are a great way to improve check averages. But how does this play out among Canadian consumers at limited-service restaurants?

Coffee Fuels Fast-Food Visits

It’s no secret that Canadians love their beverages. Anyone who has seen the drive-thru line at Tim Hortons could deduce as much, and this coffee-focused chain—raking in more than $6.1 billion in 2013—leads all others for sales in the Canadian foodservice industry.

Data found in the 2014 Canadian Future of Limited Service: Fast-Food & Fast-Casual Restaurant Consumer Trend Report reiterates the role of coffee beverages in limited service and reveals that consumers are particularly keen on coffee-only visits at fast-food concepts. Nearly seven out of 10 fast-food consumers (69 percent) report purchasing just coffee at least monthly (and 50 percent at least weekly), more than for any other type of fast-food occasion. Further, coffee tops the list of preferred fast-food beverages for breakfast, lunch, dinner and snacks.

While coffee-only occasions are much less frequent at fast-casual concepts, 41 percent report visiting specifically for this beloved beverage at least monthly. And as we saw for fast-food occasions, coffee is a leading option for a variety of fast-casual visits. Indeed, some of the leading fast-casual chains are bakery cafés, which tend to emphasize their coffee program.

How often do you visit _______ for the following meals or types of food?
(by age, once a month +)

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Base: 500 consumers aged 18+ who visit fast-food/fast-casual restaurants at least once a month
Source: Technomic, Inc., the Canadian Future of LSR: Fast-Food & Fast-Casual Restaurant Consumer Trend Report (2014)

Fast Casuals Differentiate with Adult Beverages

Coffee may be a significant aspect of the limited-service occasion, but fast casuals are taking the opportunity to stand out with their adult-beverage programs. According to Technomic’s MenuMonitor, leading fast-casual chains menu a far wider variety of alcohol beverages than their fast-food counterparts (114 adult beverages vs. 73 at fast-food restaurants, despite the fact that just 5 chains in each subsegment carry these beverages).

Indeed, adult beverages—particularly beer—are far more preferred at fast-casual than fast-food restaurants. For example, 31 percent of consumers would consider ordering beer for a fast-casual dinner (tying with coffee for the leading dinner beverage), while just 22 percent would order beer with a fast-food dinner.

Consumers aren’t just interested in ordering adult beverages if they are available; they’re actually calling for more. Although several fast-casual concepts such as Mr. Greek, Union Burger Bar and Mucho Burrito menu alcohol drinks, 22 percent of consumers (and 27 percent of men) say they would like to see more adult beverages at fast casuals. Fewer fast-food patrons call for such, but it’s worth noting the 15 percent who said they would like to see more adult beverages menued at fast-food restaurants.

The Beverage Opportunity

Beverages are just one aspect of limited-service occasions, but they’re high-margin items that can quickly increase check averages. While Canadian operators know the importance of cultivating their beverage programs, it’s still important to continually consider different beverage opportunities across subsegments. Coffee fuels fast-food visits, but it’s also a key part of the fast-casual occasion. Moreover, data suggests an opportunity to menu adult beverages across the limited-service segment, allowing operators a chance to upscale the experience and differentiate their concepts.

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Deanna Jordan

Deanna Jordan is Manager of Consumer Insights at Technomic Inc. in Chicago. She works on the firm’s Consumer Trend Reports, a series of annual studies that provides operators and suppliers with a comprehensive guide to the menu and consumer trends impacting various restaurant segments and menu categories in the U.S., Canada and U.K. She also contributes to the Consumer Food Trends newsletter, which explores the latest in foodservice and consumer trends.

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