Deep Dish #3

Buy Local: More Than Just a Trend

By Rebecca Clarke

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Introduction

The call to ‘buy local’ has become more prevalent in recent years due to the important role small and medium-size businesses play in strengthening the local economy, reducing emissions from transportation, and building community bonds (1). However, since the start of the COVID-19 pandemic this call has become louder than ever before. 

The Conference Board of Canada’s Centre for Food in Canada defines local food as food that is consumed as close as possible to where it is produced, taking into account regional differences in seasonality and availability (8). Buying this type of food has advantages for the economy, the environment and society. Economic benefits include keeping money within the community, supporting local farmers and creating jobs. Buying local is also good for the environment as it reduces the number of miles that the food has to travel to before it is bought (2). Additionally, it promotes accountability, as the consumer is more aware of where their food is coming from and how it is being produced, which can encourage farmers to use more sustainable agricultural practices (2). The way local food can bring communities together and foster a sense of belonging and togetherness also has social and cultural benefits (2). 

Although consumers have been made more aware of the benefits of buying local food in recent years, the number of ‘buy local’ campaigns, government initiatives, chamber of commerce programs and signs placed throughout communities has drastically increased with the onset of COVID-19 (3). The pandemic has definitely had an adverse effect on small and medium-size business owners and their employees in Ontario (7).

Overall, small, locally owned businesses in the food retail sector are the heart and soul of communities. If popular local businesses are to survive this pandemic, Canadian consumers should refocus their efforts to ‘buy local’ from small and medium-size businesses.

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Make your voice heard at https://gofresher.theheal.ca, and stay tuned in to the conversation through our social media pages (@FRESHER_Canada) and website at http://fresher.theheal.ca.

References

1. American Independent Business Alliance. (2014). Building “Buy Local” Campaigns that Shift Culture and Spending: A Guide to Helping Your Independent Businesses and Community Thrive. Retrieved from https://community-wealth.org/sites/clone.community-wealth.org/files/downloads/Building%20Buy%20Local%20Campaigns.pdf

2. Arrowquip. (2017, June 06). Top Benefits of Buying Locally Grown Food. Retrieved from https://arrowquip.com/blog/animal-science/top-benefits-buying-locally-grown-food 

3. Buckner, D. (2020, August 06). The ‘shop local’ message is everywhere, but it’s tough resisting deals during a pandemic. CBC News. Retrieved from https://www.cbc.ca/news/business/shop-local-covid-19-pandemic-small-businesses-1.5675070 

4. Greater KW Chamber of Commerce. (2020, March 18). How to support small businesses during the COVID-19 Coronavirus pandemic. Retrieved from https://greaterkwchamber.com/how-to-support-small-businesses-during-the-covid-19-coronavirus-pandemic/ 

5. Leger. (2020, April 09). The Commercial Shift: Consumer Behaviour During and After the Pandemic. Retrieved from https://leger360.com/surveys/discover-tomorrows-consumer-consumption-habits-and-covid-19/  

6. OECD. (2020, April 27). From pandemic to recovery: Local employment and economic development. Retrieved from http://www.oecd.org/coronavirus/policy-responses/from-pandemic-to-recovery-local-employment-and-economic-development-879d2913/ 

7. Pringle, J. (2020, March 29). Buy Local! City encourages residents to support local businesses during COVID-19 pandemic. CTV News. Retrieved from https://ottawa.ctvnews.ca/buy-local-city-encourages-residents-to-support-local-businesses-during-covid-19-pandemic-1.4869327 

8. Rosolen, D. (2013, August 22). Local food has a positive economic impact: report. Food in Canada. Retrieved from https://www.foodincanada.com/food-business/local-food-has-a-positive-economic-impact-report-114309/#:~:text=Local%20food%20systems%20have%20economic%20benefits%20for%20a%20wide%20range%20of%20businesses.&text=Consumers%20indicate%20that%20some%20of,produce%20is%20fresher%20than%20alternatives

Deep Dish #2

Evolving consumer preferences for local and light fare

By Rebecca Clarke

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Introduction

It’s no secret that the COVID-19 pandemic has impacted nearly every aspect of life. On the list of these impacts is the change that it has had on consumer purchases. Early on in the pandemic, consumers tended to buy more high-sugar, high-carb, high-fat ingredients and ‘comfort foods’ like pastries and cakes [2]. However, as the pandemic drags on, many consumers are pivoting back to healthier options. 

During these times, grocery stores, restaurants, bars, cafes, farmer’s markets and other food retailers could incorporate these ‘healthy eating’ trends into their business strategies. For example, some restaurants have adopted local healthy ingredients into their menus supporting not only good health and wellbeing but also delivering benefits to hard-hit local economies. By leveraging these trends, the food retail industry will likely ride a wave of consumer interest in local healthy foods and beverages.

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Make your voice heard at https://gofresher.theheal.ca, and stay tuned in to the conversation through our social media pages (@FRESHER_Canada) and website at http://fresher.theheal.ca.

References

1. Business Next Door. (2020, August 05). How COVID-19 Has Changed the Way We Shop Locally. Retrieved from https://business.nextdoor.com/local/resources/how-covid-19-has-changed-the-way-we-shop-locally
2. Glenney, J. (2020, September 14). Consumers look to healthy food post-COVID lockdown. Farmtario. Retrieved from https://farmtario.com/news/consumers-look-to-healthy-food-post-covid-lockdown/
3. Government of Canada. (2020). Healthy eating during the COVID-19 pandemic. Retrieved from https://www.canada.ca/en/health-canada/services/food-nutrition/healthy-eating/covid-19.html )
4. Naidoo, U. (2020, April 07). Eating during COVID-19: Improve your mood and lower stress. Harvard Health Publishing. Retrieved from https://www.health.harvard.edu/blog/eating-during-covid-19-improve-your-mood-and-lower-stress-2020040719409
5. National Restaurant Association. (2020) What’s Hot Culinary Forecast. Retrieved from https://restaurant.org/research/reports/foodtrends
6. Severson, K. (2020, September 08). 7 Ways the Pandemic Has Changed How We Shop for Food. The New York Times. Retrieved from https://www.nytimes.com/2020/09/08/dining/grocery-shopping-coronavirus.html
7. University of Maryland. (n.d.) Healthy Eating During the Pandemic. Retrieved from https://www.umms.org/coronavirus/what-to-know/managing-medical-conditions/healthy-habits/healthy-eating
8. World Health Organization. (2020). #HealthyAtHome: Healthy Diet. Retrieved from https://www.who.int/campaigns/connecting-the-world-to-combat-coronavirus/healthyathome/healthyathome—healthy-diet

Deep Dish #1

Early impacts of COVID-19 on the retail food industry

By Selina Phan

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Introduction

The COVID-19 pandemic has brought unprecedented change in the retail food industry in Canada. The Food Retail Environment Study for Health & Economic Resiliency (FRESHER) study aims to understand the impacts of COVID-19 on restaurants, bars, cafes, grocery stores, farmer’s markets, variety stores, alcohol retailers, and other specialty food stores in Ontario. In our Deep Dish series, the research team behind FRESHER aims to share short summaries from our research in combination with analysis of news and reports from across the industry. COVID-19 has revealed immense opportunities and challenges for food retailers, while also uncovering and amplifying structural inequalities in our food systems.

Industry Snapshot

The restaurant industry typically brings in $33 billion CAD revenue annually, but profit margins have been historically slim at around 3-4% [1]. The food service industry is also especially fragmented, so food retailers feel the impacts of COVID-19 very differently. While the industry had seen consistent growth due to rising incomes, 2020 certainly dampened industry growth. Full-service restaurants and drinking establishments such as bars and lounges were the worst hit in the early months, suffering a drop of nearly 50% in revenue from March 2020 compared to March 2019. Restaurants Canada, a non-for-profit association representing the Canadian food-service industry, estimates that 1 in 10 independent restaurants permanently closed as of June 2020, and 4 in 5 restaurants laid off majority of their employees.

Restaurants and food-service establishments, especially independent operators, are important contributors to the vibrancy in communities in Ontario, but COVID-19 may alter the way we dine and eat out for the foreseeable future.

Employment

Collectively, the food service industry employs about 1.2M people, representing the 4^th largest source of private sector jobs in Canada. While the industry is starting to see some growth again, Restaurants Canada reports that at least 400,000 people are estimated to be still out of work as of July 2020 [2]. Employment is still well below pre-COVID-19 levels, at only 67% of the February level of employment, according to the July Labour Force Report [3].

Businesses have noted that while CERB provided much-needed emergency relief, it has created difficulties in the economic recovery process [4]. As Ontario businesses transition and reopen, some may be revisiting their business models and pay scales.

Consumers

Nielsen has identified two types of general customers emerging from the pandemic – “insulated” consumers and “constrained” consumers [5]. Insulated consumers are those who have seen minimal to no employment impact and may be experiencing a rise in discretionary income as their expenses decrease. These consumers tend to upgrade products in their groceries or seek new product offerings such as meal kits. Constrained consumers are those who have been experiencing more severe employment impact such as furlough or unemployment, or other COVID-19 challenges. High-end restaurants and grocers may be competing for the wallet share of insulated consumers who look for alternatives to replace the out-of-home experience, while wholesale or value grocery chains may see greater demand or anxieties from constrained consumers. Ultimately, both consumers are fearful of the economic impact of COVID-19, perhaps even more so than their health [6].

Consumers also adopted new behaviours and routines when it came to eating and dining patterns. The “forced trial” of using online ordering services and apps led to a growth from 1% to 12% in the share of Canadian households who adopted online grocery services during the early months [7]. Statistics Canada noted an “exceptional surge” in grocery store sales, especially in shelf-stable products, personal hygiene, and baking products [8]. Trends such as baking sourdough bread and banana bread may be responsible for a 200% year-over-year increase in grocery store sales for baking goods such as flour and butter. Grocery stores also saw a shift in consumer loyalties, with 16% of consumers surveyed reporting a shift in their primary grocery store [9]. Big box stores, such as Costco and Walmart, surged in popularity as consumers valued the convenience of a one-stop shop to minimize risk of running multiple errands. Many consumers were reaching for comfort foods, spurring rising demand for processed and frozen foods [10].

With regards to dining out, an Angus Reid survey conducted in June 2020 found that 55% of Ontario residents surveyed intend to avoid restaurants due to public health concerns, but many are still supporting local restaurants through delivery and takeout, with 29% of Canadians surveyed ordering from restaurants at least once a week [11]. As the province moves out of Stage 2 and into Stage 3, many food retailers have been adapting by implementing more protective barriers and PPE practices among staff, in line with consumer expectations that prioritize their health and safety.

Adapting to the New Normal

Restaurants and food-service establishments have been quick to adapt to the challenges and opportunities posed by COVID-19. Based on our interviews and industry discussions, here are just a few strategies that food-service establishments have implemented in their survival and recovery:

Menu engineering: Food-service operators have streamlined their menus for greater cost and operational efficiencies. Examples of this include items that can be made with more cost-conscious ingredients, stocking inventory that has a longer shelf-life, or items that can be executed with minimal staff. With the large shifts to delivery and takeout orders, restaurants have had to test and experiment with their food to ensure that they maintain their quality over the delivery period, which can range up to 30-40 minutes.

New product offerings: In line with finding menu efficiencies, some food retailers have modified their product and service offerings by offering innovative products such as meal kits, picnic baskets, or prepared meals bundled with entertainment options.

These new offerings may become revenue sources in the long-term, demonstrating one of the ways that the pandemic has allowed creative businesses to find new opportunities.

Modifying physical space: With Ontario moving into Stage 3, food-service establishments can start to operate indoors, albeit at a reduced capacity. Operators have modified their physical space to ensure that they are maintaining physical distancing measures and protective barriers between customers and staff. Additionally, some operators have created single-direction paths with directional wayfinding signs to streamline movement and minimize risk.

Leverage social media: It is no secret that COVID-19 has increased daily media consumption. The average Canadian spends nearly 10.5 hours per day with media, with majority (5.3 hours) on digital media, and this is expected to rise further with COVID-19 [12]. With the rising popularity of video, food-service establishments have engaged with customers through platforms such as TikTok and Instagram to show behind-the-scenes clips of preparing popular dishes. As trust and compassion have become key drivers in making it through the pandemic, many food retail businesses have responded accordingly by demonstrating their brand values through videos that provide a look at how the industry operates behind the scenes.

Delivery and online ordering: Restaurants Canada estimates that over 50% of restaurants are providing contactless payment and pickup [13]. While some establishments were already well equipped for delivery, such as pizza joints and fast food restaurants, other operators encountered difficulties in their transition to offering contactless pickup and delivery.

These third-party delivery companies have recently come under further fire as restaurateurs find out about their high commission fees, which are as much as 30%, finding it unsustainable to remain profitable [14]. These high fees prompted Toronto Mayor John Tory to call on delivery companies to lower commission fees, and some companies have responded to the pandemic by reducing commissions accordingly [15].

While many of these strategies may help with mitigating the financial impact of COVID-19 on food-service establishments, a key step in moving forward during the pandemic is to maintain leadership and trust with employees, customers, and the community. Food retailers, like many organizations today, are expected to lead with their passion and values. COVID-19 has highlighted structural inequalities in the societies we live in, including our food systems. Across the FRESHER team’s industry discussions and interviews, a recurring theme among food retail operators is the importance of having open, candid conversations with their employees and customers to maintain trust in creating safety in the workplace. Additionally, sharing information with customers, such as the safety measures put in place, a behind-the-scenes look at how their food is prepared, or the story behind the restaurant can be critical steps in helping customers regain confidence to return to dine-in experiences at food-service establishments.

COVID-19 has brought about immense opportunities and challenges to the world, and food retailers have not been spared. If you currently work in food retail, whether at a grocery store, restaurant, café, or fast-food joint, we want to hear from you! If you were laid off or lost a job opportunity in the industry due to the pandemic, we also want to hear from you!

Make your voice heard at https://gofresher.theheal.ca, and stay tuned in to the conversation through our social media pages (@FRESHER_Canada) and website at http://fresher.theheal.ca.

References

1. Couillard, Lucie. 2020. Full-Service Restaurants in Canada. IBISWorld.
2. Restaurants Canada. 2020. A third of Canada’s foodservice workforce is still out of work. July 10.
3. Statistics Canada. 2020. Labour Force Survey, June 2020. Statistics Canada.
4. MacLeod, Meredith. 2020. Reopening businesses struggling to lure staff back to work. June 23.
5. Nielsen Insights. 2020. RECALIBRATED CONSUMPTION DYNAMICS IN A COVID-19 ALTERED WORLD. Nielsen, May 22.
6. Accenture. 2020. How COVID-19 will permanently change consumer behaviour. Accenture.
7. Sotos LLP. 2020. Post-COVID-19 Business: Back to The Future? April 20.
8. Statistics Canada. 2020. Canadian Consumers Adapt to COVID-19: A Look at Canadian Grocery Sales up to April 11. Statistics Canada.