A new study from research firm NPD Group says Canada's food services industry will grow by less than one per cent annually over the next five years, a "modest rate" that signals an era of more intense competition.
"There are going to be winners and losers in the restaurant industry this coming year," said Robert Carter, executive director of the NPD Group's Canadian food service division in a release.
"Restaurant operators who remain relevant by giving consumers what they want can be the winners, but it will require continually staying on top of trends and understanding what is resonating most strongly with consumers."
Fast-food chains, known within the industry as quick-service restaurants, generate $23 billion in sales in Canada each year, with about 4.3 billion visits from customers, NPD Group said in its report, "2020 Vision: The Future of QSR."
Growth is expected to be hinged mainly on larger populations in the foreseeable future, rather than an increase in the total number of visits per capita, which are expected to decline, the report said.
Over the past several years, the food services industry has generally witnessed a decline in customer transactions.
Former Tim Hortons (TSX:THI) chief executive Marc Caira highlighted the urgency of the downturn last year when he unveiled a slate of new menu items designed to draw customers in for lunches, rather than just their morning coffee.
Others in the food services industry have broadened their menus, like Subway which launched a more aggressive promotion of its breakfasts and McDonald's which brought in poutine and wraps for more health-conscious diners.
The NPD Group said customer demands are evolving, with more people looking for restaurants that offer take-out and drive-thru options. Overall, that part of the business is expected to grow 10 per cent against in-store visits.