Foodservice Profile – France

Consumer profile and trend

With a population of approximately 67 million and a gross domestic product (GDP) of US$2.8 trillion in 2018, France has the third largest economy in the EU, after Germany and the UK, and is the second largest foodservice market in the EU, providing ample opportunities for Canadian exporters. France is also the most popular tourist destination in the world and attracted nearly 90 million foreign visitors in 2018, which provides a huge opportunity for French foodservice markets.

France's GDP grew moderately at 1.6% in 2018. Compared with the rate (1.8%) in 2017, the slow growth has led to decreases in purchasing power. Moreover, high unemployment (9% in 2018, predicted to fall) and slow growth in recent years have made French diners increasingly price conscious, impacting higher-cost options in the market. This shift in attitude has, however, created opportunities for lower-cost fast food operators. For the past few years, French diners' spending patterns have decreased, and spending habits are unlikely to pick up proportionally to the country's overall economic growth (Euromonitor, 2019).

Major trends in the French foodservice are as follows:

Curiosity

some permeation and acceptance of other cultures and cuisines

Experimentation

consumers are becoming more confident in trying new cuisines

Value proposition

some consumers are more willing to buy quality products and pay the high price

Societal change

some new attitudes and practices are emerging in France such as changing tastes, product transparency and innovation

Convenience seeking

with busier lifestyles, convenience-seeking behaviors are becoming more common

Local 'real' food

French-made locally sourced ingredients are in higher demand

(GlobalData, foodservice report, 2019)

Overall foodservice market

France is the second largest foodservice market in the EU after Italy (US$144.2 billion) with sales value at US$119.3 billion in 2018. Other top foodservice markets include Spain (US$117.9 billion), Germany (US$115 billion) and the United Kingdom (US$102.4 billion). France grew the slowest among the top five EU markets with a CAGR of 0.3% from 2015 to 2018, but is forecasted to grow moderately at a CAGR of 1.2% from 2019 to 2022. The other four markets grew faster than France with CAGRs ranging between 1.4% and 1.8% over the 2015-2018 period.

The French foodservice market is dominated by restaurants, where the fast food restaurant is set to represent a rapidly growing share of the industry's restaurant channel.

According to a GlobalData report, French foodservice remains highly fragmented, with 77% of sales value in food service being represented by independent operators in 2018. Partially driven by the recent recession, consumer preferences have evolved over the last five years. Consumers are now more likely to be value focused and there is a growing demand for offerings that can be consumed quickly and at non-conventional times.

Immigration and cultural events have played a major role in developing diners' awareness of foreign cuisine in France. Although there is an increasing number of restaurants that specialize in serving exotic cuisine from Asia, Africa and America, the market remains more traditional than the foodservices offered in neighbouring countries like Germany, Spain, Belgium and Italy. Full-service restaurants (FSRs) have retained their popularity, especially among older consumers. As a result of the slowdown in economic activity in 2018, however, their growth is sluggish. Due to shorter lunch breaks and increasingly budget-conscious consumers, business has positioned itself more at the lower end of the FSR channel, which is fast food. A lack of new ideas and creativity in this channel could threaten future growth, as competing outlets have adapted more successfully to the French market's rapidly evolving landscape.

According to Euromonitor, consumer foodservice in France accelerated its digitalization in 2018, which allowed for improved customer experiences and/or production optimization. Operators widely innovated foodservice in terms of improving digital tools to consolidate or gain market share, yet digital usage varies significantly between channels.

Consumer foodservices continued to increase sales at a moderate pace in 2018, as consumer habits evolved towards a more diversified supply, highlighting the search for original and more segmented experiences. Successful hybrid concepts such as convenience stores are continuously gaining ground. Furthermore, home delivery has strong growth, but faces new service challenges.

In this report, eight foodservice subsectors have been grouped together to form the 'profit sector': accommodation, leisure, mobile operators, restaurants, retail (on-trade only), travel, workplace, and pubs, clubs and bars. They are operated by either independent consumer foodservice or chained consumer foodservice providers.

In 2018, the total value sales of France's foodservice in 2018 recorded US$119.3 billion. Restaurants are France's largest foodservice subsector, reaching US$77.8 billion in 2018, with a CAGR of 0.2% from 2015 to 2018. This subsector is expected to reach US$82.7 billion by 2022, with a CAGR of 1.2%. The leisure subsector ranked the second biggest in value sales (US$10.8 billion) in 2018, followed by accommodation venue (US$10.6 billion), pub, club and bars (US$10.5 billion), and retail (US$3.9 billion). All subsectors grew slightly from 2015 to 2018 and are expected to grow modestly (ranging between 0.7% and 1.6%) from 2019 to 2022.

Within the restaurant subsector, full service restaurants recorded the highest sales of US$46.6 billion in 2018, followed by fast food restaurants (US$26.7 billion). These top two outlets accounted for 94.3% (US$73.3 billion) of the total sales within the restaurant subsector (US$77.8 billion). Growth in both outlets was marginal at a CAGR of 0.0% and 0.5%, respectively, from 2015 to 2018; both outlets are forecasted to grow at a CAGR of 0.7% and 1.9%, respectively, from 2019 to 2022. All restaurants outlets are expected to grow moderately. However, fast food restaurants (accounting for 22.4% of the total foodservice sales) are growing faster than full service restaurants (accounting for 30.7% of the total foodservice sales). Fast food restaurant outlets are fairly fragmented, but remain dominated by McDonald's France franchise. Successful operators in this outlet have adapted the fast food model to match French preferences and cultural peculiarities. French consumers tend to favor longer meals and prefer to consume multiple courses. Operators have attempted to accommodate this aspect of French life with improved seating and food options. The French fast food outlet is branching out into offering products traditionally associated with other outlets. Alcohol has long been available in many French fast food outlets, and an enhanced coffee and baked goods proposition is being rolled out by a growing number of operators in the channel.

Coffee and tea shops recorded a slow CAGR of 0.5% from 2015 to 2018, reaching sales of US$4.2 billion in 2018. Low transaction prices (US$5.3 in chain, US$4.8 in independent outlets) attract a high frequency of visitors to these outlets, especially visitors among 'convenience seeking' consumer groups. The channel is highly fragmented and the majority of consumers prefer independent outlets to chain outlets. Key to future growth in this outlet will be to try to raise average transaction prices, either by adding value to existing options or by diversifying product offerings, encouraging consumers to visit for more than just beverages, snacks and light meals. Starbucks and Columbus lead as the specialists in coffee and tea shops.

Within the accommodation subsector, hotels and motels recorded the highest sales of US$9.1 billion in 2018, followed by holiday parks (US$703.4 million). These top two outlets accounted for 93.1% of the total sales within the accommodation subsector (US$10.6 billion). Growth in both outlets remained marginal at CAGRs for both of 0.3% from 2015 to 2018 and are forecast to grow at a CAGR of 0.9% and 0.8%, respectively from 2019 to 2022.

Within the pub, club and bar subsector, pubs and bars recorded the highest sales of US$7.1 billion in 2018, followed by nightclubs (US$2.3 billion) and private clubs (US$1 billion). Although these three outlets grew minimally at a CAGR of 0.5%, 0.3% and 0.3%, respectively from 2015 to 2018, they are forecasted to grow at a CAGR of 2.0% (the highest among all outlets), 0.6% and 1.4%, respectively from 2019 to 2022. These outlets are especially popular for socialization occasions among a varied range of consumer age groups. Visitor frequencies are particularly high at local bars and independent outlets. Many operators blame the smoking ban, enacted in 2006, for the channel's static performance in recent years.

Within the leisure subsector, venues recorded the highest sales of US$4.6 billion in 2018, followed by entertainment (US$4 billion) and visitor attractions (US$2.3 billion). These three outlets grew minimally at a CAGR of 0.3%, 0.4% and 0.2%, respectively, from 2015 to 2018 and are forecasted to grow at a CAGR of 1.0%, 1.2% and 1.9%, respectively from 2019 to 2022.

Foodservice: chain franchises versus independent operators

Despite the faster growth of chain franchises in France, independent operators dominate all subsectors in the number of outlets and value sales. The performance of chained players is triggered by higher unit prices: the competition intensifies after dynamic newcomers enter the foodservice industry.

Within the restaurant subsector, the independent restaurant sales accounted for 79% of the total restaurant sales, while chain restaurants accounted for 21% in 2018. Within the leisure subsector, independent accounted for 66.2%, while chain franchises represented 33.8% in 2018. Within the accommodation sector, independent sales accounted for 66.4% of the total sales while chain accommodation sales accounted for 33.6%. Within the pub, club and bar subsector, independent sales accounted for 88.1% of the total sales while chain franchise sales accounted for 11.9%. Only within the retail subsector did chain and independent equally share the value sales. The growth for all subsectors in both chain and independent was very slow with CAGRs ranging from 0.1% to 1.0% between 2015 and 2018. The CAGR is expected to continue to be marginal over the 2019 to 2022 period.

In France's chain sector, the highest value per transaction in 2018 occurred in social clubs (US$23.9), followed by hotels and motels (US$23.1) and pubs (US$22.2). Coffee and tea shops recorded the highest CAGR of 2.6% from 2015 to 2018, and are expected to grow the fastest at a CAGR of 1.0% from 2019 to 2022. According to a GlobalData report: "France - The Future of Foodservice to 2022," pubs, clubs and bars are ingrained in the French culture, but are in danger of losing this status due to changing consumer trends. Value-seeking consumers are less likely to visit outlets primarily for a drinks-based visit, a trend that is likely to continue with the persistent low-growth state of the French economy.

Average transaction values are high when compared to other channels, indicating that when consumers visit a pub, club or bar outlet, they tend to stay for an extended period of time. Advance planning and localism contribute to this. Operators should ensure that they provide comfortable and engaging formats that encourage this behaviour.

In France's independent foodservice outlets, the highest value per transaction in 2018 occurred in night clubs (US$28), followed by private members clubs (US$26.3), social clubs (US$23.1), fine dining (US$22.7) and hotels and motels (US$21.8). Both social clubs and coffee and tea shops recorded the same highest CAGR of 2.4% from 2015 to 2018 and are expected to grow the fastest, both at a CAGR of 0.9%, from 2019 to 2022. Fine dining, baker and other retail are expected to have negative growth at −0.1%, −0.1% and −0.2% respectively over the 2019-2022 period.

Dine-in vs takeaway foodservice channels

In terms of France's sale values in the foodservice sector in 2018, dine-in channels recorded US$107.2 billion, accounting for an 89.9% share, while take-away recorded US$12.1 billion, accounting for a 10.1% share. Within the take-away sub-channel, collection reached US$8.5 billion, representing 7.1% share, while delivery reached US$3.6 billion, representing 3% share. Both dine-in and take-away grew modestly at the CAGRs of 0.3% and 0.5% from 2015 to 2018. It is forecasted that the delivery takeaway sub-channel will reach the highest CAGR of 1.6% from 2019 to 2022.

Top 10 foodservice companies in France

McDonald's was France's top foodservice franchise company with a value sale of almost US$5 billion in 2017, representing 4.9% of the foodservice market in France. It was followed by AccorHotels (US$1.5 billion), Restaurant Brands International (US$1.3 billion), Groupe Bertrand (US$1.1 billion), and Yum! Brands, Inc. (US$747.5 million).

Restaurant Brands International, Inc. is the third-largest global quick-service restaurant chain created by a high profile merger of Burger King and Tim Horton's franchise brands. Groupe Bertrand is France's largest operator of pubs and bars by sales value and market share. It operates restaurants throughout France under a number of brand names, including Burger King and Quick. The group operates pubs under the Au Bureau and Café Leffe brands (the latter is owned in partnership with InBev). Yum! Brands, Inc. is the largest quick-service restaurant company in the world, most known for its franchise chains such as KFC, Pizza Hut, and Taco Bell.

Buffalo Grill is France's largest steakhouse operator. The group's restaurants provide full service and place a strong emphasis on family dining. Agapes, primarily owned by the Mulliez Family conglomerate, operates quick service chain Flunch and pizza delivery and eat-in chain Pizza-Pai, as well as a number of smaller chains.

Groupe le Duff's principal FSR chain in France is the 'Del Arte' chain of Italian-style eateries. Del Arte is France's largest foreign cuisine-inspired foodservice chain, serving a product mix of Italian-style pizza, pasta, risotto and desserts. Serare SAS operates the Courtepaille chain of FSR in France with 280 grill restaurants. The chain specializes in 'grill' foods such as steaks and rotisserie style chicken. It is a full-service chain mainly targeted at families and travellers, offering options at a medium range price point.

Market opportunities for Canadian exporters

The Comprehensive Economic and Trade Agreement (CETA)

With CETA, 98% of EU tariff lines are now duty-free for Canadian goods, and an additional 1% will be eliminated over a seven-year period. Tariff elimination provides enhanced export opportunities into the EU market for Canadian producers, processors, and manufacturers, as well as for agricultural and agri-food products, fish and seafood, forestry goods, and the full range of industrial goods.

How does CETA benefit Canadian agriculture and agri-food exporters?

• Under CETA, almost 94% of EU tariff lines have become duty-free.
• For many processed foods, current EU tariffs are complex and trade-restrictive. CETA immediately eliminated all tariffs on processed foods, with the exception of sweet corn and refined sugar.

For more information, please visit Opportunities and Benefits of CETA for Canada's Agriculture and Agri-Food Exporters.

Strategies for entering the foodservice sector in France

The foodservice sector is highly competitive in France, as it includes many high-quality, diverse establishments. Most large restaurant businesses, including chains, offer local cuisine and use imported products only if local alternatives are not available. Restaurants in France that serve international cuisine are more likely to use imported food products. However, niche opportunities for Canadian suppliers exist for various products, such as fish and seafood, bison meat, horse meat, beef, fruits and vegetables, ice wine and beer, maple, sugars and sugar confectionery, pet food, canola seeds and oil, lentils, durum wheat, and frozen ethnic/regionally focused food service meals.

Exporting channels

Based on the report by the USDA Foreign Agricultural Service entitled "France: Food Service - Hotel Restaurant Institutional," exporters can access the French market through several channels. The appropriate channel depends on the type of product and target consumer. Most companies will import through one of the channels listed below. There are about 4,000 distributors/wholesalers in France.

• Cash & Carry: Wholesalers display a wide selection of food and non-food products in large stores. They sell to food retailers, food service sector restaurants and restaurant chains. Cash & carry offers competitive prices, a variety of products, extended operating hours and immediate product availability. Major cash & carry groups are Metro (French subsidiary of Metro/Germany) and Promocash (a subsidiary of Carrefour), together representing more than 75% of wholesale sector sales.
• Specialized distributors/wholesalers: They are specialized in the distribution of food products. They have dry and cold storage facilities with refrigerated/freezer trucks for deliveries. They buy from processing companies, foreign exporters or importers. Their largest clients are in the catering sector.
• Direct sale to an end-user is extremely rare and complicated and usually limited to high volume customers (for example, fast food chain, hotel chains). Although an exporter can engage in direct to end-user sales, it is advisable for the exporter to have local agents to handle the paperwork and licensing, as unexpected issues are common.

A distributor in France should be able to handle customs, quarantine, and any licensing procedures needed for the food product. A number of distributors will complete the necessary paperwork themselves, while others will use an import agent. For some products, multiple documents and certificates are compulsory. Exporters are strongly recommended to work with the local import agent, distributor, and the end user to make sure the products are in compliance with French and EU regu lations and all proper documentation has been completed. For more information, please consult the Exporting to the EU - A guide for Canadian business, Export requirements library (Canadian Food Inspection Agency) and Import Regulations - France (The Canadian Trade Commission Service)

Conclusion

France is the third largest economy in the EU after Germany and the United Kingdom, and is the second largest foodservice market in the EU after Italy. With a population of 67 million and an average of 86 million tourists visiting France each year, France's foodservice market provides opportunities for the Canadian foodservice industry and agri-food and seafood suppliers to expand into France and to compete with other existing international food franchises, along with local foodservice companies.

For more Information

International Trade Commissioners can provide Canadian industry with on-the-ground expertise regarding market potential, current conditions and local business contacts, and are an excellent point of contact for export advice.

• Overview of Trade Commissioner Services in France
• Find a Trade Commissioner

For additional intelligence on this and other markets, the complete library of Global Analysis reports can be found on the International agri-food market intelligence page, arranged by region.

For additional information on ANUGA 2019, please contact:

Ben Berry, Deputy Director
Trade Show Strategy and Delivery
Agriculture and Agri-Food Canada
ben.berry@canada.ca

Foodservice Profile – France
Global Analysis Report

Prepared by: Hongli Wang, Market Analyst

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