Does good fortune await Canada’s foodservice industry in 2017?




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Does good fortune await Canada’s foodservice industry in 2017?

Chris Elliot, Restaurants Canada

  • 1 January 2017

2017 is the Year of the Rooster, according to Chinese astrology. It turns out that ideal careers for roosters are teacher, soldier, police officer, and restaurant owner. People born in the year of the rooster are considered to be hard-working and multi-talented—two assets that are extremely important to owning a restaurant.

If you were born in the year of a rooster, however, it is considered to be the unluckiest year of the 12-year cycle. So, these traits will be put to the test in 2017 as commercial foodservice sales are forecast to moderate following several years of strong gains.

Restaurants Canada’s forecasting model calls for commercial foodservice sales[i] to grow by 4.0% to $66.9 billion. This comes on the heels of three consecutive years of sales exceeding 5% growth. Adjusted for menu inflation of 2.4%, real sales will advance by 1.5%. This is just slightly above Canada’s population growth rate.

Why 2016 was a strong year

Many of the elements that worked in favour of restaurant operators will diminish in 2017.

After several years of robust gains, consumers will pull back on spending at restaurants in Ontario and British Columbia. This is due to high household debt (a whopping 168% of disposable income) and a deceleration in disposable income growth.

After expanding by 3.7% in 2016, disposable income will slow to 3.0% in 2017 and 2.9% in 2018—the weakest growth since the 2009 recession. Modest wage gains and weak labour market growth are to blame. This is critical as disposable income is the most important factor that determines the health of the foodservice industry.

In 2016, an extra day in February and generally mild weather conditions helped restaurateurs. A surge in domestic and international visitors also benefited operators. However, in 2017, the tourism industry will be hard-pressed to show another year of double-digit gains.

Provincial performance

Provinces with the strongest economic growth will experience the fastest gains in foodservice sales.

Despite a moderation in spending, continued healthy economic activity and a rising population will boost foodservice spending in British Columbia and Ontario by 4.4% and 4.2%, respectively. This is a more sustainable growth after the breakneck pace both provinces have experienced in the past three years.

Alberta’s foodservice industry has been besieged by a steep recession, the Fort McMurray wildfires, and soaring labour costs. Despite the challenges, gains at quick-service restaurants offset lower spending at full-service restaurants, caterers, and drinking places over the past two years. In 2017, a stronger economy and the rebuilding effort will spur foodservice sales in Alberta by 4.3%. Still, this is a marked slowdown from the 7% growth between 2011 and 2014.

After a surprising rebound in domestic demand, Quebec’s foodservice industry will return to a more sustainable pace of growth in 2017 as sales climb by 4.1%.

Not all provinces will boast solid growth. Foodservice sales in Manitoba will slow to 3.7% growth after two years of growth above 6%. Saskatchewan’s economy continues to find its footing, which will restrain foodservice sales to 2.7% in 2017. A high unemployment rate and declining working-age population will lead to below-average foodservice spending in Atlantic Canada.

How to succeed in 2017

Despite where you live, restaurateurs will have to use their considerable talents to succeed in 2017—whether they are roosters or not.

Staying on top of trends, controlling costs, and innovating to grow market share are critical to remaining competitive. Operators can also take advantage of the business-building tools that Restaurants Canada offers, and attend the RC Show to see what’s new in the industry.

Astrology may well predict what the future holds, but savvy restaurateurs can create their own fortune.

[i] Commercial foodservice sales include full-service restaurants, quick-service restaurants, caterers and drinking places (e.g. bars, taverns, pubs and nightclubs). Including the non-commercial foodservice sector (e.g. accommodation foodservice, institutional foodservice, retail foodservice, foodservice at stadiums and vending machines) total sales will climb to $83 billion in annual sales.

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