Warm weather, a leap year, strong consumer spending in British Columbia and Ontario, and an influx of tourists has created a recipe for healthy growth in foodservice sales this year.
By Chris Elliott
Growth is expected to continue in 2017, but at a slower pace as consumers keep a closer eye on spending.
Rounding out 2016
Annual commercial foodservice sales in Canada are projected to grow by a robust 5.3% to more than $64 billion in 2016. However, not all provinces have posted healthy gains. Depressed commodity prices restrained economic activity in Alberta and Saskatchewan, which pushed down foodservice revenues in those provinces. Despite these challenges, commercial foodservice sales growth in 2016 was on par with the 5.2% jump in sales in 2015.
Combined with non-commercial foodservice – which includes accommodation, institutions, retail and other – total foodservice sales in Canada will climb to nearly $80 billion.
What’s in store for 2017
Looking ahead, Canada’s economy is forecast to improve, growing from 1.4% in 2016 to 2.1% in 2017. This expansion is due to greater business investment and government spending. While employment and disposable income will also rise, consumers will take a breather after several years of strong gains. Retail sales are expected to slow from 3.6% in 2016 to 3.0% in 2017. Consumers have been on a spending spree in recent years, which has pushed the household debt to a record 168% of disposable income.
Commercial foodservice sales are forecast to climb by 4.0% in 2017 due to a moderation in spending in Ontario and British Columbia. Quebec, which also posted strong gains in 2016, will grow at a more sustainable pace in 2017. Alberta and Saskatchewan will come out of their slump, as improved economic prospects lift foodservice spending in 2017, especially at full-service restaurants.
Consumer spending could be the wild card. Canadians continue to defy expectations so another strong year of consumer spending will certainly lead to robust foodservice sales growth. Improved tourism will also boost foodservice sales in 2017. However, a sharp correction in the housing market could put a damper on consumer spending.
Note: Restaurants Canada uses an econometric model of the restaurant industry to forecast foodservice sales. The model uses economic forecasts by the Conference Board of Canada for real GDP, disposable income, retail spending, the unemployment rate and the exchange rate.