Page 33 - MENU Magazine - Nov/Dec 2017

All in all, 2017 was a banner year for the economy. It would be icing on the proverbial cake if 2018 was equally as positive. Although there are some reasons to be optimistic, I’m less hopeful for a number of reasons.
All good things must come to an end. The strong economic growth of 2017 will mod- erate to a more sustainable 2.1% pace in 2018, and then to 1.7% in 2019. This is due to a reduction in residential investment. Real consumer spending will slow as rising interest rates, softer housing prices and high household debt take the wind out of the sails of consumers.
As a result, foodservice sales in Canada will moderate to 4.3% growth in 2018. This would represent its slowest pace since 2011. After adjusting for menu in ation, real sales will grow at roughly the same pace as the overall population. This means the only way to grow sales is to take market share away from your competition.
At the same time that consumer spend- ing is moderating, foodservice operators in Ontario and Alberta are bracing for sharp increases in the minimum wage. Seven out of 10 operators say that the number one priority over the next 12 months is to reduce operating costs. They will do this through reducing employee hours, looking for less expensive menu items and cutting sta . For many, they will have no choice but to raise menu prices in tandem with lowering costs.
But before we blow out the candles on 2017, let’s make a wish that consumers keep
spending and the tourists keep coming. While it may be ambitious thinking that 2018 would be as strong as 2017, solid revenue growth will help o set some of
the rising costs that will hit the restaurant industry. Of course, foodservice operators will also have to use all their experience, and even some luck, to navigate the coming two years.
Restaurants Canada o ers members a number of savings programs so be sure to check with the membership department that you are getting the most out of your membership. We also have a number of research reports to help you benchmark your nancial ratios and identify ways that operators are coping with rising minimum wage costs, such as the Restaurant Outlook Survey. For more information, contact membership@restaurantscanada.org. m
ABOUT CHRIS:
As the Senior Economist, Chris Elliott
leads the research department at Restaurants Canada. Chris has worked with Restaurants Canada for 18 years,
has a Bachelor of Arts and Master’s Degree in Economics and specializes in economic modelling and forecasting. His passion for working with numbers has helped make Restaurants Canada a leading source of information about Canada’s foodservice industry. In his spare time, Chris loves to kayak and the outdoors. He is a huge metal music fan, attending concerts throughout Canada and the United States.
COMMERCIAL FOODSERVICE SALES IN CANADA
(YEAR-OVER-YEAR CHANGE)
2.4%
6.2%
5.2%
4.9%
6%
4%
2%
1.2% 1.0%
3.6%
2.3%
4.3%
3.7% 3.6%
7%
5%
0.7%
3.2%
3%
0.9%
1%
2015 2016 2017 2018 2019 2020 2021
forecast
NOMINAL REAL
COMMERCIAL FOODSERVICE SALES BY SEGMENT IN CANADA
(YEAR-OVER-YEAR NOMINAL CHANGE)
DRINKING PLACES
0% 1%
2017 FORECAST 2018 FORECAST
Source: Restaurants Canada's 2017-2021 Foodservice Industry Forecast
QUICK-SERVICE 5.3%
RESTAURANTS 4.5%
FULL-SERVICE 5.5%
RESTAURANTS
4.3%
CATERERS 2.1%
NOVEMBER / DECEMBER 2017 MENU 33
4.8%
-0.9%
-1%
-0.8%
2%
3%
4%
5%