By Jeni Marinucci
Let’s be honest; the news isn’t great. Word comes this week that the restaurant industry may be facing its lowest revenue growth year since 2011, according to a recent report released by The Conference Board of Canada. The report, “Canadian Industrial Outlook: Food Services—Winter 2017,” which can be read in its entirety here, forecasts a less-than-stellar growth period ahead for restaurant owners, and it may be due to a crowded – and increasingly populated – marketplace.
Michael Burt is Director of Industrial Economic Trends at The Conference Board of Canada, and says that competition for market share is heating up exponentially:
“As restaurants vie for Canadians’ food dollars, they will not only be competing against each other for market share, but with grocery stores as well. Dining at home is becoming relatively attractive compared with eating out, given slower growth in income and the fact that prices at restaurants have steadily risen despite a drop in grocery prices over the last year.”
Economic growth has been stagnant to slow in many sectors, and this extends into household purchasing and lifestyle choices. With many families opting to eat out less often, and purchase less when they do, restaurant spending has taken a noticeable downturn. The rate of restaurant growth in Canada has matched population growth (1.1 per cent to 1.1 per cent, respectively), and the availability of cheaper groceries is partially tied to lower consumer spending.
But it’s not all bad. The report has some positivity, and is optimistic in places – especially in areas we’ve discussed here previously on the Order Up blog. Most specifically, the CCB touts breakfast as a possible area for continued and sustained growth. The report notes a 6.3 per cent climb in breakfast-only traffic, and breakfast accounts for nearly 20 per cent of all restaurant visits in Canada. The arrival of all-day breakfast is one way restaurants are coping with the general downturn, and the report calls the trend “one bright spot for the industry,” citing “strong growth traffic” in the breakfast menu area.
Pancakes and coffee, anyone?
