Less disposable income means less willingness to dine out, according to the conference board

Mario ToneguzziIt’s no secret that Canadians have high debt levels these days and that’s not good news for the food services industry.

A new report released on Tuesday by the Conference Board of Canada says “tapped-out” consumers won’t be spending much dining out over the next few years. In fact, the Canadian Industrial Outlook: Food Services report says restaurant sales are forecast to grow by an average of only 1.4 per cent per year between now and 2022.

“Canadians’ ability to spend will be squeezed not just by high debt levels, but by rising interest rates that will increase the cost of servicing their debt,” said Michael Burt, director of industrial economic trends at the Conference Board of Canada. “This will leave Canadians with less disposable income and likely diminish their willingness to dine out.”

The report also said:

  • aggressive discounting practices by major Canadian food retailers resulted in price deflation at grocery stores in 2017;
  • with Amazon set to make inroads into the Canada food retail landscape, grocery prices will post modest growth at best, providing some cost relief for restaurant operators;
  • food industry pre-tax profits are expected grow by 3.4 per cent to reach $1.9 billion in 2018.

“Despite moderating sales growth, the financial performance of the industry will remain healthy. On the cost side, significant minimum wage hikes in both Ontario and Alberta will raise industry labour costs this year and next. At the same time, these wage hikes will drive down demand for labour, with the industry projected to shed 6,000 workers between 2017 and 2019. A lower headcount, combined with lower food prices, should keep overall cost increases in check,” said the conference board.

Respected business writer Mario Toneguzzi is a veteran Calgary-based journalist who worked for 35 years for the Calgary Herald in various capacities, including 12 years as a senior business writer.


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