The Upside of a Down Canadian Dollar
The falling price of oil has dragged the Canadian dollar down with it, which brings mixed blessings for restaurateurs across the country. The oil-rich provinces of Alberta, Saskatchewan and Newfoundland and Labrador will face below-average economic growth and job creation in 2016. However, the lower loonie will draw more international tourists and boost exports – which is good for business in many parts of the country.
What’s pushing the loonie down?
Due to lower oil prices, the Canadian dollar – which was at par with the U.S. dollar in 2012 – now sits at US$0.78. A resurgent American economy also adds downward pressure on the dollar. In the second half of 2016, the United States Federal Reserve will likely raise its key interest rate, which will further strengthen the American dollar at the expense of our loonie. Our economy and industry will see changes for some time to come, as the Canadian dollar is expected to remain below US$0.80 the end of 2017.
The tourists come back
After struggling since 2001, tourism saw a sharp improvement in 2015. Canada hosted 27.6 million international visitors last year – the highest number since 2007. Although this figure is almost half of the tourists that came to Canada in 2000, it still shows a 7.8 per cent increase over 2014. The Canadian Tourism Commission expects the lower oil prices and loonie will fuel a rebound in visitors. Despite the wintry weather, travel to Canada in Q1 2016 jumped 13.5 per cent on a year-over-year basis.
Exports to grow
A lower Canadian dollar will also make our exports more attractive. The export-driven economies of Ontario and British Columbia stand the most to gain, and will lead the country in economic growth in 2016.
What your restaurant can expect
If your restaurant is in Ontario or British Columbia, you can expect to see strong sales. The robust, export-driven economies of these provinces will raise disposable income and consumer spending this year.
Operators in Alberta, Saskatchewan and Newfoundland and Labrador will see weaker sales, but there is a silver lining. The influx of international tourists and increase in domestic travel will benefit restaurants and drinking places across the country.
If your restaurant is near a tourist destination, you should especially enjoy a nice jump in customers this year. According to CBRE Hotels, accommodation foodservice will grow the fastest in the restaurant industry with revenues climbing 4.4 per cent in 2016. As the U.S. economy picks up momentum, Americans will also have some extra money in their pockets to travel to Canada – and eat at our restaurants.