Given the strength of sales in June, July and September, foodservice sales ended the year on a stronger-than-expected note.  According to Restaurants Canada’s latest long term forecast, commercial foodservice sales are forecasted to climb by 5.3% in 2017 following a similar gain in 2016.  It now looks like sales will come in much higher due to robust consumer spending in British Columbia, Quebec, Ontario and Manitoba.  

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.

Similar to Technomic, we foresee a moderation in consumer spending at restaurants in 2017 as sales grow by 4.0%.  This is due to slower disposable income growth and high household debt.  Also, Ontario and British Columbia have posted robust gains in recent years, which is unsustainable over the long term.

Consumer demand for convenience and quality will continue to support strong gains in the fast casual segment.

Quick and full-service restaurants will see growth hover around 4% in 2017 following solid gains in 2016.  While demand will moderate in Ontario and British Columbia, Alberta and Saskatchewan will see a slight increase following two years of declines.  After adjusting for menu inflation, real sales will grow at about the same pace as population growth.  This will mean operators will need to steal traffic from their competitors in order to grow sales by focusing on food quality, value, convenience and innovative menu offerings.

Hot off the Press! Foodservice Industry Forecast
To learn how your segment or province will fare over the next five years, get the full story in our Foodservice Industry Forecast. This new 30-page report is free of charge for Restaurants Canada members and is available on the Member Portal. You can also contact Member Services at 1-800-387-5649, ext 8006 or members@restaurantscanada.org to order your copy.

Author

Chris Elliott is the Senior Economist for Restaurants Canada; he manages and produces a comprehensive research program that has made Restaurants Canada a leading source of information for and about Canada’s $89-billion foodservice industry. Chris produces a number of member reports that analyze key industry trends and economic forecasts. He also provides research to support Restaurants Canada’s lobbying efforts on issues that affect foodservice operators – from payroll taxes to food costs. Chris has worked with Restaurants Canada for 20 years, has a Bachelor of Arts and Master Degree in Economics and specializes in economic modeling and forecasting.