Restaurant confidence stumbles in early 2018

Published April 27, 2018

What a difference a year can make. In last year’s Q1 2017 Restaurant Outlook Survey, nearly half of operators posted higher same-store sales and were optimistic about the next 12 months. The mood has soured significantly since then.

In Q1 2018, 38% of operators reported lower same-store sales compared to 25% of respondents in Q1 2017. The decline in sales is due in part to bad weather and weak consumer spending in Alberta and Saskatchewan.

While 30% of operators posted higher sales in Q1 2018, this has trended down throughout 2017.

Since the announcement of Bill 148 in Ontario and Bill 17 in Alberta, the share of foodservice operators feeling optimistic about the next 12 months dropped from 69% in Q1 2017 to 47% in Q1 2018.

Conversely, those feeling pessimistic jumped to 33% in Q1 2018 from 11% in Q1 2017.

In addition to the new labour legislation, the erosion in operator sentiment reflects deteriorating household finances. High household debt and rising interest rates will put more pressure on consumers to restrain discretionary spending.

The latest data from Statistics Canada supports the slump in operator sentiment. While aggregate foodservice sales (including unit growth) in Ontario grew by 5.3% in the first two months of 2018, menu inflation jumped to 5.7%. As a result, real sales slipped by 0.4% — a sharp reversal from the 3.0% real growth in 2017.

Given these challenging times, operators need to focus on what makes them unique to separate themselves from the competition. Restaurants also need to keep up with the latest technology to make it more convenient for customers to make their purchases and improve back of house productivity.

To learn more about the latest operator trends, download the Restaurant Outlook Survey HERE .



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