Commercial foodservice sales in Canada rose to their highest level in more than two years, with seasonally adjusted sales climbing to a record $7.2 billion in April 2022. While this represents a 10.7% increase over January 2020, once adjusted for menu inflation, real sales grew by a tepid 0.7%.
Pent-up consumer spending helped full-service restaurant sales grow to a seasonally adjusted $3.28 billion in April 2022, surpassing quick-service restaurant sales of $3.16 billion for the first time since the start of the pandemic. Adjusted for menu inflation, real sales at full-service restaurants are 4.2% above pre-pandemic levels while real sales at quick-service restaurants were flat.
From an operator’s perspective, financial challenges remain. Despite higher sales in April, 44% of quick-service restaurants were operating at a loss and 15% were just breaking even. This compares to 40% of full-service restaurants operating at a loss and 19% that were breaking even.
The rising cost of living, combined with a slower economy, is expected to take some of the wind out of spending. According to Restaurants Canada’s REACT survey, roughly one in four Canadians said they will go out less often to a restaurant in June. By comparison, 11% of respondents said they will go out more often to a quick-service restaurant and 18% said they will go out more often to a table-service restaurant.
Given all of the above, commercial foodservice sales growth has been stronger than expected. However, our latest forecast calls for a moderation in spending in the second half of 2022. Year-over-year foodservice sales growth is forecast to decelerate to 11% nominal growth in the second half of the year following more than 30% growth in the first half of 2022.
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