Total foodservice sales in Canada are forecast to grow to a record $88.7 billion in 2018, up 4.6% over 2017. Healthy economic growth and the lowest unemployment rate in 10 years will help prop up foodservice spending.
Many households are turning to foodservice more often as they don’t have time to cook or simply don’t want to. As a result, the foodservice industry is expected to outperform retail food sales for the eighth consecutive year. In 2018, the foodservice share of the total food dollar will reach 39.5%. This is the highest level since 2004.
Low inflation at grocery stores has also eroded the retail food market share.
As a result of discounting and an expanded food selection, traditional grocery stores (Sobeys, Loblaws) continue to lose ground to department stores (Costco, Walmart). Between 2012 and 2017, retail food sales growth at department stores soared by 66% compared to just 13% growth at grocery stores and supermarkets.
In the coming years, retail food sold from e-commerce giant Amazon will be a new source of competition for brick and mortar food retailers, but restaurants may not be impacted as much. Despite the convenience of delivery offered by Amazon, consumers still enjoy the experience that comes from dining out.
In the United States, the foodservice share of the total food dollar rose to 48% in 2017 following four years of little change. The restaurant industry in the United States boasts a higher market share than Canada due to higher disposable income in the United States and no federal tax on meals from restaurants. Nevertheless, there is still room for growth in Canada’s foodservice industry.