Over the past few months, Canadians have gradually made increases in their restaurant spending leading to a very welcomed, yet wary stabilization of the restaurant industry. Between March and July 2022, the number of Canadians who purchased a meal or snack from a restaurant at least once over the course of a month steadily improved due to the reopening of on-premise dining, combined with pent-up consumer demand. After peaking in July, that number moderated in August, remaining relatively unchanged through October.
While younger Canadians (18 – 34 year olds) drove most of the early gains in restaurant traffic during the first half of the year, those habits changed in October resulting in a decrease in the purchase of coffee and snacks. This trend occurs when Canadians cut back on lower-priced occasions to preserve their restaurant budget for higher-priced occasions.
While the rising cost of living, higher interest rates and growing concerns about an economic slowdown are impacting lower income households, some Canadians are ordering out slightly more often. In October, the share of Canadians who purchased a meal (breakfast, lunch, or dinner) from a restaurant at least once a week or more increased slightly month over month, driven by Canadians aged 55 and older.
So what does the future hold – could we see further erosion across other categories? It is inevitable that slower economic growth will restrain future restaurant visits and spend – there are already signs from our REACT survey that lower-income Canadians are feeling the impact of increased living costs. 41% of Canadians with a household income of less than $50,000 have indicated they expect to cut back on purchasing a meal or snack from a table-service restaurant in November compared to roughly 30% for all other income groups. In the QSR category, there was no discernable difference in purchase habits amongst income groups, with 29% of all Canadians saying they will make fewer purchases at a QSR in November. On a positive note the majority of Canadians still intend to purchase a meal from a restaurant as often in November as they did in October, offering a somewhat optimistic yet guarded outlook for the industry.
For more information on the latest REACT survey, click here.