This year is shaping up to be the toughest year for foodservice operators since 2011, according to Restaurants Canada, the largest association representing foodservice and hospitality businesses across the country.
While overall foodservice sales were 5 per cent higher during the first six months of 2018 than during the same period in 2017, real year-over-year sales growth was only 0.7 per cent after adjusting for menu inflation of 4.3 per cent.
“Bars, restaurants and other foodservice businesses are fortunately benefiting from increased sales, but mostly from higher menu prices rather than more traffic,” said Chris Elliott, Restaurants Canada Senior Economist. “It’s a challenging situation for many foodservice operators and their customers; patrons are paying more, so they are dining out less, and businesses are still struggling, even after raising menu prices, to cover their rising costs.”
Alberta, British Columbia, Newfoundland & Labrador and New Brunswick all reported menu price increases of 3 per cent or more during the first six months of 2018, as businesses responded to greater operating costs in those provinces, such as higher minimum wages.
Menu prices in Ontario jumped 6.6 per cent during the first half of 2018, after the new minimum wage of $14/hour came into effect — this was the largest year-over-year increase that diners in that province experienced since the introduction of the Goods and Services Tax in 1991.
“Foodservice businesses are having to make really tough choices,” said Lauren van den Berg, Restaurants Canada National Vice President, Government Affairs. “They’ve done their best not to cut back on staff, and instead chose to raise menu prices. But they’ve still had to decrease the number of hours they can provide workers, and opportunities to work additional shifts. The foodservice sector is where most of us get our first jobs, so that makes it a lot harder for people entering the workforce.”
Click here for more information on year-over-year differences in foodservice sales.