Revenue growth for Canadian restaurants will be limited to 3.9 per cent in 2017, predicts the Conference Board of Canada’s recently released “Canadian Industrial Outlook: Canada’s food services industry” report.
According to the report, the number of Canadian restaurants has grown at a rate of 1.8 per cent annually since 2011. This year, pre-tax profits in the food services industry are forecast to reach $1.6 billion, while pre-tax profits in the food manufacturing industry are expected to climb to $4.2 billion. Expansion of restaurant traffic could slow due to weaker consumer spending.
“As restaurants vie for Canadians’ dollars, they will not only be competing against each other for market share, but with grocery stores as well,” says Michael Burt, the Conference Board of Canada’s director of industrial economic trends. “Dining at home is becoming relatively attractive compared to eating out, given slower growth in Canadians’ income while prices at restaurants have steadily risen, despite a drop in grocery prices over the last year. Increased competition in the industry may drive less-profitable independent restaurants out of business as they struggle to compete with chains on food prices.”
Breakfast traffic rose by 6.3 per cent in 2016 and has remained strong. Breakfast was once seen as low-revenue, but today demand is rising and many franchised restaurants are joining the all-day breakfast trend.