Canadian restaurant traffic on the rise, despite inflation: NPD Group
The restaurant industry continues to recover in Canada, according to new data from the NPD Group, although inflation concerns and worries about the economy are weighing on consumer habits.
NPD Group, a data and marketing research firm, says overall restaurant visits were up 5% in August compared to a year ago. Spending at restaurants was also up 9% from 2021. While restaurant visits slowed in August from the triple-digit growth seen earlier this year, in-person dining still increased by 28% year over year.
The statistics are still slightly down from pre-pandemic levels, but NDP restaurant industry analyst Vince Sgabellone says the gap has narrowed to single digits. Restaurant visits, for example, are down 5% from August 2019.
“We hear a lot of bad news about the economy and inflation, but so far that hasn’t stopped the recovery,” Sgabellone said in an interview with Yahoo Finance Canada.
“Things keep going up and have since restaurants were able to reopen in February and March of this year… We’re getting closer to pre-pandemic levels.”
The restaurant industry has been among the hardest hit by the COVID-19 pandemic, losing billions of dollars in sales during a period marked by frequent lockdowns.
While traffic levels may return, restaurants across the country still face major challenges.
A widespread labor shortage remains a key issue, with Restaurants Canada reporting that there were more than 171,000 vacancies in the restaurant industry in June, three times as many as before the pandemic. Restaurants are also struggling with a heavy debt burden, with 35% of independent restaurants surveyed by Restaurants Canada reporting having debt levels above $100,000.
Inflation has also made the recovery more difficult for restaurants. The price of food purchased from restaurants rose 7.4% annually in August, according to Statistics Canada’s Consumer Price Index.
The recovery of the restaurant industry could be threatened if the economic situation deteriorates in Canada. Sgabellone notes that foodservice visits are often one of the first things consumers back off on when cutting back on discretionary spending during an economic downturn. A Yahoo/Maru Public Opinion poll conducted in July found that 68% of Canadians surveyed were cutting back on dining out and ordering takeout in response to runaway inflation.
But so far, pent-up restaurant demand still outweighs the inflation-related fallout.
“It’s hard to say when economic headwinds can undo the tailwinds that are the exuberance of going out to restaurants again,” Sgabellone said.
“We have those two forces against each other and so far the tailwind is winning and driving these increases in traffic and is a net positive for the restaurant industry…It doesn’t is not reversed yet.”
Alicja Siekierska is a Senior Reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.
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