Our restaurant industry’s revival

New reports reveal that consumers are dining out more since the beginning of the year, despite inflation. Is the restaurant sector experiencing a revival?
Sylvain Charlebois
Professor, Dalhousie University
sylvain charlebois

If there's one sector that deserves some good news, it's the restaurant industry. This sector has been through hell due to the pandemic, putting our restaurateurs and their employees to the test. However, recently published reports indicate that the restaurant industry is making a strong comeback. 

According to a report from Circana, the restaurant industry continued its robust recovery in the first quarter of 2023. Restaurant visits increased by 11% and spending rose by 18% during the quarter ending in March, compared to the same period last year. This is great news considering the evidently painful challenges this sector has faced in recent years. Since March 2020, despite higher prices, consumers appear to be visiting restaurants more often. 

According to the Circana report, the increase in visits to food services at different times of the day can be attributed to changing behaviours, such as the gradual return of people to workplaces and engaging in formal or informal routines outside the home. Breakfast and morning snack periods experienced significant growth, with morning meal demand up by 13%, representing the largest share of daily traffic. Lunch and dinner visits also saw a growth of 10%, while afternoon snack demand increased by 8% compared to the same quarter last year. All very encouraging metrics for the sector.

READ: Canadians making fewer trips to the grocery store as inflation pinches 

In summary, full-service restaurants showed the highest growth in traffic, with a remarkable gain of 24%. However, quick-service establishments still dominated with a 67% share of all food service visits, showing a 9% increase during the quarter. Full-service establishments accounted for 22% of the total visits. The remaining share of traffic represents retail dining, including prepared foods in convenience stores and grocery stores, which experienced a 5% decline compared to the previous year.

No surprise here. The latest results from McDonald's and Restaurant Brands International, the parent company of Tim Hortons and Popeyes, for example, indicate that the fast-food sector is doing better. This may not be desirable for some, but at least people are going out. 

And the good news doesn't stop there. Statistics Canada also added its two cents last week by mentioning that even though retail food sales have been declining for some time due to persistent food inflation, the percentage of food service in relation to total food sales seems to have returned to its pre-pandemic level for the first time. Before the pandemic, the percentage stood at 39%. According to Statistics Canada's data, the percentage in the first quarter reached 39% again, a 4% increase from a year ago. In other words, when it comes to dining out, consumers are returning to their pre-pandemic habits.

READ: Canada saw decline in fresh fruit, vegetable availability in 2022

The restaurant industry remains one of the most important sectors in our economy. If the restaurant industry thrives, so will retail. Restaurants are the ultimate lure for the retail business, enticing people to go out. But according to Statistics Canada, we also observed that the sector generated as much revenue as in the first quarter of 2019 – the last complete pre-pandemic first quarter – but with approximately 100,000 fewer employees in the sector, including accommodation sites.

In short, the data from the restaurant industry is reassuring. Everything indicates that consumers may be going out to forget their despair at the grocery store. Perhaps it's the “might as well” syndrome that drives people to go out, despite wallets still being intimidated by inflation.

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