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(Feb. 16, 2010) This month’s economic insights brought to you by CRFA economist Chris Elliott.
 CRFA economist
Chris Elliott |
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Fortunately for foodservice operators, Feb. 14 marked the start of the Year of the Tiger on the Chinese calendar. Traditionally, the tiger represents optimism, determination and power – something the foodservice industry desperately needs after the difficulty of last year.
The latest economic indicators already point to a better year ahead. The Conference Board of Canada’s consumer confidence index jumped to a 23-month high in January, reflecting an improved sense of financial and job security. In the past six months, Canada’s economy has created 130,000 jobs, partially offsetting the 400,000 lost during the recession. Retail sales have climbed in five of the past six months and are slowly returning to pre-recession levels. The U.S. economy – which accounts for 76% of Canada’s exports – posted a robust 5.7% annualized increase in the fourth quarter of 2009, representing the strongest quarterly expansion since 2003.
Canada’s economy is forecast to grow by 2.7% in 2010 following a 2.5% decrease in 2009. More jobs and a 3.1% increase in disposable income will boost commercial foodservice sales by 2.9% this year. Adjusted for menu inflation of 2.4%, real foodservice sales will grow by 0.5% compared to an estimated 4.5% decline in 2009.
While all regions will post improved foodservice sales growth in 2010 compared to 2009, Western Canada will lead the country with a 3.1% increase in sales this year. Foodservice operators will benefit from strong consumer spending as this region is forecast to boast the fastest retail sales growth in the country. Healthy gains in Quebec combined with improved sales in Ontario will lift total foodservice sales in Central Canada by 2.9%. In contrast, sluggish job creation and below-average consumer spending will restrain total foodservice sales growth in Atlantic Canada to 2.3% in 2010.
Incidentally, 2011 is the Year of the Rabbit, considered to be a lucky sign. Hopefully this ‘luck’ translates into solid sales growth for the foodservice industry next year as well.
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