Canadian Pizza Magazine

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CRFA outlook says foodservice sales to drop 1.4%


Dec. 15, 2008 – Canadian foodservice operators are facing the most
challenging business environment since 1991, when they were hit with
the double whammy of the GST and a recession.

CRFA’s latest forecast is for industry sales to fall by
1.4% in 2009 compared to a 5.9% decrease in 1991. Adjusted for menu
inflation of 3.2%, real foodservice sales will slip by 4.6% – the
largest decline since the 10.6% drop in sales in 1991.

With
Canada’s economy caught in the grips of a global recession, stagnant
income growth and rising unemployment will lead consumers to cut back
on discretionary spending.  TD Economics is forecasting Canada’s
economy will contract by 1.4% in 2009 following a meagre 0.7% expansion
in 2008. As a result, disposable income will grow just 0.7% and the
unemployment rate will jump from an annual average of 6.1% in 2008 to
8.2% by the fourth quarter of 2009.

Based
on this economic outlook, commercial foodservice sales will slip 2.5%
in 2009, falling by $1.2 billion to $46.2 billion. Every segment will
see a drop in sales.  Full-service restaurants will post the largest
decline (-3.1%) as cost-conscious consumers trade down to
limited-service restaurants (-1.8%). Total caterer sales are forecast
to drop by 3.0% in 2009 due to a decline in social catering and reduced
contract catering spending in business dining, transportation and at
remote camps. Sales at drinking places will decline for a fifth
consecutive year with a 2.6% decrease in 2009.

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The
most recent forecast of accommodation foodservice calls for a 3.5%
increase in sales in 2009, but this forecast was made prior to the
global financial meltdown.  A new forecast will be available in late
January to reflect the current economic climate.

Institutional
foodservice will be the fastest-growing segment in 2009 with a 5.8%
increase in foodservice expenditure. Rising operator costs and an
aging population will lead to higher foodservice spending at healthcare
facilities while rising enrolment will boost foodservice spending in
education.

Retail foodservice sales will
increase by 1.2% and foodservice spending at all other foodservice
establishments will slip 2.5%.

Overall, foodservice spending will drop to $58.9 billion in 2009.