Food prices report predicts restaurant sales to halve in 2020

A man records signs in a restaurant window in Toronto on March 22, 2020.

Frank Gunn / The Canadian Press

Restaurant costs for 2020 will be much lower than initially forecast, as consumers instead spend a larger portion of their restaurant budgets in grocery stores, according to an updated food prices report that forecasts annual restaurant sales. will be halved.

“It all comes down to the fact that people need to change the way they buy and consume food,” said Simon Somogyi, associate professor at the University of Guelph and co-author of the report with the Dalhousie University professor. , Sylvain Charlebois.

The COVID-19 pandemic has seen restaurants across the country close or switch to delivery and pickup models as part of efforts to contain the outbreak. Sales have plummeted at many restaurants.

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“The food industry is being wiped out because of COVID-19,” the report read.

The initial report from researchers at both universities predicted restaurant prices to rise two to four percent in 2020, but that has now been revised down. The researchers did not provide a new range of percentages because they cannot confidently do so in a rapidly changing environment, Somogyi said.

Restaurants typically generate more than $ 90 billion in annual sales, but researchers expect $ 40 billion to $ 50 billion to flow to grocery stores throughout the pandemic. Grocery stores have seen unprecedented demand as the pandemic spread, with consumers stocking up on cleaning supplies, toilet paper and food.

Menu prices are expected to “drop significantly” thanks to major disruptions in the industry, according to the report.

Restaurants may need to become more price competitive, Somogyi said, as full-service establishments compete for a share of consumers’ take-out budgets with fast food restaurants, like pizza chains.

“They are going to move into this category of food service. It will be more competitive, ”he said.

However, this shift from food and beverage spending to grocery stores is unlikely to last, Somogyi said, although it depends on how long the physical distancing recommendations are in place.

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“I don’t see it having a massive long-term impact,” he said.

When the pandemic subsides and restaurants reopen, Somogyi noted, people may wish to return to dining rooms.

“And then there is a wave of shopping at home and in restaurants.”

Despite the current demand from grocers, Somogyi pointed out that they are also facing new cost pressures, such as increased sanitation practices, a workforce to cope with an increase in online orders and bonuses or additional hourly wages for store employees.

Overall, the report still expects total food and grocery costs to remain stable with a jump of no more than four percent for the year, with larger-than-expected increases in consumer costs. vegetables and bakery.

The December report predicted a rise of up to 2% in baking costs and a range of 2-4% in vegetable prices.

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Dairy products, fruits, meat and seafood remain unchanged – although the report notes that fruit prices could drop slightly in the summer.

Ontario Premier Doug Ford is ordering the closure of all non-essential businesses in the province to help deal with the spread of COVID-19. Ford says the order will go into effect Tuesday at 11:59 p.m. and will be in place for at least 14 days. He says he will release the list of businesses that will be allowed to stay open on Tuesday, but food will stay on grocery store shelves and people will still have access to medicine. The Canadian Press

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