During the summer months, while the sun shines down and a light breeze blows across the Canadian blue sky, we’ve all tried to justify going out for dinner or drinks, knowing full well that we’ve got a refrigerator full of food sitting at home for you.
“Why not? It’s the summer; go on! Treat yourself!”.
We’ve all been there.
But as the dark clouds of recession loom closer and threaten to obliterate our sunny blue skies, perhaps we should step away from our indulgent summer tendencies and towards more frugal ones.
Unless you’ve been living under a well-insulated and affordable rock for the past six months, you’ll know that the world is grappling with the increasingly high cost of living. Unfortunately, Canada is no exception to this worrying trend.
Statistics Canada, the national statistical office, published in May that inflation has risen by 7.7% yearly. To put that in context, that’s the most significant inflationary yearly increase since January 1983!
Alarmingly, the average weekly earnings statistics show that there has been only a 4% increase in Canadian wages during the same time frame. So, while Canadians have received an increase in pay over the last year, this increase is not high enough to offset the cost of living.
After reading those stats, I think it would be safe to assume that most Canadians have tightened their purse strings to manage their cash flow better.
In reality, you’d be entirely wrong to assume that.
Canadians spend more at retail outlets, restaurants, and bars than before the pandemic.
Compared to April 2019, Canadians spent approximately $9 billion more at retail and leisure stores in April of 2022. Spending at just food and drink outlets has increased by under a billion dollars.
What?!?!
At first thought, the increase in spending could be explained by the increase in cost-of-living. (Canadians haven’t been going out to the shops/restaurants more than they were pre-covid, it’s just that stuff is more expensive now, so we’re spending more).
However, this thought can quickly be dismissed as while things have got (a lot) more expensive, they haven’t gotten expensive enough to account for the significant increases in spending that Statistics Canada has observed.
A more likely explanation for the increased spending is the almighty release of pent-up demand for in-person shopping, dining, and drinking bottled up for over two years.
Our desire to get out of our houses and return to ‘normality’ has been so strong that it overpowered all of our monetary concerns surrounding inflation and the threat of an economic recession.
The covid lockdown was so bad that we’re now playing catch up to make the most of the new “good times.”
And credit where credit is due. Many restaurateurs, bar owners, and shop owners have adapted their business offerings to tap as much of this demand as possible—introducing new trends such as ‘experimental dining’ within the restaurant scene.
It’s also important to note that many of these businesses had first to survive the onslaught of lockdowns that the pandemic caused through the provision of online and delivery services.
So, much like how consumers probably deserve a good old shopping trip, topped off with some drinks and food, many restaurant, bar, and shop owners probably deserve the return of some old-fashioned in-person customers.
However, these “good times” are not going to last forever.
Although many Canadians do deserve to be able to hit the town and spend their hard-earned money on whatever they want, the genuine threat of an incoming recession means that they may be better off to opt for a more penny-pinching option.
For many, the next few months will be somewhat of a balancing act in which they try to maximize the joyous return of a ‘normal’ summer while also preparing for winter with costly fuel, food, and energy prices.
Are you interested in opening, purchasing, or selling a restaurant? CHI Real Estate can help. Get in touch with our team today.