After a big jump in 2023 of 12.1%, restaurant and bar sales may be leveling off.

Bundling the first three months of the year together, sales in the first quarter were down by 0.5% compared to the fourth quarter, but remained 3.7% higher than a year earlier.

Inflation, however, was a key factor with the price of food purchased from restaurants 5.0% higher in the first quarter of 2024 compared to the same quarter in 2023 while the price of alcohol served in licensed establishments was 3.4% higher.

First quarter sales performance varied by subsector. Year-over-year (y/y) sales were 15.3% higher in the “special food services” subsector (think caterers, food trucks, and concessions) compared to a modest increase of 1.8% for “drinking places.” Both full-service (+3.5%) and limited-service restaurants (+4.8%) posted y/y increases in the first quarter.

The sector’s sales are being pushed and pulled by competing forces. On the one hand, population growth and resurgent tourism are supporting spending. On the other hand, inflation and higher interest rates are cutting into the budgets of businesses and households alike.

The latest numbers on restaurant and bar sales, in combination with a pullback in retail sales, provide a sign that consumer fatigue has set in amid the prolonged period of high inflation and elevated borrowing costs. The good news for consumers is that overall inflation rates have edged lower and rate cuts by the Bank of Canada may start as early as this Wednesday.

Answer to the previous trivia question: Wood Buffalo is Canada's largest national park.

Today’s trivia question: When was the term the “tragedy of the commons” used for the first time?