Happy New Year! Coming out of the holiday season, we decided to take a look at restaurant sales in our first 24 of 2025!

Restaurant and bar sales have held up quite well last year despite a broader slowdown in consumer spending under the weight of elevated interest rates and inflation.

Seasonally-adjusted receipts of food services and drinking places in Alberta had a sluggish beginning in 2024 but improved through the second quarter. On a year-to-date (YTD) basis, they grew by 3.8% relative to the first ten months of 2023.

While supported by increases in full-service restaurants, nearly two-thirds of the aggregate gain came from the limited-service eating places category (e.g., fast food restaurants and coffee shops). 

The story is, however, less encouraging if you factor in rising food prices. Adjusting for inflation, real sales* were practically flat on a YTD basis. 

Meanwhile, the accommodation and food services sector have made several advances in the labour market. Up 8.1% YTD, the sector was responsible for nearly 15% of Alberta’s aggregate job gains through November 2024.

Higher sales and employment are positive signs for the restaurant and bar sector but the lackluster inflation-adjusted revenue story suggests that Albertans are still reeling from past interest rate hikes and sticky inflation.

We expect consumer spending to pick up this year, particularly in the second half after the Bank of Canada’s terminal rate drops to 2.5%.  

*Deflated by Alberta CPI Food Purchased From Restaurants

Answer to the previous trivia question: Canada’s economy (as measured by real GDP per capita) has contracted in eight of the last nine quarters

Today’s trivia question: How many dates are scheduled for Bank of Canada interest rate announcements in 2025?