Work from home could cost food service industry billions
Restaurants in urban cores, coffee shops, pubs will likely be hit worst, experts say
The increase in Canadians working from home could have a huge financial impact on the food service industry, to the tune of billions of dollars lost by 2021.
A new survey shows that more and more Canadians see telecommuting as a permanent option, and that means fewer customers for coffee shops, lunch spots, pubs and more in urban centres. This will contribute to $20 billion in lost revenue in the upcoming year for the industry hard-hit by the COVID-19 pandemic, the report predicts.
Almost 11,000 Canadians were surveyed about working from home and food expenses at the end of July by the Agri-Food Analytics Lab at Dalhousie University, in partnership with research firm Caddle.
Almost a quarter of the respondents, or 23.6 per cent, said they plan to work from home more often a year from now, while another 40 per cent either said they didn’t know, or they don’t know what they will be doing a year from now. Quebec had the highest percentage of respondents saying they plan to work from home more often a year from now, at 28.9 per cent, while Ontario came second at 24.8 per cent. As well, millennials (born 1981-1996) had the highest percentage of any demographic, at 25.3 per cent.
Of those who plan to work from home more often, 57 per cent plan to spend less at restaurants because of it.
Before the pandemic, 36.8 per cent of the survey’s respondents were going to arestaurant for a meal or a break at least twice a week. When the pandemic ends, only 23.3 per cent of respondents plan to continue this — a significant drop, said Sylvain Charlebois, the lead author and Dalhousie professor in food distribution and policy.
“That’s becoming more and more of a legitimate option for a greater number of employers and actually will have a huge impact on the food industry and its architecture,” he said.
Close to 22 per cent of respondents
said their employers are planning to allow people to work from home more often, and of those respondents, more than half intend to work from home permanently, with some considering relocating because of it. The majority of these — 70.1 per cent — plan to spend much less time and money at restaurants.
Charlebois said the impact of more Canadians permanently working from home and potentially moving outside of urban centres will be significant on the food industry, especially on restaurants in urban cores that once relied on commuting workers.
According to an analysis of Statistics Canada data in the report, before the pandemic, the ratio in sales between food retail (such as grocery stores) and food service was around 59/41 per cent. But in May, that ratio was closer to 91/9 per cent. Though monthly food retail sales didn’t change much, going from around $7.7 billion monthly pre-pandemic to $7.8 billion in May, monthly food service sales went from $5.3 billion monthly pre-pandemic to $891 million in May, according to the report’s analysis based on Statistics Canada. Of course, that’s after the early pandemic spikes which saw food retail sales jump thanks to Canadians hoarding toilet paper, flour and more.
Charlebois said now that grocery store hoarding has settled, Canadians aren’t necessarily spending much more at the grocery store than they were before — dollars spent at a restaurant aren’t equal to dollars spent on groceries, he explained, and Canadians are just generally spending less on food.
“What we’re showing is that the pie has shrunk.”
As well, Charlebois thinks people may be wasting food less by cooking at home.
The report estimates the ratio of food retail sales to food service sales will be around 70/30 by July 2021, which would represent a loss of around $20 billion to the food service industry within the next 12 months — and approximately 30 per cent of that loss will be because of telecommuting, the report suggests.
David Lefebvre, vice-president of Restaurants Canada, said the report’s predictions feel conservative based on what his organization is hearing. After all, it’s a snapshot, he said, and the fact that 40 per cent of respondents don’t know where they’ll be working in a year indicates that the number of people who plan on working from home permanently will likely continue to rise.
“We feel that as the situation unfolds, you will have more people working from home for a longer period of time,” he said.
Lefebvre said the food service industry normally sees around $98 billion in sales annually, but by his organization’s prediction, that number will have fallen by around $30 billion when 2020 ends. The “worst thing” will be if restaurants are forced to close again, he said.
Charlebois said he thinks restaurants in urban cores, especially coffee shops and lunch spots, will be hardest-hit — he said people will continue to go to restaurants, but less often and for different reasons.
“The pandemic is clearly transformational,” said Charlebois. “I think it’s going to change many economic sectors, including food service.”
Lefebvre said restaurants in the urban cores will overall be disproportionately affected, but especially sit-in restaurants that don’t offer delivery or takeout. As well, coffee shops and pubs where people gather after work will be greatly affected, he said.