According to a report from Statistics Canada, total sales at Canadian food and drink establishments rose 0.1% in July to 8.52 billion Canadian dollars.
This was the fifth month in a row that sales had gone up, and they were 6.8% higher than a year earlier.
The agency also said that menu prices were 3.2% higher than in July 2024, and prices for alcoholic drinks served in licensed places went up 3.4%.
The small rise in July keeps the steady rise going through spring and early summer. Full-service restaurants saw the biggest increase among all categories, with sales up 0.4% from June when adjusted for seasonality.
Special food services, like caterers and mobile vendors, went up by 1.4%. Restaurants with limited service went down 0.3%, and bars and pubs went down 1.9%.
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Every major category except bars saw gains from one year to the next. Full-service rose 7.3% and quick-service rose 6.5%.
Performance in different regions was not the same. Sales went up in five provinces in July.
Ontario had the biggest dollar increase, up 0.3% from the previous month. Manitoba came in second with 1.0%.
British Columbia had the biggest drop in dollars, down 0.3%. The Northwest Territories saw the biggest rise among the territories, going up 3.9%.
Statistics Canada said that the numbers are current dollars that have been adjusted for the season and may change as more data comes in.
The fact that nominal sales are going up and menu prices are going up at a moderate rate suggests that demand is still strong even though household budgets are getting tighter.
The sector probably saw some increase in real volumes or a shift toward higher ticket dining, since year over year sales growth was faster than the reported change in restaurant prices.
However, direct comparisons are not exact because of differences between current-dollar sales and price indexes.
Even though operators are dealing with rising labour and occupancy costs, steady growth in discretionary services can help keep jobs in the hospitality and related industries.
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Canada’s GDP rose 1.3% in the second quarter because of domestic travel, and it rose 0.2% in July because goods producers bounced back. Together, these numbers show that the economy is still strong enough to support restaurant demand.
The difference between full-service and limited-service restaurants is interesting.
As group outings and tourism return to normal, full-service restaurants are seeing more customers. On the other hand, quick-service chains seem to be dealing with customers who are more sensitive to price.
The drop in sales at drinking places is in line with a larger trend of people being careful with their discretionary spending at the end of the month and the effect of promotions that can change bar sales from one month to the next.
Investors will be watching to see if this trend continues into late summer, when the patio season usually ends and the prices of food and drinks can change.
The 3.2% rise in restaurant food prices in July was much lower than last year’s highs, but it was still enough to test how much people are willing to pay, especially for families with low incomes.
Operators who can increase check sizes through add-ons or loyalty programs without pushing customers away may be able to keep their margins.
People who sell more alcohol will have a harder time balancing things out if bar traffic stays low and drink prices go up.
It also matters for publicly traded chains and suppliers how different provinces are.
Brands with a lot of stores in big cities can benefit from Ontario’s steady growth, while Manitoba’s stronger monthly rise shows how important it is to have a variety of regional networks.
A small drop in British Columbia’s economy each month may be due to local economic problems or the timing of tourism flows.
Franchise systems that rely on a lot of national exposure can help smooth out these ups and downs, but single-province ideas may feel them more strongly.
A spending mix that includes a lot of services can keep some parts of inflation from going down, which means that central bankers should be careful as they look at the direction of rate cuts.
At the same time, the slow rate of nominal growth suggests that restaurants are growing without getting too hot, which would cause prices to rise again.
The next few releases will show whether the slow business at quick-service restaurants and bars in July was just a fluke or the start of a cooler pattern for eating out in late summer.
