From the Editor: Business Confidential

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Is the Canadian economy sitting on the precipice of a recession?

Is the Canadian economy sitting on the precipice of a recession? Are Canadians starting to tighten their collective belts, and as a result, choosing to eat out less often? With only a few months left in 2008, it’s anybody’s guess as to what foodservice operators can realistically expect.

The signs of a slowdown have been glaring for months: fuel prices are at an all-time high; food costs continue to escalate; and massive layoffs have been announced at iconic companies such as Air Canada and General Motors.

Still, despite shifting trends, many analysts believe Canada has staved off a recession. According to the Economist consumer demand will remain strong in 2008 and 2009 and inflation will be subdued by the continuing strength of the Canadian dollar. Out west, buoyed by the 2010 Winter Olympics, restaurants and hotels are sprouting like mushrooms; and in Ontario, a province recently branded as a “have-not,” new restaurant concepts continue to hatch on a regular basis and luxury hotel development has been red hot.

In the U.S., however, the recession has been making headlines for several months and changes have been dramatic, punctuated by consumers losing their homes and jobs. Similarly, the foodservice industry has been rocked by a series of restaurant casualties. According to a survey by Nielsen Co., which tracks consumer habits, approximately 63 per cent of American consumers are cutting spending due to rising gas prices, up 18 per cent from a year ago. And a total of 78 per cent are combining shopping trips, while 52 per cent are eating out less often.

Whether Canada will be hit full-throttle by a recession this year or early into 2009 or simply stunted by an economic slowdown remains to be seen. But there are some valuable lessons to be learned from what’s happening south of the border. Every recession is unique in that it brings to light a host of different consumer behaviour patterns. For example, during a recession consumers typically tend to trade down. Those accustomed to eating at fine-dining establishments may opt to dine at casual eateries, while consumers that generally patronize casual eateries might choose to eat at QSRs more often.

But it’s important to realize the eating habits of today’s consumers are notably different from those in prior recessions. While people become more careful during an economic downturn, holding off on making major purchases and switching from branded products to discount goods, will consumers raised on eating outside the home or regularly picking up food to be consumed at home completely change their eating behaviours? Smart operators know it’s prudent to prepare for the worst. But that’s not always about cost-cutting measures or playing the waiting game. More often than not, it’s about understanding the importance of reinventing your business; coming up with innovative approaches to your menu and marketing them accordingly; providing customer value (and quality) for their money and focusing on well-thought out promotions that create a buzz. Ultimately, that’s what’s going to bring customers through your door, recession or not.

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Rosanna Caira
Rosanna Caira is the editor and publisher of Kostuch Media’s Foodservice and Hospitality, and Hotelier magazines. In her capacity as editor of Canada’s two leading hospitality publications, Rosanna directs the editorial and graphic content of both publications, and is responsible for the editorial vision of the magazines, its five websites as well as the varied tertiary products including e-newsletters, supplements and special projects. In addition to her editorial duties, Rosanna also serves as publisher of the company, directing the strategic development of the Sales and Marketing, Production and Circulation departments. Rosanna is the face of the magazines, representing the publications at industry functions and speaking engagements. She serves on various committees and Boards, including the Board of Directors of the Canadian Hospitality Foundation. She is a recipient of the Ontario Hostelry’s Gold Award in the media category. In 2006, Rosanna was voted one of the 32 most successful women of Italian heritage in Canada. Rosanna is a graduate of Toronto’s York University, where she obtained a BA degree in English literature.

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