For the last few years, we’ve heard the same story: consumers are under pressure, prices are too high and everyone is looking for value.

I think we’re missing the more important part.

Consumers aren’t simply spending less. They’re becoming much more selective about what they’re willing to pay for.

Heading into 2027, that’s going to matter enormously for restaurant brands and consumer product manufacturers.

The consumer has changed

There is no question household budgets are being squeezed.

Canadian household spending grew faster than disposable income in the first quarter of 2026, pushing the household saving rate down to 3.5%, its lowest level in two years.

But price sensitivity isn’t limited to lower income consumers.

Recent Canadian consumer segmentation research found that 65% of lower income households approach purchases with a price first mentality, but so do 42% of higher income households.

That’s important.

Watching price has become a consumer behaviour, not simply a function of whether someone can afford something.

At the same time, consumers haven’t stopped spending on food experiences they value.

The latest detailed Canadian household spending data shows households spent an average of $12,046 on food, including $3,351 at restaurants. That’s roughly 28% of household food spending going to restaurants.

So this isn’t simply a story about consumers retreating to the cheapest option.

They’re making harder decisions about what is worth their money.

$6 can be expensive. And $6 can be cheap.

A $6 beverage can feel ridiculously expensive. Another $6 beverage can feel like a small reward.

A $20 restaurant meal can feel like terrible value. A $25 meal somewhere else can feel completely justified.

The same thing happens in grocery. Consumers can resist another price increase on an everyday product and then willingly pay more for something that delivers protein, convenience, better ingredients, functionality or a better experience.

Behavioural economics helps explain this. We don’t evaluate prices in isolation. We compare them with what we think something should cost, what the alternatives cost and what we believe we’re getting in return.

Price is what something costs. Value is whether I think it was worth it.

And that difference is becoming increasingly important.

Our prediction for 2027

At SHG, we believe the market will increasingly separate into two groups:

Products and experiences consumers consider replaceable, and those they consider worth paying for.

The middle is where I would be concerned.

Undifferentiated products will face increasing price and promotional pressure.

Restaurant occasions that aren’t distinctive will compete more aggressively with grocery, prepared foods and staying home.

But businesses that give consumers a clear reason to spend through convenience, health, functionality, indulgence, quality or experience should retain considerably more pricing power.

The winners won’t necessarily have the lowest prices. They’ll understand exactly where their customers see value.

Do you actually know where you have pricing power?

This is the question I think CEOs should be asking.

For a franchisor, pricing power can vary by menu item, location, market, daypart and customer.

For a manufacturer, it can vary by SKU, customer, channel, geography and consumer segment.

Most companies have pieces of that information. Very few are connecting all of it.

That’s one of the problems we’re building SHG PerformANT AI™ to solve.

Imagine connecting your sales, pricing, margin, product and customer data with consumer behaviour, demographics, competitive pricing and economic conditions.

Then a CEO could ask:

  • Where do we have room to increase price?
  • Where are we discounting unnecessarily?
  • Which products are becoming vulnerable to substitution?
  • Which customers would actually pay more and why?
  • What happens to volume and EBITDA if we change price?

We already have more consumer and industry data than most executives could ever reasonably digest. The opportunity now is to connect that intelligence to your own business and determine what you should do next.

That’s where I believe the next generation of performance management is heading.