Ontario’s
Restaurant
Industry
Ron Reaman
Vice President, Ontario
Canadian Restaurant and Foodservices Association
• Founded in 1944, the CRFA is one of the largest
business associations in Canada.
• The CRFA represents owner/operators of restaurants,
bars, cafeterias, social and contract caterers and
accommodation, entertainment and institutional
foodservice.
• Offices in Halifax, Montreal, Toronto, Winnipeg and
Vancouver.
• Own and operate CRFA Tradeshow and BC Foodservice
Expo.
Our Goal Should be Your Goal
CRFA Mission
“To create an environment to help
members in every community to
grow and prosper.”
Critical to the Social and Economic Fabric of Canada
• Major contributor to the social and economic
fabric of most communities, including $277
million annually in charitable contributions
• Every dollar spent at a restaurant generates
$1.85 of spending in the rest of the economy
• Every one million dollars in restaurant sales
creates nearly 27 jobs
SOURCE: Statistics Canada and CRFA
One of the most trusted industries
1. Medical research
2. Restaurant
3. Food
4. Tourism
5. Technology
6. Airline
7. Banking
8. Newspapers
9. Radio
10. National retail stores
11. Drug and pharmaceutical
12. Hydroelectric
13. Consumer household product
14. Liquor
15. Magazines
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
Television
Insurance brokerage
Financial planning
Insurance
Automobile
Consumer gas
Cable television
Long-distance telephone
Cosmetic
Chemical
Advertising
Oil
Cellular phone
Tobacco
Source: Reader’s Digest 2010 Annual Poll
About Ontario’s Restaurant Industry
CRFA’s Restaurant Outlook
Survey
Number of Commercial Foodservice
Establishments
• $24 billion in
sales
Drinking
• 7.3 million visits
to restaurants
every day
• 30,200
commercial
establishments
Caterers
2,858
Places
1,177
Full-service
restaurants
12,878
Quickservice
restaurants
13,319
SOURCE: Statistics Canada, NPD Group and CRFA
One of the country’s largest employers
• 404,000 jobs
2011 Private Sector Employment by Industry
Ontario
Manufacturing
794,900
Retail trade
• 6.0% of
Ontario’s
workforce
761,600
Construction
442,500
Restaurants
404,200
Finance and insurance
358,200
Wholesale trade
230,800
Real estate and leasing
143,100
Agriculture
92,100
Utilities
54,600
Mining and oil and gas extraction
28,800
Forestry and logging
7,400
0
200,000
400,000
SOURCE: Labour Force Survey, Statistics Canada
600,000
800,000
1,000,000
A major source of jobs for young people
• 181,000 jobs < 25
• 45% of employment
in foodservice
• 20% of Ontario’s
youth employment
SOURCE: Labour Force Survey, Statistics Canada
Where Canadians Find Their First Jobs
1.
Restaurant/foodservice
22%
2.
Retail
16%
3.
Manufacturing
11%
4.
Delivering newspapers
8%
5.
Agriculture
6%
Q: What was the very first industry that you were employed in?
Base: 1,028 respondents.
SOURCE: Ipsos and CRFA
Most Canadians would prefer to go out to a restaurant
when going out with family/friends.
Go out to a restaurant
28%
Outdoor activities
23%
Go out to movies
12%
Go out shopping
12%
Go out to a concert or other
event
9%
Go to a bar or pub
7%
Go out to a sporting event
5%
Visit cultural sites
4%
Q: The following is a list of different activities that you could do when going out with family and
friends. Please rank these in order of how much you prefer to participate in each. Note: the
results are based on the share of respondents that assigned a rank of ‘one’ to the above activities.
Base: 1,028 respondents.
Source: Ipsos poll, August 2010
Where are we
today?
Economic Indicators - Ontario
Year-over-Year Change
6%
2010
5%
2011
5.0%
2012
4%
3%
2%
3.4%
3.0%
2.6%
2.5%
1.7%
1.6%
1.9%
0.7%
1%
0%
Real GDP
Employment
SOURCE: TD Economics
Retail Sales
Restaurant Sales by Segment - Ontario
Year-over-Year Change
8%
6%
5.9%
4.7%
4%
5.4%
4.1%
2%
0%
-2%
-4%
-6%
-8%
-7.9%
-10%
Total
Commercial
Full-service
restaurants
Quick-service
restaurants
SOURCE: CRFA and Statistics Canada
Caterers
Drinking
Places
Restaurant Sales by Province
Canada: 3.9%
YTD sales as of Nov. 2011 /YTD 2010
BC
-0.2%
Sask.
5.1%
Man.
Alberta
5.6%
7.6%
Ontario
4.7%
Quebec
3.2%
SOURCE: Statistics Canada
Atlantic
3.0%
Number of Locations - Ontario
35,000
35,159
34,339
34,363
32,487
30,000
30,553
30,412
30,233
2009
2010
2011-p
25,000
20,000
15,000
10,000
5,000
0
2005
2006
2007
2008
SOURCE: Statistics Canada
Top 50 Foodservice Companies
Share of Commercial Foodservice Revenue
Share of Commercial Foodservice Units
60%
50%
42%
45%
47%
48%
48% 49%
49%
49% 48% 51% 50%
40%
30%
20%
21%
22% 23%
22% 22%
25% 25%
27%
28%
30%
30%
10%
0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
SOURCE: Foodservice and Hospitality Magazine, Statistics Canada and CRFA
Competition
from Grocery
Stores
Restaurant Industry Share of the Total Food Dollar
55%
United States
Canada
50%
49%
46%
45%
40%
37%
39%
35%
30%
Note: Total food dollar includes spending by consumers, tourists, businesses, institutions and
government at foodservice operations, grocery and convenience stores.
SOURCE: CRFA and National Restaurant Association
Foodservice
Profits
Issue: Labour –Minimum Wages in Ontario
Minimum Wage is Increasing
Much Faster than Inflation
• 43% over between 2004
and 2010.
43.4%
• Labour accounts for at
least a third of sales.
• Due to CRFA’s lobbying
efforts, Ontario froze the
minimum wage in 2011
- saving the industry
$266 million.
11.3%
Minimum Wage
Inflation
Note: Growth from February 2004 to March 2010
Source: HRSDC and Statistics Canada
Rising food and labour costs remain the biggest issues
having a negative impact on the restaurant industry.
Rising food costs
77%
Rising labour costs
67%
Weak economy
58%
Shortage of skilled labour
32%
Decline in tourists
29%
Weak customer demand
29%
Sales taxes
25%
Bad weather
18%
Shortage of unskilled labour
Strong Canadian dollar
Accessing credit/loans from banks
No factors
14%
10%
8%
3%
Q: What factors, if any, are currently having a negative impact on your business?
Base: 333 respondents representing 7,769 units.
SOURCE: CRFA’s Restaurant Outlook Survey
Operating Expense Ratios – Ontario
(as a share of revenue)
Advertising
Depreciation
Other
3.0%
8.9%
Pre-tax profit
3.4%
2.9%
Cost of Sales
35.1%
Utilities
2.9%
Rental and
leasing
7.7%
Repair and
maintenance
2.6%
Labour Costs
33.5%
SOURCE: Statistics Canada
Pre-tax Profit Margins – Ontario
(as a share of revenue)
7%
6%
5%
2001
5.9%
5.8%
2009
5.5%
4.5%
4.5%
4%
3%
2.3%
2%
1%
0%
Total Commercial
Full-service restaurants
SOURCE: Statistics Canada
Quick-service
restaurants
Consumer
Trends
Most Canadians would prefer to go out to a restaurant
when going out with family/friends.
Go out to a restaurant
28%
Outdoor activities
23%
Go out to movies
12%
Go out shopping
12%
Go out to a concert or other
event
9%
Go to a bar or pub
7%
Go out to a sporting event
5%
Visit cultural sites
4%
Q: The following is a list of different activities that you could do when going out with family and
friends. Please rank these in order of how much you prefer to participate in each. Note: the
results are based on the share of respondents that assigned a rank of ‘one’ to the above activities.
Base: 1,028 respondents.
Source: Ipsos poll, August 2010
Why Canadians Eat Out
Indulgence/ treat
43%
I am on the go
40%
Saves me time from having to cook
34%
I don't want to cook
34%
Special occasion
32%
Satisfy cravings
28%
To spend time with my friends/ family
28%
Breaks up my normal routine
26%
To try different foods
14%
Value for money
11%
Inexpensive way to entertain guests
Other
8%
2%
Q: What are your top three reasons for visiting a restaurant?
Note: data are based on share of overall responses.
Base: 1,011 (data include only the respondents who purchased and consumed meals at restaurants).
Source: Ipsos poll, August 2010
What Lies
Ahead?
State of Canada’s Restaurant Industry
A greater share of respondents expect their same-store
sales will grow at a lesser rate over the next six months.
40%
30%
30%
28%
31%
22%
20%
18%
10%
19%
Greater
Lesser
0%
Q2 - 2011
Q3 - 2011
Q4 - 2011
Q: Over the next six months, do you expect your total sales volume (on a same-store basis) will
grow at a greater, lesser, or about the same rate as the previous six months?
Base: 333 respondents representing 7,769 units.
SOURCE: CRFA’s Restaurant Outlook Survey
A majority of operators (53%) plan to keep menu prices
about the same over the next six months.
Higher
46%
Same
Lower
53%
1%
0%
10%
20%
30%
40%
50%
60%
Q: Over the next six months, do you expect your menu prices to be higher, lower, or the same as
the previous six months?
Base: 333 respondents representing 7,769 units.
SOURCE: CRFA’s Restaurant Outlook Survey
Three-quarters of operators plan to keep their employment
level about the same or higher over the next six months.
Higher
12%
About the same
65%
Lower
0%
23%
10%
20%
30%
40%
50%
60%
70%
Q: Over the next six months, is your company's level of employment expected to be higher, lower,
or about the same as the previous six months?
Base: 333 respondents representing 7,769 units.
SOURCE: CRFA’s Restaurant Outlook Survey
Restaurant sales are forecast to moderate in 2012 before
picking up momentum in 2013.
Year-over-Year Change in Restaurant Industry Sales in Ontario
10%
8.5%
8%
6%
4.4%
4%
2%
0%
5.2%
3.3%
2.2%2.1%
5.7%
4.7%
4.3%
3.6%
2.7%
2.7%
0.2%
0.0%
-2%
SOURCE: CRFA’s Restaurant Industry Forecast: 2012-2016
Labour
Shortages
Labour Shortage in Foodservice: Ontario
Number of Jobs
80,000
71,476
60,000
45,468
40,000
20,856
20,000
2,743
0
2010
2015
2020
SOURCE: Canadian Tourism Human Resource Council
2025
What do
Consumers
Want?
Health
The Importance of Health
Health is going to be more important in menu design than it has been
in the past
Completely Agree (wt=5)
Somewhat Agree (wt=4)
Neutral (wt=3)
Somewhat Disagree (wt=2)
Completely Disagree (wt=1)
Source: 2010 BrandSpark International Canadian Shopper Study
CRFA’s Health Living Strategy
Foodservice Industry Vision
for Healthy Living
The foodservice industry supports healthy living and
offers Canadians choices that reflect their individual
commitment to healthy living as relates to
balancing nutrition intake with activity.
CRFA’s Health Living Strategy
• Only 1 in 10 meals is eaten in a restaurant but we
still have an important role to play
• Calories in = calories out
• CRFA will educate and lead our industry as to what
foodservice can do to improve the health of
Canadians
• CRFA and the industry have been an innovator and
leader for a number of years.
• Foodservice industry is a major sponsor of physical
activity and health programs at all levels.
CRFA’s Health Living Strategy
Trans Fats
• Worked with Health
Canada and other
stakeholders to develop
a strategy whereby
trans fats were virtually
eliminated from
foodservice
CRFA’s Health Living Strategy
Sodium Reduction Strategy
• Working with Health Canada and other
stakeholders for over 2 years to develop a
strategy to reduce sodium levels.
• In July, the Sodium Working Group tabled a
strategy and framework to reduce daily intake of
sodium from 3400mg to 2300mg
CRFA’s Health Living Strategy
Menu Labeling
• Introduced Nutritional
Information Program 5 years
ago, 31 chains now participate
• Menu board legislation proposed
in a several jurisdictions – Not
as simple as it seems.
• CRFA working on a national
framework to give customers the
ability to make nutritional
choices prior to purchase.
Legislative Issues – CRFA Working for You
Labour Shortage
Minimum Wage
Employment Standards
Taxes
Beverage Alcohol
Environment
Healthy Living
Workers Compensation
EI
Food Safety
Canadian Restaurant and Foodservices Association
Thank You
Ron Reaman
Vice–President, Ontario
rreaman@crfa.ca
www.crfa.ca