FOODSERVICE

LABOUR SHORTAGE:
181,000 employees
needed by 2015
FACTS 2OO7
Market Review and Forecast $30.00

WESTERN GROWTH:
sales up 37% in Western
Canada since 2000

DEMOGRAPHICS:
38% will be aged
50+ by 2016

TOURISM: International
travel down 31%
since 2000

MEALTIMES: 22% of
restaurant meals
eaten at breakfast
 NEW FROM
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profit to your bottom line.

BEER BATTERED
• Choose Haddock, Cod, Pollock,
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RAW LOLIGO SQUID • Made with genuine Alexander
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• Tender Loligo – sweet and mild tasting
• Light crispy coating with
• Available in tubes, and tubes and tenta-
back-of-the-house appearance
cles
• Fully cleaned, all natural
MULTI-GRAIN
TILAPIA FILLETS
• Premium quality, hand-cut fillets
• Delicious, crunchy multi-grain
breading
• Good source of dietary fibre
• Low in saturated fat, no trans fat
• Easy to prepare – oven or retherm

PRIMAVERA ROLLS
• Seafood, rice and vegetables in a
delicate sauce
• Available in Haddock or Salmon
• Healthy and delicious menu choice
• Low in saturated fat, no trans fat

SEAFOOD SKEWERS
• Unseasoned for maximum menu flexibility
• Cook in minutes
• Four different Skewers to choose from:
• Hand-cut Haddock or Salmon fillets
with peppers
• Premium quality IQF Shrimp
• Delicious Shrimp & Scallop combo

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KC7044 w w w. h i g h l i n e r f o o d s e r v i c e . c o m
 FIVE KEY TRENDS

!n
Western Growth
A booming economy and growing population TOP-LINE TREND TABLE OF CONTENTS
will make Western Canada the hottest foodservice Page 9
e market in the country . . . . . . . . . . . . . . . . . . . . . . . .
State of the Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Tourism Challenges TOP-LINE TREND
International tourism to Canada is on the decline, Page 17 CRFA’s 2007 Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
but domestic tourism is taking flight . . . . . . . . . . . . .
CRFA’s Long Term Forecast . . . . . . . . . . . . . . . . . . . . . . . . 7
Labour Shortage
A growing labour shortage is making it difficult TOP-LINE TREND
to recruit and retain employees . . . . . . . . . . . . . . . . . Page 19 Western Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Changing Mealtimes Prairie Provinces . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Time-starved consumers are eating more restaurant
meals off-premise and relying on restaurants for more TOP-LINE TREND
breakfasts and snacks . . . . . . . . . . . . . . . . . . . . . . . . Page 25 Ontario and Quebec . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Demographic Shift Atlantic Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Canada’s aging population is more likely to eat TOP-LINE TREND
at full-service restaurants, and is more concerned Page 28 Tourism Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
with nutrition and food quality . . . . . . . . . . . . . . . . .

Employment Contribution . . . . . . . . . . . . . . . . . . . . . . . . 17

Labour Shortage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Profit Margins . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

S Foodservice Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

a Household Spending . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Foodservice sales
on Canada’s foodservice industry will reach a record $53 billion
in sales in 2007. This marks an increase of 4.1% over 2006, or Changing Mealtimes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ice
modest growth of 1.4% when adjusted for menu inflation.
at
The past few years have been tumultuous ones for Canada’s Restaurant Visits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
62,600 restaurants, bars and caterers. In the seven years leading
up to 2000, real commerical foodservice sales growth averaged
4.4% per year. In the seven years since, real sales growth has Menu Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
fallen to an average of 1.2% per year. Looking ahead, real
commerical foodservice sales are expected to grow by an average Demographic Shift . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
of just 1.3% per year through 2010.

POWERPOINT SLIDES CANADIAN RESTAURANT AND FOODSERVICES ASSOCIATION

Foodservice Facts is available in PowerPoint format 316 Bloor Street West, Toronto, Ontario M5S 1W5
for CRFA members only:
Phone: (416) 923-8416 or 1-800-387-5649
Deluxe Edition – A ready-made presentation with all the charts and Fax: (416) 923-1450
graphs in Foodservice Facts, plus text slides with key points in bullet E-mail: info@crfa.ca Website: www.crfa.ca
form. $250.00 plus applicable taxes.
Editor: Jeni Armstrong
Basic Edition – Includes all the charts and graphs in Foodservice Facts. Economist: Chris Elliott
$130.00 plus applicable taxes. VP, Research and Communications: Jill Holroyd
DA
1 To order the slides, visit CRFA’s online catalogue at www.crfa.ca/catalogue Copyright 2007. All rights reserved including the right of reproduction
2 or call 1-800-387-5649 ext. 4215. CRFA accepts all major credit cards. in whole or in part in any form.

m w w w.c r fa .c a — FO O D S E RV I C E FACTS 20 07 01
MC_CRFA_AD_MAR07.indd 1
3/19/07 3:19:24 PM
STATE OF THE INDUSTRY
• Rising disposable income pushed foodservice sales past the $50-billion mark in 2006
• Foodservice gains market share from retail
• Limited-service restaurants and caterers dominate sales growth in 2006

Canada's foodservice industry rebounded in 2006 with a solid

5.6% increase in total sales to reach $51.4 billion – a welcome Real Change in Total Foodservice Sales
change from the lacklustre growth of 2005. Adjusted for menu
5% 4.7%
inflation, real foodservice sales advanced 2.9% in 2006.
This recovery was driven by increased disposable income, 4%
which grew 6.1% in 2006 as tax cuts put more money in the
3% 2.9%
pockets of consumers. At the same time, Canada’s unemployment 2.5% 2.6%
rate fell to a 32-year low. With more Canadians in the workforce, 2%
foodservice spending increased. 1.4%
1.0%
1%
Looking back on 2006, several themes emerge: 0.1%
0%
-0.1%
Caterers remain strong -1%
Contract and social caterer sales rose a solid 7.7% in 2006 -1.2%
following a 17.6% gain between 2003 and 2005. Strong mining -2%
1999 2000 2001 2002 2003 2004 2005 2006-p 2007-f
and natural resource activity resulted in significant gains at
remote foodservice camps, and bolstered caterer sales 9.2% in Source: CRFA, Statistics Canada p - preliminary; f - forecast
2006. Among non-commercial foodservice segments, growth Note: Real refers to inflation-adjusted growth.
at remote foodservice camps and at health care facilities lifted
institutional foodservice 5.2%.
Healthy demand for foodservice lifted the foodservice share of
Rising gas prices fuel limited-service sales total food sales in Canada from 40.4% in 2005 to 41.4%
After a sluggish 2005, sales at limited-service restaurants jumped in 2006. This remains well below the 47.9% market share
9.1% due to strong consumer demand across the country. captured by the foodservice industry in the U.S., however,
Faced with rising gasoline prices, many consumers opted to where consumers enjoy higher disposable income and no federal
“trade down” from full-service restaurants, which saw a 3.9% tax on restaurant meals.
increase in sales for the second year in a row.

Bar sales fizzled

Canadians’ thirst for bars Foodservice Share of the Total
and nightclubs continued Food Dollar — Canada
to wane in 2006, as total
sales in this segment fell 43% Foodservice Share of the
4.4%. Since 2000, the U.S. Food Dollar: 47.9% - 2004
number of taverns, bars 42.1%
42% 41.9%
and nightclubs has 41.5%
41.5%
dropped 18.0%, for a loss 41.3%
41.4%
of 1,096 units. These losses 41%
40.5%
have been felt all across 40.8%
Canada. An aging 40.6% 40.4%
40%
population, smoking bans
and shrinking profit
margins led some operators to convert to full-service restaurants, 0%
while others were forced to close their businesses permanently. 1998 1999 2000 2001 2002 2003 2004 2005 2006-p 2007-f
p - preliminary; f - forecast
Customers savour convenience
Source: CRFA, Statistics Canada and the National Restaurant Association
Busy consumers have responded favourably to the convenience
Note: Total food dollar includes spending by consumers, tourists, businesses,
of foodservice establishments in retail stores, resulting in average institutions and government at foodservice operations, grocery and convenience stores.
annual growth in this segment of 8.5% since 2001.

For the impact of tourism on foodservice sales, see page 17.

04 FO O D S E RV I C E FACTS 20 07 — w w w.c r fa .c a
 STATE OF THE INDUSTRY
• The average commercial foodservice unit posted annual sales of $673,404 in 2006 – up 5.9% over 2005
• Pre-tax profits average just $25,589, or 3.8% of operating revenue

• Full-service restaurants had the highest average unit • Average unit volume for contract and social caterers,
volume in 2006 as slow sales were partially offset by a which saw exceptional growth of 16.0% in 2005, moderated
decline in the number of establishments. to 2.9% in 2006.

• Limited-service restaurants posted the strongest growth in • Taverns, bars and nightclubs had the lowest average unit
average unit volume of all commercial segments in 2006, volume in 2006, combined with the weakest sales growth
following weak gains in 2005. of all commercial segments (2.8%).

Average Unit Volumes 1 - Canada

2006 Average % Change % Change
Unit Volume ‘06/’05 ‘05/’04
Full-service Restaurants $750,535 5.3% 4.8%
Limited-service Restaurants $671,507 8.0% 1.5%
Contract and Social Caterers $516,979 2.9% 16.0%
Taverns, Bars and Nightclubs $494,773 2.8% 4.4%
Total Commercial Industry $673,404 5.9% 4.6%
Source: Statistics Canada
1 Average unit volumes are calculated as the total volume of sales divided by the number
of units from the Survey of Restaurants, Caterers and Taverns by Statistics Canada

Market Share by Segment

2006 2006 Per Average Annual
Market Capita Sales Growth
Share Spending 1 Since 2001 2

Commercial Foodservice 78% $1,228 3.5% Operations whose primary business is food and beverage service.

Includes licensed and unlicensed fine-dining, casual and family

Full-service Restaurants 36% $573 3.5% restaurants as well as restaurant-bars.
Includes quick-service restaurants, cafeteria, food courts and
Limited-service Restaurants 31% $481 4.1% take-out and delivery establishments.
Includes contract caterers supplying food services to airlines,
Contract and Social Caterers 6% $95 3.8% railways, institutions and recreational facilities, as well as social
caterers providing food services for special events.
Includes bars, taverns, pubs, cocktail lounges and nightclubs primarily
Taverns, Bars and Nightclubs 5% $79 -0.2% engaged in serving alcoholic beverages for immediate consumption.
These establishments may also provide limited food service.
Self-operated foodservice in establishments whose primary business
is something other than food and beverage service. Branded
Non-Commercial Foodservice 22% $348 4.8% restaurants in any of these settings are counted in commercial
restaurant sales if they are owned by the restaurant chain.

Accommodation Foodservice 10% $157 4.4% Foodservice in hotels, motels and resorts.

Foodservice in hospitals, residential care facilities, schools, prisons,

Institutional Foodservice 6% $95 5.8% factories, remote facilities and offices. Includes patient and inmate meals.
Foodservice operated by department stores, convenience stores and
Retail Foodservice 2% $31 8.5% other retail establishments.
Includes vending, sports and private clubs, movie theatres, stadiums
Other Foodservice 4% $64 3.0%
and other seasonal or entertainment operations.

Total Foodservice 100% $1,576 3.8% Includes commercial and non-commercial foodservice.
1
Per capita spending is calculated by dividing foodservice sales by the total population.
2
Growth rate is based on compounded annual sales.

w w w.c r fa .c a — FO O D S E RV I C E FACTS 20 07 05
CRFA’S 2007 FORECAST
• Canada’s foodservice industry will grow to $53.5 billion in sales in 2007
• Accommodation foodservice will lead all segments in growth
• Foodservice sales will be restrained by weaker growth in disposable income

Total foodservice industry revenues in Canada will grow 4.1%

to reach a record $53.5 billion in 2007, fueled by rising Total Foodservice Sales
household income in Western Canada. Adjusted for menu ($ billions)
inflation, total foodservice sales will grow just 1.4%. $60
$53.5
$51.4
$48.7
• Accommodation foodservice is set to lead the way with $50 $46.9
$44.0 $44.5
year-over-year sales growth of 5.1% in 2007. This is $41.4 $42.7
$38.7
largely due to an expected increase in domestic travel, $40 $37.1
which accounts for 13.9% of total foodservice revenue.
$30
• Sales at full- and limited-service restaurants, which $20
account for two-thirds of total foodservice industry sales,
will see steady growth of 4.5% and 4.3%, respectively. $10

• Robust development of natural resources – particularly in $0

1998 1999 2000 2001 2002 2003 2004 2005 2006-p 2007-f
Western Canada – will boost the demand for foodservice at
remote camps, lifting total caterer sales 2.9% in 2007. Source: CRFA and Statistics Canada p - preliminary; f - forecast

• Sales at taverns, bars and nightclubs will remain weak in 2007,

as a decline in units and sluggish consumer demand limit
this segment’s recovery from a 4.4% drop in sales in 2006.
• The convenience of in-store foodservice – such as department
store restaurants – will lift retail foodservice by 4.1% in 2007.
CRFA’s 2007 foodservice forecast of 4.1% growth marks a
slowdown from 2006, when foodservice sales grew by 5.6%.
This slowdown will be due largely to a moderation in disposable
income growth across Canada, which will grow 5.2%.

Foodservice Sales Forecast 2007

2007 Forecast % Change % Change
(Millions of Dollars) ‘07/'06 ‘06/'05

Full-service Restaurants $ 19,549.0 4.5 % 3.9 %

Limited-service Restaurants $ 16,359.5 4.3 % 9.1 %
Contract and Social Caterers $ 3,197.0 2.9 % 7.7 %
Taverns, Bars and Nightclubs $ 2,625.7 2.1 % -4.4 %
TOTAL COMMERCIAL $ 41,731.2 4.2 % 5.6 %

Accommodation Foodservice $ 5,398.0 5.1 % 6.5 %

Institutional Foodservice $ 3,174.1 2.2 % 5.2 %
Retail Foodservice $ 1,055.9 4.1 % 7.1 %
Other Foodservice $ 2,150.4 3.1 % 3.8 %

TOTAL NON-COMMERCIAL $ 11,778.4 3.9 % 5.7 %

TOTAL FOODSERVICE $ 53,509.6 4.1 % 5.6 %

Menu inflation 2.7 % 2.7 %

REAL GROWTH 1.4 % 2.9 %

Source: CRFA's InfoStats, Statistics Canada, fsSTRATEGY and Pannell Kerr Forster * For historical data, visit CRFA's website at www.crfa.ca ** See page 5 for definitions.

For CRFA’S foodservice forecasts by province, see pages 9 – 15.

06 FO O D S E RV I C E FACTS 20 07 — w w w.c r fa .c a
 CRFA’S LONG TERM FORECAST
• Commercial foodservice will post steady growth through 2010
• Above-average growth forecast for full-service restaurants

Commercial foodservice sales in Canada will register steady,
moderate sales growth between 2007 and 2010, averaging 3.9%
per year, or 1.3% adjusted for inflation. By 2010, total restaurant,
caterer and bar sales will surpass $46 billion annually (excluding
non-commercial foodservice).
After factoring out inflation and population growth, foodservice
sales will remain relatively flat, with average annual real per
capita growth of just 0.5% between 2007 and 2010. This marks
a sharp deceleration from the 3.5% average annual real per
capita growth registered between 1997 and 2000.

While income and employment will remain the dominant

CRFA’s Foodservice Forecast: Change in Sales
forces driving foodservice demand, commercial foodservice
(2007-2010)
sales will continue to underperform income growth, limited
by the following factors:
Full-service 4.2%
Restaurants
A plateau in the number of units
Total Commercial 3.9%
In the past five years, the number of foodservice units fell
Foodservice 1.9%, compared to a 4.1% increase between 1997 and 2000.
In the coming years, it is expected that the number of unit
Limited-service 3.8%
Restaurants openings will offset closures, maintaining the total population
of restaurants, bars and catering locations between 62,500
Contract and Social 3.6% and 63,500 units to 2010.
Caterers

Taverns, Bars and 1.7%

Slower economic growth in Ontario
Nightclubs Ontario accounts for nearly 40% of Canada’s foodservice
0% 1% 2% 3% 4% 5% industry, but foodservice sales growth in the province has fallen
below the national average due to significant job losses in the
Source: CRFA’s Long Term Forecast
manufacturing sector, a decline in tourists and slow disposable
income growth. Between 2007 and 2010, sluggish economic
growth and a further decline in tourism will continue to
• Full-service restaurants will post above-average growth of restrain foodservice sales.
4.2% per year between 2007 and 2010 as an aging population
drives sales in this segment. Caterers will benefit from
increased contracting out and growth in remote foodservice. Change in Commercial Foodservice Sales
• Over the next four years, limited-service restaurants will FORECAST
8%
7.3%
advance an average 3.8% per year, on par with the Foodservice Sales
6.9%
industry average. 6.1% Disposable Income
6% 5.6% 5.2%
• Taverns, bars and nightclubs will post the weakest growth 4.6% 4.7% 4.3% 4.4%
4.2%
of all commercial foodservice segments as more Canadians 4.0% 4.2%
4%
choose to socialize at home. Restrained consumer demand 3.6% 3.7% 4.2% 4.2% 3.6% 3.4%
3.5%
will limit average annual sales growth at bars to 1.7%
through 2010. 2% 2.3%
1.5%

0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: CRFA's Long Term Forecast

For the impact of tourism on

foodservice sales, see page 17.

CRFA uses an econometric model to forecast commercial foodservice sales

by using the Conference Board of Canada’s forecasts of disposable income,
real GDP, employment and tourism.

w w w.c r fa .c a — FO O D S E RV I C E FACTS 20 07 07
 TOP-LINE
WESTERN GROWTH TREND

• British Columbia and Alberta take top spots for foodservice sales growth
• Foodservice sales in Western Canada have grown 37.3% since 2000

Western Canada will lead the country with the strongest
economy and fastest employment growth in 2007. Foodservice
sales in British Columbia and Alberta will mirror this trend –
growing 5.1% and 5.4% respectively – making these the top
two provinces in terms of foodservice growth.
• Foodservice sales jumped 8.6% in B.C. and Alberta in 2006,
bringing total sales in the two provinces to $11.5 billion.
• Alberta took top spot for foodservice growth in 2006,
with sales rising an impressive 10.9% compared to
B.C.’s robust 6.9%.
• Strong provincial economies have created severe labour
shortages in B.C. and Alberta. Labour shortages will continue
to suppress potential foodservice sales as operators are
forced to reduce hours of operation because they are
chronically short-staffed.
• Residents of B.C. and Alberta enjoy above-average disposable
income and no provincial sales tax on meals, leading to
the highest average household spending at restaurants and
bars in Canada (see page 24).
• Since 2000, a growing population and healthy economic
activity in B.C. and Alberta have spurred a 2.8% increase
in the number of commercial foodservice establishments,
compared to a 3.2% decline in units in the rest of Canada.
• Foodservice operators in the western provinces report an
average unit volume of $728,456 per year – $55,052 more
than the national average.

Regional Share of Total Commercial Economic Forecast - 2007

Foodservice Sales in 2006
4.5%

4.0% 3.9%
Atlantic Canada Western Canada
5.5% Prairie Provinces
3.5%
Ontario/Quebec
Western Canada 3.0% Atlantic Canada
3.0% 2.8%
28.9%
2.5% 2.4%
2.0%
2.0%
1.5%
1.5%

1.0% 0.9%

Prairie Provinces 0.5%

5.0%
Ontario and Quebec 0.5%
60.6%
0.0%
Real GDP Growth Employment Growth

Source: Statistics Canada Source: Conference Board of Canada

Commercial Foodservice: Western Canada

Chain Independent Pre-tax Profit
Growth Growth 2006 Sales Average Unit Units Share of Share of (% of operating Bankruptcy
in '07 1 in '06 1 (in millions) Volume 2 Units Units revenue) Rate

Alberta 5.4% 10.9% $ 4,993 $ 747,498 6,924 44.4% 55.6% 5.8% 0.5%
British Columbia 5.1% 6.9% $ 6,552 $ 714,609 9,601 32.2% 67.8% 3.2% 0.5%
Western Canada 5.2% 8.6% $ 11,545 $ 728,456 16,525 37.1% 62.9% 4.3% 0.5%
Canada 4.2% 5.6% $ 40,064 $ 673,404 62,666 37.9% 62.1% 3.8% 1.1%
1
Growth rates are undjusted for menu inflation
2
Data are based on unit counts from the Monthly Restaurant, Caterers and Taverns Survey
Source: Statistics Canada, CRFA's Long Term Forecast and ReCount/NPD Group

w w w.c r fa .c a — FO O D S E RV I C E FACTS 20 07 09
 PRAIRIE PROVINCES
• Foodservice sales in the Prairie provinces moderate to just below the national average
• Profit margins in the Prairie provinces are the highest in the country due to below-average
rental and leasing costs

2005 Operating Profit Margins

(% of operating revenue)
6% 5.6%

5%
4.3%
4% 3.7%
3.3%
3%

2%

1%

0%
Western Canada Prairie Provinces Ontario/Quebec Atlantic Canada

Source: 2007 Foodservice Operations Report, Statistics Canada and CRFA

2006 was a strong year for foodservice sales in the Prairie
provinces, and a welcome change from 2005, which saw sales
growth dip into negative territority. After a year of recovery,
Regional Share of Total Commercial
growth is expected to moderate in 2007.
Foodservice Sales in 2006
• Saskatchewan, which saw flat foodservice sales in 2005,
Atlantic Canada
recorded 9.9% growth in 2006 – second only to Alberta. 5.5%
Growth in 2007 will be slightly below the national average.
Western Canada
• Foodservice sales in Manitoba posted a strong recovery in 28.9%
2006, with 6.2% growth compared to a 4.0% decline in
2005, driven by rising employment and pent-up consumer
demand. Sales are poised to grow 3.9% in 2007.

• A significant milestone was achieved in 2006 as Manitoba’s

and Saskatchewan’s foodservice industries surpassed $1
billion in foodservice sales. Prairie Provinces
Ontario and Quebec
5.0% 60.6%
• Like provinces to the west, Saskatchewan and Manitoba
will increasingly feel the effects of labour shortages
in foodservice. Source: Statistics Canada

Commercial Foodservice: Prairie Provinces

Chain Independent Pre-tax Profit
Growth Growth 2006 Sales Average Unit Units Share of Share of (% of operating Bankruptcy
in '07 1 in '06 1 (in millions) Volume 2 Units Units revenue) Rate

Manitoba 3.9% 6.2% $ 1,012 $ 573,806 1,817 40.7% 59.3% 5.3% 1.5%
Saskatchewan 3.6% 9.9% $ 1,003 $ 625,910 1,723 40.7% 59.3% 6.0% 1.4%
Prairie Provinces 3.8% 8.0% $ 2,014 $ 598,472 3,540 40.7% 59.3% 5.6% 1.4%
Canada 4.2% 5.6% $ 40,064 $ 673,404 62,666 37.9% 62.1% 3.8% 1.1%
1
Growth rates are undjusted for menu inflation
2
Data are based on unit counts from the Monthly Restaurant, Caterers and Taverns Survey
Source: Statistics Canada, CRFA's Long Term Forecast and ReCount/NPD Group

w w w.c r fa .c a — FO O D S E RV I C E FACTS 20 07 11
 ONTARIO AND QUEBEC
• Declines in manufacturing and tourism restrain foodservice growth in Ontario and Quebec

Collectively, Ontario and Quebec account for the largest share

of Canada’s foodservice industry, generating 60.6% of national
foodservice sales.
As Canada’s two largest provincial economies, heavily reliant
on manufacturing, Ontario and Quebec are sensitive to the high
Canadian dollar, which limits exports, and economic conditions
in the U.S., which are expected to be weak in 2007.
As a result, job and income growth in Ontario and Quebec
will remain sluggish in 2007, and foodservice sales in these
provinces will underperform the national average for the sixth
time in the past seven years.

Economic Impact of a High Canadian Dollar Regional Share of Total Commercial

(decline in manufacturing and tourism since 2002) Foodservice Sales in 2006
0% Atlantic Canada
5.5%
-5% -2.5%

Western Canada
-10% -8.9% 28.9%

-15%
-15.4%
-20%
Ontario and Quebec
-25% Prairie
Rest of Canada
Provinces
5.0%
-30%
-29.6% Ontario and
-35% Manufacturing Jobs International Tourists Quebec
Source: Statistics Canada Source: Statistics Canada 60.6%

• In both Ontario and Quebec, growth at limited-service
restaurants and caterers offset weaker sales at full-service
restaurants and a sharp decline in bar sales in 2006.
• Economic growth in both provinces will be weighed down
in 2007 by the struggling export industry. Wage growth,
combined with a $3.2-billion pay equity ruling for 360,000
public sector workers, will boost income and consumer
spending in Quebec. In Ontario, however, massive job cuts
and plant closings will limit income and job growth.
• In 2006, foodservice sales in Ontario bounced back 5.1%,
following 3.6% growth in 2005. In 2007, foodservice
sales growth will be limited to 4.0%, due to a moderation
in disposable income growth and a decline in the number
of international tourists.
• Although Quebec began 2006 on a strong note, sluggish
consumer spending at bars and full-service restaurants in
the second half of 2006 restrained total sales growth to 3.2%.
Higher disposable incomes in 2007 are expected to lead to a
recovery in restaurant sales, which will lift total sales by 3.9%.

Commercial Foodservice: Ontario and Quebec

Chain Independent Pre-tax Profit
Growth Growth 2006 Sales Average Unit Units Share of Share of (% of operating Bankruptcy
in '07 1 in '06 1 (in millions) Volume 2 Units Units revenue) Rate

Quebec 3.9% 3.2% $ 8,241 $ 567,217 16,141 30.8% 69.2% 4.0% 1.4%
Ontario 4.0% 5.1% $ 15,964 $ 734,844 22,083 41.0% 59.0% 2.9% 1.3%
Central Canada 4.0% 4.5% $ 24,205 $ 667,692 38,224 37.5% 62.5% 3.3% 1.4%
Canada 4.2% 5.6% $ 40,064 $ 673,404 62,666 37.9% 62.1% 3.8% 1.1%
1
Growth rates are undjusted for menu inflation
2
Data are based on unit counts from the Monthly Restaurant, Caterers and Taverns Survey
Source: Statistics Canada, CRFA's Long Term Forecast and ReCount/NPD Group

w w w.c r fa .c a — FO O D S E RV I C E FACTS 20 07 13
 ATLANTIC CANADA
• Sluggish employment gains stall foodservice sales in Atlantic Canada

Atlantic Canada ranked last in foodservice sales growth in
2006 as sales declines in Newfoundland and Labrador and
New Brunswick combined to offset the gains in Prince Edward
Island and Nova Scotia.
A decline in tourism, rising gasoline prices and below-average
disposable income growth are largely to blame for lacklustre
regional sales that have underperformed the national average
in recent years.
The outlook for Atlantic Canada remains muted, as
foodservice sales expand a modest 1.1% in 2007. The increase
in Atlantic foodservice sales is primarily inflationary, as
customer traffic will be held in check by sluggish demand
and population migration to other parts of the country.
• Foodservice sales in Nova Scotia rose 6.0% in 2006 following
a 6.4% decline in 2005. After adjusting for menu inflation,
however, real foodservice sales in Nova Scotia remain
12.0% below 2002 levels. In 2007, foodservice sales will
expand a tepid 2.5%.
• A decline in units and weak consumer demand will reduce
foodservice sales in New Brunswick by 2.5% in 2007.
• With the lowest per capita disposable income, households
in Nova Scotia, New Brunswick and Newfoundland and
Labrador spend the least at bars and restaurants compared
to other Canadian households.

• Since 2000, the number of commercial foodservice units

in Atlantic Canada has dropped 10% – a loss of 465
establishments. Atlantic Canada has accounted for 43% Regional Share of Total Commercial
of all foodservice establishments closed in Canada since Foodservice Sales in 2006
2000 – a notable figure given that the region accounts
for just 6.8% of foodservice establishments in Canada. Atlantic Canada
5.5%
• A decline in units, combined with a drop in domestic and
tourist spending, reduced foodservice sales in Newfoundland Western Canada
28.9%
and Labrador 8.0% in 2006. Hardest hit were bars and
limited-service restaurants. Although Newfoundland will
outperform the rest of Canada in real GDP growth, lacklustre
spending will limit foodservice sales growth in 2007 to 2.8%.

• On the heels of a respectable 4.5% gain in foodservice sales

in 2006, foodservice sales in PEI will advance 4.3% in 2007.
Prairie Provinces
5.0% Ontario and Quebec
60.6%

Source: Statistics Canada

Commercial Foodservice: Atlantic Canada

Chain Independent Pre-tax Profit
Growth Growth 2006 Sales Average Unit Units Share of Share of (% of operating Bankruptcy
in '07 1 in '06 1 (in millions) Volume 2 Units Units revenue) Rate

Newfoundland
and Labrador 2.8% -8.0% $ 411 $ 456,979 996 42.3% 57.7% 3.8% 1.2%
Prince Edward Island 4.3% 4.5% $ 155 $ 541,102 271 33.2% 66.8% 4.2% 1.8%
Nova Scotia 2.5% 6.0% $ 936 $ 672,839 1,551 39.7% 60.3% 3.4% 1.2%
New Brunswick -2.5% -1.4% $ 680 $ 515,477 1,422 48.3% 51.7% 4.0% 0.8%
Atlantic Canada 1.1% 0.7% $ 2,182 $ 559,753 4,240 42.4% 57.6% 3.7% 1.1%
Canada 4.2% 5.6% $ 40,064 $ 673,404 62,666 37.9% 62.1% 3.8% 1.1%

1
Growth rates are undjusted for menu inflation
2
Data are based on unit counts from the Monthly Restaurant, Caterers and Taverns Survey
Source: Statistics Canada, CRFA's Long Term Forecast and ReCount/NPD Group

w w w.c r fa .c a — FO O D S E RV I C E FACTS 20 07 15
 TOP-LINE
TOURISM CHALLENGES TREND

• Tourism accounts for 19.3% of total foodservice sales in Canada

• Domestic tourism increasing in importance to foodservice

International travel to Canada stalls Domestic tourism takes flight

International tourism accounts for 5.4% of spending on The good news is that while international tourism declines,
foodservice but has been in steady decline in recent years. The spending on foodservice by domestic travellers is on the upswing.
number of international travellers to Canada has fallen 31.3% Since 2000, domestic tourist spending on foodservice has
since 2000 and international tourist spending on foodservice increased 43.0%, and domestic travel now accounts for 13.9%
has decreased 5.9%. This decline in the number of international of total foodservice revenue.
visitors is largely due to border delays, high gas prices and
the high Canadian dollar, which have caused the number of
Tourism Share of Total Foodservice Sales
same-day trips from the U.S. to Canada to plummet.
The outlook for international travel is equally bleak. Over 25% Domestic Tourists
the next several years, a strong Canadian dollar, above-average Foreign Tourists
20% 19.2% 19.3%
oil prices and the Western Hemisphere Travel Initiative (WHTI)
– which imposes new passport requirements on Canada/U.S. 15%
travellers – will further discourage cross-border travel, with the 12.1%
13.9%
economic impact felt most strongly by border communities 10%
and provinces that rely on tourism originating in the U.S.
Analysis by the Conference Board of Canada indicates that 5%
7.1%
5.4%
WHTI will cost the Canadian tourism industry $3.3 billion in 0%
lost revenue between 2007 and 2010, with the largest declines 2000 2006
in Ontario and British Columbia. Source: Statistics Canada and CRFA

EMPLOYMENT CONTRIBUTION
• Canada’s foodservice industry employs more than one million Canadians

• With 1,040,300 employees, the foodservice industry

accounts for 6.3% of total employment in Canada, and
nearly one in five jobs for youth.

• More people work in the foodservice industry than in

agriculture; forestry, pulp and paper; banking; and oil and
gas extraction combined.

Number of Foodservice Employees in Canada

1,200 (in thousands)
1,036.9 1,009.0 1,040.3
1,006.2 1,017.5
1,000 951.0
920.8 943.5
870.0 873.4 910.6
800

600
• An additional 240,000 Canadians are indirectly employed
400 by the foodservice industry as suppliers, distributors and
consultants. In total, close to 1.3 million Canadians rely
200 on the foodservice industry for employment.

0 • Most foodservice operations are small businesses. In 2003,

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 55.5% of foodservice operators employed fewer than 10
Source: Labour Force Survey, Statistics Canada people. Another 42.9% employ between 10 and 99. Only
1.6% of foodservice businesses employ 100 or more people.

w w w.c r fa .c a — FO O D S E RV I C E FACTS 20 07 17
 TOP-LINE
LABOUR SHORTAGE TREND

• Demand for foodservice workers to outpace supply over the next nine years
• Alberta’s foodservice industry currently has a labour shortage of more than 11,000 workers
• Long-term decline in youth population will put pressure on many foodservice occupations

Foodservice operators across Canada are struggling to find

people to fill a growing number of job vacancies. Alberta
operators – who are currently contending with a shortage
of more than 11,000 foodservice workers – are feeling this
most acutely, but operators in every region of Canada are
experiencing a labour crunch.
Even in Atlantic Canada, where the unemployment rates are
the highest in Canada, there is a chronic shortage of workers due
to out-migration. Between July 2005 and July 2006, 13,000
people in Atlantic Canada left the region for work in Alberta.

Labour shortages have profound effects for foodservice operators: Population of 15 to 24 Year Olds to 2025
(Canada)
Higher wages, fewer workers (in thousands)
In Alberta, average weekly wages in foodservice have soared 4,500
by more than 18.7% in the past two years – almost twice as
fast as the province’s average industrial wage. At the same
time, because the labour crisis is a “people shortage” and not 4,000
just a “skills shortage,” operators are often unable to find
enough workers to adequately staff their establishments, forcing
them to reduce hours of operation and forgo potential sales.
3,500

Lack of people = lost opportunities

Despite a booming economy and growing incomes, sales at
full-service restaurants in Alberta were flat in 2006 – due in
part to decreased hours of operation for many restaurants.
Similarly, even though Alberta is home to the fastest-growing
foodservice industry in Canada, unit growth has not kept
pace with sales growth due to the difficulty in finding skilled
tradespeople to construct and renovate a new restaurant, and
people to staff the restaurant.
What’s needed
Over the next nine years, Canada’s commercial foodservice
industry will require an additional 181,000 workers. While the
demand for foodservice employees will grow an average of
1.8% per year over the next nine years, the working-age
population of 15- to 69-year-olds will grow by just 0.9%.
0
'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 '24 '25
Source: Statistics Canada
Young workers in short supply
The industry provides a wide range of part-time and entry
level jobs with flexible hours that appeal to young workers.
Nearly 45% of foodservice employees are under the age of 25.
Yet, over the next four years, Canada’s population of youth
will remain flat before dramatically declining over the following
11 years. By 2022, there will be 340,000 fewer young people
in Canada than there are today, creating another challenge for
foodservice operators.

Demand For Labour Will Outpace

Canada’s Population Growth
(Average annual growth, 2006 — 2015)
2.0%
1.8%
1.7%

1.5%

1.0% 0.9%

0.5%

0.0%
Foodservice Employment Total Employment Population of 15 to 69 Year Olds
Demand Demand

Source: Canadian Tourism Human Resource Council, Statistics Canada and CRFA

w w w.c r fa .c a — FO O D S E RV I C E FACTS 20 07 19
 PROFIT MARGINS
• The average pre-tax profit margin for foodservice operators in Canada has declined from 5.8% to 3.8%

The pre-tax profit margin for Canadian restaurants, bars and

caterers rose to 3.8% in 2005 – a small improvement over the Financial Operating Ratios - 2005
3.7% recorded in 2004, but well below the 5.8% profit margin (share of operating revenue)
achieved in 2001. Pre-tax profit
Food and labour costs – the two largest expenses for All other expenses
3.8%
11.3%
foodservice operators – consumed 67.1% of operating revenue
in 2005, up from 66.5% in 2004. In contrast, rental and leasing Depreciation Food and
costs fell in 2005, to 7.0% from 7.3% in 2004. A decline in the 2.8% beverage costs
Advertising and 35.6%
repair and maintenance and ‘all other expenses’ categories
promotion
also led to a slight increase in the profit margin. 2.8%

Utilities including
telephone
2.8%
Rental and leasing
7.0%
Repair and
maintenance Salaries and wages
2.4% 31.5%

Source: 2007 Foodservice Operations Report, Statistics Canada and CRFA

Limited-service stays strong Saskatchewan fares best, Ontario falters

• With lower-than-average food, beverage and labour costs,
limited-service restaurants have the highest pre-tax
profit margin at 4.9%.
• The average pre-tax profit margin at full-service restaurants
rose from 2.7% in 2004 to 3.1% in 2005 due to lower food
and leasing costs.
• Rising food and labour costs for caterers eroded pre-tax
profit margins in this segment for the third straight year.
• Taverns, bars and nightclubs had a pre-tax profit margin
of 3.3% in 2005, down from 3.9% in 2004. Profits in this
segment fell across most of the country.
• Saskatchewan was home to the highest pre-tax profit
margin (6.0%) in Canada in 2005. At the other end of the
spectrum, the average restaurant, bar or caterer in Ontario
saw pre-tax profits of only 2.9%. Ontario’s pre-tax profits
have shrunk from 5.4% since 2001, due to sluggish sales
and rising expenses.
• B.C., Alberta and Quebec all felt the sting of rising labour
costs in 2005. In the West, labour shortages boosted total
payroll costs 5.8% in B.C. and 5.5% in Alberta. In Quebec,
higher wages and payroll taxes meant that 33 cents of every
dollar spent at restaurants in Quebec went to payroll – the
highest percentage in the country.

Operating Profit Margins

8%
2001
7% 7.0%
2005
6% 6.0% 5.8%
5.6%
5% 4.9%
4.3%
4% 3.8%
3.1% 3.3%
3% 2.7%
2%
1%
0%
Full-service Limited-service Contract and Taverns, Bars Total
Restaurants Restaurants Social Caterers and Nightclubs Industry

Source: 2007 Foodservice Operations Report, Statistics Canada and CRFA

w w w.c r fa .c a — FO O D S E RV I C E FACTS 20 07 21
 FOODSERVICE UNITS
• The number of commercial foodservice units in Canada stays relatively flat
• Chain restaurants continue to expand their market share

Fastest-Growing Menu Themes

(QSR units, 2005 over 2000)

Subs 41.2%
Asian 24.2%
Gournet Coffee and Tea 21.6%
Donut 14.1%
Mexican 8.4%
Pizza 2.5%
Hamburger 2.0%
Chicken 1.8%
Other QSR -5.0%
Italian -14.5%

-20% -10% 0% 10% 20% 30% 40% 50%

Source: ReCount/NPD Group

The number of restaurants, caterers and bars rose just 0.1% to
62,666 units in 2006. While there was a slight increase in the
number of restaurants, these gains were partially offset by a
5.5% decline in the number of taverns, bars and nightclubs.
Since 2000, the number of taverns, bars and nightclubs has
declined by 18.0% – a loss of 1,096 units.
Commercial Foodservice Units
0
4
Chains and Top 50 stay strong
Since 1998, the market share of chain restaurant units has
increased from 32.7% to 37.9% in 2005.
The top 50 foodservice companies account for 53.5% of
total commercial foodservice sales, and 36.1% of units. More
than one quarter (26.1%) of all commercial foodservice sales
are generated by the top five foodservice companies, which
also account for 13.7% of units.
Bankruptcies tumble

6
2

6
62,629
3

63,517
1

The number of commercial foodservice bankruptcies1 fell

63,85
63,74

63,30
63,33

62,66
62,77
62,66
61,224

70,000
2
1
60,16
58,78
3
55,85

from 777 in 2005 to 705 in 2006. The bankruptcy rate in the

53,124

60,000
1
51,09
2

foodservice industry slipped to 1.1% in 2006, its lowest level

47,87
0
42,47

50,000 in more than two decades.

40,000

30,000
Top 50 Foodservice Companies
20,000 Share of Commercial Foodservice Revenue
10,000 Share of Commercial Foodservice Units
60%
53.5%
0
50%
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 43.3%
40% 36.1%
Source: Business Register, Statistics Canada
30% 29.1%

Unit growth slows in recent years 20%

During the 1990s, the number of foodservice units rose an 10%

average of 3.5% per year. In recent years, however, the number
0%
of units has been relatively flat, indicating a balance between
1 998 2005
supply and demand for food away from home.
Source: CRFA; Foodservice & Hospitality; and Business Register, Statistics Canada
Sales and units for a small number of the top 50 companies include operations
outside of Canada.

1
Note: The commercial bankruptcies reported by Industry Canada capture only those businesses that have filed for bankruptcy
and exclude business closures for other reasons.

w w w.c r fa .c a — FO O D S E RV I C E FACTS 20 07 23
HOUSEHOLD SPENDING
• Annual household spending on foodservice rose 8.7% in 2005
• Restaurants provide one in 10 meals, on average
• Canadians spend 24.5% of their household food dollar at restaurants

The average Canadian household spent $1,931 on food and alcohol

from restaurants and bars in 2005, $154 – or 8.7% – more than
in 2004. Of that total amount, $1,677 was spent on food from
restaurants and $254 on alcohol from licensed establishments.
Rising disposable incomes and the busy lifestyles of many
Canadians are largely responsible for this spending increase.
Other notable trends in household spending include:

Regional disparity
Growth in spending in 2005 was driven primarily by British
Columbia and Alberta, where residents enjoy above-average
disposable incomes, a strong job market and no tax on
restaurant meals. By contrast, households in Atlantic
Canada have the lowest disposable income, and spend
less at restaurants and bars. Between 2000 and 2006, drink prices at licensed establishments
jumped 18.5%, compared to an 11.8% increase in prices at
liquor stores.
Average Household Spending at
Restaurants in Canada
Average Household Spending
$2,000 $1,931
$1,737 $1,737 $1,777 at Restaurants in 2005
$1,654
$1,514 $1,538 $1,536 British Columbia $2,293
$1,500 $1,381
Alberta $2,252
Ontario $2,057
$1,000
Canada $1,931
Manitoba $1,777
$500
Prince Edward
$1,664
Island
Quebec $1,651
$0
1997 1998 1999 2000 2001 2002 2003 2004 2005 Saskatchewan $1,594
Source: 2005 Survey of Household Spending, Statistics Canada Nova Scotia $1,504
New Brunswick $1,486
Newfoundland
$1,096
Grocery continues to dominate and Labrador

Healthy growth in household spending at restaurants has been $0 $500 $1,000 $1,500 $2,000 $2,500
matched by increased spending at grocery stores. As a result, Source: 2005 Survey of Household Spending, Statistics Canada
the foodservice share of the household food dollar has remained
relatively flat at 24.5% – an increase of only 2.5 percentage
points in the last decade. Where Canadians Eat Their Meals
The vast majority of meals – seven out of 10 – are prepared
at home. Restaurants provide only one in ten meal occasions. Purchased from
All other away-from- restaurant - eaten
home 8% in home 2%
The income connection
Household spending on foodservice is closely tied to income. At a restaurant
For every $1,000 increase in income, foodservice spending 8%

rises by $28.90. Carried from home

8%
Bars lose out to liquor stores
Skipped
In recent years, there has been a shift to household spending at Prepared and 8%
liquor stores – a 26.7% increase since 2000, compared to a eaten at home
66% Ready-to-eat meal
6.7% increase in alcohol purchases at licensed establishments.
purchased from
While this trend can be partially attributed to an aging population grocery - eaten in
and smoking bans in many parts of the country, rising alcohol home 2%
prices at licensed establishments may be the biggest factor.
Source: Eating Patterns in Canada - October 2006

24 FO O D S E RV I C E FACTS 20 07 — w w w.c r fa .c a
 TOP-LINE
CHANGING MEALTIMES TREND

• Popularity of breakfast/morning snacks surges

• Breakfast occasions outpace lunch at quick-service restaurants

The share of breakfast/morning snack occasions has jumped to
21.7% in 2006, up from 15.5% in 1996 – making breakfast the
fastest growing daypart at Canadian restaurants.
For the first time, the breakfast/morning snack share of
occasions at quick-service restaurants (26.1%) surpassed the
lunch share of QSR meal occasions (24.3%). The introduction
of new breakfast sandwiches and the growing popularity of
coffee have contributed to this trend.
As Canadians try to balance busy work and home lives,
fewer restaurant meals are eaten on premise. This is particularly
true during the breakfast and supper dayparts, when more than
80% of meals purchased at restaurants are eaten off premise.
Although breakfast is gaining in popularity, supper remains
the most popular daypart, accounting for 30.7% of meal occasions
at quick-service restaurants and 53.3% of meal occasions at
full-service restaurants.

Meal Occasions by Daypart

Restaurant Quick-service Full-service
Top 5 Menu Items*
Average Restaurants Restaurants
BREAKFAST/MORNING SNACK
Average Check Size 1 $2.97 $2.29 $6.61 1. Regular coffee 58.8%
2. Hash browns/home fries 10.2%
Share of Meal Occasions 21.7% 26.1% 12.1% 3. Eggs (excluding omelette) 9.4%
Percentage Off-Premise 69.0% 82.0% 8.0% 4. Sliced bread/toast/English muffin 8.4%
5. Bagels 8.4%
Fastest growing item: Iced coffee/frappes

LUNCH
Average Check Size 1 $6.75 $5.28 $10.29 1. French fries 28.3%
2. Regular soft drinks 22.3%
Share of Meal Occasions 26.6% 24.3% 30.2% 3. Hamburgers 17.9%
Percentage Off-Premise 46.0% 60.0% 18.0% 4. Regular coffee 13.4%
5. Salads 11.8%
Fastest growing item: Bacon cheeseburger

SUPPER
Average Check Size 1 $10.30 $6.59 $15.90 1. French fries 30.6%
2. Pizza 21.2%
Share of Meal Occasions 35.7% 30.7% 53.3% 3. Chicken/turkey/poultry 20.9%
Percentage Off-Premise 62.0% 83.0% 32.0% 4. Regular soft drink 20.2%
5. Salads 17.5%
Fastest growing item: Individual slice pizza

AFTERNOON/EVENING SNACK
Average Check Size 1 $3.31 $2.69 $8.91 1. Regular coffee 30.8%
2. Ice cream/yogurt/frozen yogurt 13.9%
Share of Meal Occasions 15.9% 18.8% 4.3%
3. Donuts 9.2%
Percentage Off-Premise 73.0% 77.0% 29.0% 4. Regular soft drinks 6.7%
5. French fries 5.6%
Fastest growing item: Cappuccino/latte
1 Per person, includes taxes but excludes tips

Source: CREST/NPD Group * Share of daypart occasions

CREST DEFINITIONS: Consumer Reports on Eating Share Trends

Quick-Service Restaurants (QSR): Counter service, inexpensive and usually specializes in one food. Take-out and delivery
is generally strong and there may be drive-through service.
Family/Midscale: Table- or self-service, moderately priced and usually specializes in one type of food. There may be take-out service.
Casual Dining: Full table service, mid-priced range, and often with a themed atmosphere. There is generally little take-out.
Fine Dining: Extensive table service, formal table settings, premium priced.
Other: Foodservice through grocery, convenience, department and discount stores, vending machines and street vendors.

w w w.c r fa .c a — FO O D S E RV I C E FACTS 20 07 25
RESTAURANT VISITS
• Time-starved consumers are eating more restaurant meals off-premise
• Quick-service restaurants account for nearly two-thirds of restaurant visits

Average Check Per Person

2005 2006 Year-over-year
change

Quick Service $4.26 $4.41 3.5%

Family/Midscale $9.25 $9.66 4.4%
Casual Dining $13.29 $14.19 6.8%
Fine Dining $28.89 $30.20 4.5%
Other $4.20 $3.92 -6.7%

$6.36 $6.62 4.1%

Source: CREST/NPD Foodservice Information Group

Average check includes taxes but excludes tips.

One or more members of a Canadian household visited a Check sizes rise

restaurant for a meal or snack an average of 536 times in 2006, The average check size per person rose to $6.62 – a 4.1% increase
up 1.9% over 2005 and 19.1% over 1996. The majority of visits, over 2005. This increase marks the largest year-over-year growth
64.2%, were to quick-service restaurants. since CREST began collecting data in 1995.

Annual Number of Visits per Household – 2006 Annual Number of Visits per Household
400 by On Premise and Off Premise
350
344 205 209
200
300
163 188
250 150
On Premise
200 Take Out 113
Drive Through
100 Telephone Delivery
150

100 73 63 50 41
47
50 27
8 29
0
0
Quick Service Family/Midscale Casual Dining Fine Dining Other 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Source: CREST/NPD Group Source: CREST/NPD Group

Off-premise dining takes off

Canadians are eating more restaurant meals off-premise,
turning to drive-throughs and take-out as a way to enjoy the
convenience of prepared meals or snacks on the go. In 2006,
the average Canadian household ate meals or snacks obtained
from drive-through, take-out or telephone delivery 328 times,
compared to 233 occasions in 1997. The growth in the number
of drive-through orders has nearly tripled from 41 annual
visits in 1997 to 113 visits in 2006.
At the same time, walk-in take-out has increased 15.3%,
and telephone delivery remains relatively unchanged since 1997.
On-premise eating, which accounted for only 39.0% of all meal
occasions in 2006, has fallen from 45.6% in 1997.

For CREST definitions, see page 25.

26 FO O D S E RV I C E FACTS 20 07 — w w w.c r fa .c a
 MENU TRENDS
• French fries drop below 20% market share for first time
• Coffee and tea show strong growth

French fries remain the most popular menu item at Canadian Regular coffee remains the most popular beverage ordered at
restaurants, but their share of meal occasions has dipped restaurants, included in 23% of all meal occasions. Hot tea jumped
below the 20% mark for the first time since the Top 10 list from fourth place to third – switching places with diet soft drinks.
was created in 1994.

Top 10 Foods - 2006 Top 10 Beverages - 2006

2006 Share of Change Since 2006 Share of Change Since
Occasions 1998 (% points) Occasions 1998 (% points)
1 French fries 19% -5.2 1 Regular coffee 23% 1.5
2 Hamburgers 10% -1.9 2 Regular soft drinks 14% -3.3
3 Salads 10% -2.0 3 Hot tea 5% 1.3
4 Chicken 10% -1.7 4 Diet soft drinks 4% -0.5
5 Pizza 10% -2.0
5 Juice 3% 0.1
6 Sandwiches 9% -0.1
6 Milk/chocolate milk 3% 0.1
7 Chinese/Oriental/stir fry 5% -0.7
7 Specialty coffee 2% -0.3
8 Ice cream/frozen yogurt 4% -0.9
9 8 Beer 2% -0.5
Donuts 4% 1.0
10 Soup 4% -1.3 9 Iced tea 2% 0.5
10 Decaffeinated coffee 2% 0.5
Source: CREST/NPD Group and CRFA
Chicken: Nuggets/strips, fried, wings, BBQ/Grill/Charbroiled/Rotisserie, Baked/Roasted Source: CREST/NPD Group and CRFA

After slipping to fourth place in 2005, hamburgers regained

second place in the top 10 foods of 2006, displacing salads and FASTEST GROWING WHAT'S SLOWING
chicken. Pizza returned to its former position in fifth place, and
Iced coffee/frappes Fried fish sandwich
Chinese/Oriental/stir fry moved up one spot to seventh. Donuts,
which were absent from the top 10 list 2005, reappeared at Bacon cheeseburger Cinnamon rolls/buns
number nine while soup rounded out the top 10. Side dish potato salad Lasagna/ravioli/stuffed veal
Since 1998, most of the top 10 foods have seen a drop in
Cookies (loose) Main dish caesar salad
meal occasions as Canadians’ tastes shift to ordering more ethnic
foods and fresh-prepared sandwiches and subs. These two Tomato/vegetable juice Hot/cold turkey sandwich
categories have grown 27.7% and 47.1% respectively since 1998. Individual pizza slice Brownies
Wrap/pita sandwich Rice
Cocktails/liquor Frozen yogurt
Soft serve blend ice cream Soft serve ice cream sundaes
Shakes/malts/floats etc.
Source: CREST/NPD Group

The changing popularity of various menu items is tracked by The

NPD Group’s CREST survey. The “growing” list shows the menu
items that made the biggest volume gains in 2006 compared to
2005, while the “slowing” list shows the menu items that saw the
most significant declines.

w w w.c r fa .c a — FO O D S E RV I C E FACTS 20 07 27
 TOP-LINE
TREND DEMOGRAPHIC SHIFT
• By 2016, 38% of Canadians will be aged 50+
• Eating patterns and menu preferences will shift as the population ages

In just four years, the baby boom generation will begin to turn 65,
and by 2016, the number of Canadians aged 50 or older is expected 2006 Share of Meal Occasions by
to grow by more than three million, to 38% of the population. This Age Group and Segment
marks a sharp contrast from 25 years ago, when only 23% of 80%
74% 72%
69% 71% 70% 70%
the population was over the age of 50. Foodservice operators in
all segments will need to adapt to the changing eating patterns 59%
60%
and menu preferences of this rapidly growing age group.
Quick-service restaurants 48%
Full-service restaurants 41%
40%
Population Growth in Canada
Between 2006 and 2016 33%

35% 20% 22%

30% 29.5% 18%
21% 21% 21% 21%

25%
20% 0%
15% Under 6 6 - 12 13-17 18-24 25-34 35-49 50-64 65 years
years old years old years old years old years old years old years old and older
10%
Source: CREST/NPD Group
5%
0%
-5% -0.4%
-2.8% Data from CREST/NPD Group show that as Canadians age,
< 25 25–49 50+ they tend to shift their restaurant visits from quick-service to
2016 9.8 12.1 13.4 full-service restaurants. With more disposable income and
Population million million million more time, seniors 65 and older source nearly 41% of meal
Source: Statistics Canada occasions at full-service restaurants, compared to less than
22% for those aged 35-49.

Health concerns drive menu choices Restaurants respond

According to Ipsos-Reid surveys1, Canadians aged 50 and older
put more emphasis on freshness and nutrition than adults aged
18 to 49. Older Canadians are also more concerned about sugar
content, carbohydrates and eating enough vegetables. Concern
about the sodium content of foods also increases with age,
with three-quarters of Canadians aged 55 and older expressing
a desire to incorporate sodium-reduced foods into their diets.
Many restaurants have added more options to their menus to
meet the needs of both older Canadians and younger households,
offering more fresh, healthy menu items, premium ingredients
and portable snacks and meals. Some of the fastest-growing
quick-service menu concepts feature freshly prepared subs and
sandwiches, Asian foods and gourmet coffee and tea to meet
the on-the-go needs of busy consumers (see page 23).

When shopping for groceries, do you look for versions of the

products that have this feature: (respondents that answered yes)

Age 18-34 35-54 55+

Less fat 65% 77% 86%
Less sugar 53% 69% 76%
More fibre 45% 65% 77%
Less calories 49% 54% 66%
No hydrogenated oils 38% 59% 68%
Less carbs 34% 43% 43%
Source: Ipsos-Reid, Jan. 26, 2005

Hectic lifestyles impact eating

While younger Canadians share some of these health concerns,
they are more likely to find busy lifestyles an impediment to
healthy eating. More than half of Canadians aged 18-34 agree
that their life is so hectic they find it hard to include healthier
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food options on a daily basis, compared to 42% of Canadians Canadians aware of “good” and “bad carbohydrates” but do not really
aged 35-54 and 30% of Canadians aged 55 and older. By contrast, understand them (Mar. 10, 2004); Canadians on healthy eating (Jan. 26, 2005);
as older Canadians reach retirement age, the work-life balance President’s Choice second annual healthy eating survey (Feb. 2, 2006)
shifts, affording more time to eat what and where they wish.

28 FO O D S E RV I C E FACTS 20 07 — w w w.c r fa .c a
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