Food services and drinking places, annual, 2016
Firms in the food services and drinking places subsector generated $68.0 billion in operating revenue in 2016, up 6.1% from 2015. Operating expenses rose 6.2% to $65.2 billion, leading to a 4.2% profit margin.
The increase in 2016 was driven in part by menu inflation, with the Consumer Price Index reporting that the price of food purchased from restaurants was up 2.6%, while prices for alcoholic beverages served in licensed establishments increased by 1.8%.
Among the provinces, British Columbia had the highest pace of growth, with operating revenue increasing by 9.9% from 2015 to 2016. One factor contributing to the higher growth of the subsector in British Columbia has been strong growth in tourism. Alberta businesses saw the slowest rate of growth for the second year in a row, with operating revenue increasing by 1.9%.
The four provinces with the largest shares of operating revenue in 2016 were Ontario (38.8%), Quebec (18.9%), British Columbia (16.9%) and Alberta (13.8%).
Sales of food and non-alcoholic beverages accounted for 83.3% of the total sales of goods and services in the subsector in 2016, followed by the sale of alcoholic beverages at 12.9%.
The largest operating expense for the food services and drinking places subsector was the cost of goods sold, which represented 36.7% of the subsector's total operating expenses in 2016. The next largest expense item was salaries, wages, commissions and benefits (32.2%), followed by rental and leasing (8.4%).
Restaurant sales feed growth
The food services and drinking places subsector is composed of four types of businesses: full-service restaurants; limited-service eating places; special food services; and drinking places. In 2016, the limited-service eating places industry led the subsector in terms of growth in operating revenue, up 7.7% to $29.2 billion. Operating expenses rose 8.0%, resulting in a profit margin of 4.3%. At the provincial level, an increase in operating revenue was seen across all of the provinces in this segment for the fourth year in a row.
Full-service restaurants were the second fastest growing segment of the subsector in 2016, with operating revenue increasing 6.1% from 2015 to $30.2 billion. Operating expenses in the industry grew by 5.7% to $29.2 billion, which led to a 3.4% profit margin.
In the special food services industry group, operating revenue increased 1.1% from the previous year to $5.8 billion in 2016. However, this was the lowest growth rate for special food services since 2009. Operating expenses in the special food services industry group rose 2.4% to $5.3 billion, resulting in a profit margin of 7.3%.
Drinking places, which include bars and taverns, saw a 1.6% increase in operating revenue to $2.8 billion in 2016. Operating expenses increased 2.0% to $2.7 billion, resulting in a 4.0% operating profit margin in 2016.
Full-service restaurants accounted for 44.4% of the subsector's sales, followed by limited-service eating places with 43.0% in 2016. Special food services, which includes food service contractors, caterers, and mobile food services, accounted for 8.5% of operating revenue, with drinking places accounting for the remaining 4.2%.
Note to readers
Data for 2014 and 2015 have been revised.
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