# 4.1: Food and Beverage Sector Performance


According to Statistics Canada, the food and beverage sector comprises “establishments primarily engaged in preparing meals, snacks and beverages, to customer order, for immediate consumption on and off the premises” (Government of Canada, 2012). This sector is commonly known to tourism professionals by its initials as F&B.

The food and beverage sector grew out of simple origins: as people travelled from their homes, going about their business, they often had a need or desire to eat or drink. Others were encouraged to meet this demand by supplying food and drink. As the interests of the public became more diverse, so too did the offerings of the food and beverage sector.

In 2014, Canadian food and beverage businesses accounted for 1.1 million employees and more than 88,000 locations across the country with an estimated $71 billion in sales, representing around 4% of the country’s overall economic activity. Many students are familiar with the sector through their workplace, because Canada’s restaurants provide one in every five youth jobs in the country — with 22% of Canadians starting their career in a restaurant or foodservice business. Furthermore, going out to a restaurant is the number one preferred activity for spending time with family and friends (Restaurants Canada, 2014a). For a perspective on how sales are distributed across the country by province, and how different foodservice operations perform in terms of revenue (sales dollars collected from guests), look at Tables 4.1 and 4.2. A key factor in the below results is the higher population base in Ontario and Quebec. Economic growth or decline also impacts results and vary from province to province year over year. In terms of sales (Table 4.2), Ontario is the leader with almost$28 billion. Quebec, BC, and Alberta occupy the next three spots with revenues ranging from $9 billion to$13 billion, and the other provinces had sales of $2 billion apiece or less. Over the last five years, BC has shown greater growth in revenues along with third more units (restaurants) than neighbouring Alberta, leading to identical average sales per unit. Foodservice sales in British Columbia rose by a solid 7.9% in 2018 over 2017. Alberta boasts the highest average unit volume at$838,666 per year, more than $100,000 over the national average due to greater disposable income and no provincial sales tax on meals. In BC, improved economic growth lifted total foodservice sales by a healthy 7.9% for the strongest annual growth since 2006 (Restaurants Canada, 2019). Since 2018 Alberta has seen a significant decline in its economy due to the energy sector collapse tied to the price of crude oil. Province Foodservice Units Totals Average Volume/Unit ($) [Skip Table] Newfoundland and Labrador 1,168 737,301 Prince Edward Island 413 663,259 Nova Scotia 2,260 750,458 New Brunswick 1,708 714,521 Quebec 22,736 594,147 Ontario 38,317 747,468 Manitoba 2,621 794,425 Saskatchewan 2,673 717,449 Alberta 11,277 838,666 British Columbia 14,550 838,444 Canada 97,939 735,915 Data source: Statistics Canada, Restaurants Canada 2019

Table 4.2 below indicates the profit margins per province. Profit is the amount left when expenses (including corporate income tax) are subtracted from sales revenue. A higher profit margin means that a greater percentage of sales are retained by the business owner, and a lower percentage is lost to operating and other costs.

Province Sales Growth Sales Pre-tax Profit Margin (% of operating revenue) 2018-19 Forecast (%) [Skip Table] Newfoundland and Labrador 1.6% .2% $861.2 4.1% Prince Edward Island 4.3% 6.3%$273.9 6.9% Nova Scotia 3.9% 5.6% $1,696.0 5.0% New Brunswick 3.1% 3.0%$1,220.4 6.0% Quebec 4.2% 5.2% $13,508.5 4.4% Ontario 4.6% 5.7%$28,640.7 3.8% Manitoba 3.4% 2.4% $2,082.2 4.8% Saskatchewan 3.8% 1.6%$1,917.7 5.3% Alberta 3.0% 2.4% $9,457.6 4.4% British Columbia 4.8% 7.9%$12,199.4 4.7% Canada 4.2% 5.2% \$72,074.8 4.3% Data source: Statistics Canada, Restaurants Canada 2019

The provincial variations in total sales and profit margins are due to several factors including:

• The relative level of economic activity
• Minimum wage levels, which have increased in several provinces including Alberta and British Columbia
• Provincial sales taxes
• Cultural differences
• Weather
• Municipal taxes
• Percentage of the market held by chains versus independents
• Number of units (restaurants)
• The density of units relative to the local population
• Number of tourists or business travellers

Now that we have a sense of the relative performance of F&B operations by province, and some influences on success, let’s delve a little deeper into the sector.

This page titled 4.1: Food and Beverage Sector Performance is shared under a CC BY license and was authored, remixed, and/or curated by Morgan Westcott & Wendy Anderson et al. (BC Campus) .