food service facts 2007

FOODSERVICEFACTS 2OO7

DEMOGRAPHICS:38% will be aged

50+ by 2016

MEALTIMES: 22% ofrestaurant meals

eaten at breakfast

LABOUR SHORTAGE:181,000 employees

needed by 2015 Market Review and Forecast $30.00

WESTERN GROWTH:sales up 37% in Western

Canada since 2000

TOURISM: Internationaltravel down 31%

since 2000

NEW FROMHIGH LINER!

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

ATLANTICUS EASTERN REGION

(902) 422-2883

WESTERN CANADA(403) 278-66411-800-667-1732

ONTARIO(416) 622-38941-800-268-2615

QUEBEC (514) 323-68011-800-361-3945

Seafood Builds Business.Ask The Experts.

RAW LOLIGO SQUID• Tender Loligo – sweet and mild tasting• Available in tubes, and tubes and tenta-

cles• Fully cleaned, all natural

SEAFOOD SKEWERS• Unseasoned for maximum menu flexibility• Cook in minutes• Four different Skewers to choose from:

• Hand-cut Haddock or Salmon filletswith peppers

• Premium quality IQF Shrimp• Delicious Shrimp & Scallop combo

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

BEER BATTERED

• 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

MULTI-GRAINTILAPIA FILLETS

• Choose Haddock, Cod, Pollock,Shrimp or Mozzarella Sticks

• Made with genuine AlexanderKeith’s India Pale Ale

• Light crispy coating withback-of-the-house appearance

Hoist your sales! High Liner Foodservice has beenbusy developing some great new products. And,because they are from High Liner you can be surethat they will add pizzazz to your menu and moreprofit to your bottom line.

Call your High Liner Foodservice repre-sentative today to get all the details onthis delicious array of new products.

KC7044

FIVE KEY TRENDS

www.crfa .ca — FOODSERVICE FACTS 2007 01

TABLE OF CONTENTS

State of the Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

CRFA’s 2007 Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

CRFA’s Long Term Forecast . . . . . . . . . . . . . . . . . . . . . . . . 7

Western Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Prairie Provinces . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Ontario and Quebec . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Atlantic Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Tourism Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

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

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

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

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

Household Spending . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Changing Mealtimes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Restaurant Visits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Menu Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Demographic Shift . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Western GrowthA booming economy and growing population will make Western Canada the hottest foodservice market in the country . . . . . . . . . . . . . . . . . . . . . . . .

Tourism ChallengesInternational tourism to Canada is on the decline, but domestic tourism is taking flight . . . . . . . . . . . . .

Labour ShortageA growing labour shortage is making it difficult to recruit and retain employees . . . . . . . . . . . . . . . . .

Changing MealtimesTime-starved consumers are eating more restaurantmeals off-premise and relying on restaurants for morebreakfasts and snacks . . . . . . . . . . . . . . . . . . . . . . . .

Demographic ShiftCanada’s aging population is more likely to eat at full-service restaurants, and is more concerned with nutrition and food quality . . . . . . . . . . . . . . . . .

Foodservice salesCanada’s foodservice industry will reach a record $53 billion in sales in 2007. This marks an increase of 4.1% over 2006, or modest growth of 1.4% when adjusted for menu inflation.

The past few years have been tumultuous ones for Canada’s62,600 restaurants, bars and caterers. In the seven years leadingup to 2000, real commerical foodservice sales growth averaged4.4% per year. In the seven years since, real sales growth hasfallen to an average of 1.2% per year. Looking ahead, real commerical foodservice sales are expected to grow by an averageof just 1.3% per year through 2010.

Foodservice Facts is available in PowerPoint format for CRFA members only:

Deluxe Edition – A ready-made presentation with all the charts andgraphs in Foodservice Facts, plus text slides with key points in bulletform. $250.00 plus applicable taxes.

Basic Edition – Includes all the charts and graphs in Foodservice Facts.$130.00 plus applicable taxes.

To order the slides, visit CRFA’s online catalogue at www.crfa.ca/catalogueor call 1-800-387-5649 ext. 4215. CRFA accepts all major credit cards.

316 Bloor Street West, Toronto, Ontario M5S 1W5

Phone: (416) 923-8416 or 1-800-387-5649Fax: (416) 923-1450E-mail: [email protected] Website: www.crfa.ca

Editor: Jeni ArmstrongEconomist: Chris ElliottVP, Research and Communications: Jill Holroyd

Copyright 2007. All rights reserved including the right of reproductionin whole or in part in any form.

CANADIAN RESTAURANT AND FOODSERVICES ASSOCIATIONPOWERPOINT SLIDES

TOP-LINE TREND

Page 9

TOP-LINE TREND

Page 17

TOP-LINE TREND

Page 19

TOP-LINE TREND

Page 25

TOP-LINE TREND

Page 28

!

m

DA12

Sa

oniceat

n

e

MC_CRFA_AD_MAR07.indd 1

3/19/07 3:19:24 PM

FOODSERVICE FACTS 2007 — www.crfa .ca04

41.5%

41.4%

40.4%40.6%

41.9%

40.8%

41.3%

42.1%

41.5%

40.5%

0%

40%

41%

42%

43%

1998 1999 2000 2001 2002 2003 2004 2005 2006-p 2007-f

Foodservice Share of the

U.S. Food Dollar: 47.9% - 2004

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 solid5.6% increase in total sales to reach $51.4 billion – a welcomechange from the lacklustre growth of 2005. Adjusted for menuinflation, real foodservice sales advanced 2.9% in 2006.

This recovery was driven by increased disposable income,which grew 6.1% in 2006 as tax cuts put more money in thepockets of consumers. At the same time, Canada’s unemploymentrate fell to a 32-year low. With more Canadians in the workforce,foodservice spending increased.

Looking back on 2006, several themes emerge:

Caterers remain strong Contract and social caterer sales rose a solid 7.7% in 2006 following a 17.6% gain between 2003 and 2005. Strong miningand natural resource activity resulted in significant gains atremote foodservice camps, and bolstered caterer sales 9.2% in2006. Among non-commercial foodservice segments, growth at remote foodservice camps and at health care facilities liftedinstitutional foodservice 5.2%.

Rising gas prices fuel limited-service salesAfter a sluggish 2005, sales at limited-service restaurants jumped9.1% due to strong consumer demand across the country.Faced with rising gasoline prices, many consumers opted to“trade down” from full-service restaurants, which saw a 3.9%increase in sales for the second year in a row.

Bar sales fizzledCanadians’ thirst for barsand nightclubs continuedto wane in 2006, as totalsales in this segment fell4.4%. Since 2000, thenumber of taverns, barsand nightclubs hasdropped 18.0%, for a lossof 1,096 units. These losseshave been felt all acrossCanada. An aging population, smoking bansand shrinking profit

margins led some operators to convert to full-service restaurants,while others were forced to close their businesses permanently.

Customers savour convenience Busy consumers have responded favourably to the convenienceof foodservice establishments in retail stores, resulting in averageannual growth in this segment of 8.5% since 2001.

Healthy demand for foodservice lifted the foodservice share oftotal food sales in Canada from 40.4% in 2005 to 41.4% in 2006. This remains well below the 47.9% market share captured by the foodservice industry in the U.S., however,where consumers enjoy higher disposable income and no federaltax on restaurant meals.

Real Change in Total Foodservice Sales

2.5%

4.7%

-0.1%

-1.2%

2.6% 2.9%

0.1%

1.0% 1.4%

-2%

-1%

0%

1%

2%

3%

4%

5%

1999 2000 2001 2002 2003 2004 2005 2006-p 2007-f

Foodservice Share of the Total Food Dollar — Canada

Source: CRFA, Statistics Canada p - preliminary; f - forecastNote: Real refers to inflation-adjusted growth.

Source: CRFA, Statistics Canada and the National Restaurant Association Note: Total food dollar includes spending by consumers, tourists, businesses, institutions and government at foodservice operations, grocery and convenience stores.

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

p - preliminary; f - forecast


STATE OF THE INDUSTRY

• Average unit volume for contract and social caterers, which saw exceptional growth of 16.0% in 2005, moderated to 2.9% in 2006.

• Taverns, bars and nightclubs had the lowest average unit volume in 2006, combined with the weakest sales growth of all commercial segments (2.8%).

Commercial Foodservice 78% $1,228 3.5%

Full-service Restaurants 36% $573 3.5%

Limited-service Restaurants 31% $481 4.1%

Contract and Social Caterers 6% $95 3.8%

Taverns, Bars and Nightclubs 5% $79 -0.2%

Non-Commercial Foodservice 22% $348 4.8%

Accommodation Foodservice 10% $157 4.4%

Institutional Foodservice 6% $95 5.8%

Retail Foodservice 2% $31 8.5%

Other Foodservice 4% $64 3.0%

Total Foodservice 100% $1,576 3.8%

Market Share by Segment

2006 Market Share

2006 Per CapitaSpending 1

Average Annual Sales Growth Since 2001 2

Operations whose primary business is food and beverage service.

Includes licensed and unlicensed fine-dining, casual and family restaurants as well as restaurant-bars.

Includes quick-service restaurants, cafeteria, food courts and take-out and delivery establishments.

Includes contract caterers supplying food services to airlines, railways, institutions and recreational facilities, as well as social caterers providing food services for special events.

Includes bars, taverns, pubs, cocktail lounges and nightclubs primarilyengaged 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 restaurants in any of these settings are counted in commercial restaurant sales if they are owned by the restaurant chain.

Foodservice in hotels, motels and resorts.

Foodservice in hospitals, residential care facilities, schools, prisons, factories, remote facilities and offices. Includes patient and inmate meals.

Foodservice operated by department stores, convenience stores and other retail establishments.

Includes vending, sports and private clubs, movie theatres, stadiums and other seasonal or entertainment operations.

Includes commercial and non-commercial foodservice.

• Full-service restaurants had the highest average unit volume in 2006 as slow sales were partially offset by a decline in the number of establishments.

• Limited-service restaurants posted the strongest growth in average unit volume of all commercial segments in 2006, following weak gains in 2005.

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%

Average Unit Volumes1 - Canada

2006 Average Unit Volume

% Change‘06/’05

% Change‘05/’04

• 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

1 Per capita spending is calculated by dividing foodservice sales by the total population.2 Growth rate is based on compounded annual sales.

Source: Statistics Canada1Average 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


$37.1 $38.7$41.4 $42.7 $44.0 $44.5

$46.9 $48.7$51.4 $53.5

$0

$10

$20

$30

$40

$50

$60

1998 1999 2000 2001 2002 2003 2004 2005 2006-p 2007-f

($ billions)

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

Source: CRFA and Statistics Canada p - preliminary; f - forecast

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

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 %

Foodservice Sales Forecast 2007

Total Foodservice Sales

2007 Forecast(Millions of Dollars)

% Change‘07/'06

% Change‘06/'05

CRFA’s 2007 foodservice forecast of 4.1% growth marks aslowdown from 2006, when foodservice sales grew by 5.6%.This slowdown will be due largely to a moderation in disposableincome growth across Canada, which will grow 5.2%.

Total foodservice industry revenues in Canada will grow 4.1% to reach a record $53.5 billion in 2007, fueled by rising household income in Western Canada. Adjusted for menu inflation, total foodservice sales will grow just 1.4%.

• Accommodation foodservice is set to lead the way with year-over-year sales growth of 5.1% in 2007. This is largely due to an expected increase in domestic travel, which accounts for 13.9% of total foodservice revenue.

• Sales at full- and limited-service restaurants, whichaccount for two-thirds of total foodservice industry sales, will see steady growth of 4.5% and 4.3%, respectively.

• Robust development of natural resources – particularly in Western Canada – will boost the demand for foodservice atremote camps, lifting total caterer sales 2.9% in 2007.

• 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 departmentstore restaurants – will lift retail foodservice by 4.1% in 2007.

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.


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 (excludingnon-commercial foodservice).

• Full-service restaurants will post above-average growth of 4.2% per year between 2007 and 2010 as an aging populationdrives sales in this segment. Caterers will benefit from increased contracting out and growth in remote foodservice.

• Over the next four years, limited-service restaurants will advance an average 3.8% per year, on par with the industry average.

• Taverns, bars and nightclubs will post the weakest growth of all commercial foodservice segments as more Canadians choose to socialize at home. Restrained consumer demand will limit average annual sales growth at bars to 1.7% through 2010.

7.3%

3.4%

4.2%

5.6%

3.6%4.2%4.2%

3.5%

1.5%

2.3%

3.6%

6.9%

4.2%

6.1%

5.2%

4.3% 4.4%4.6%

3.7%

4.0%4.7%

0%

2%

4%

6%

8%

Foodservice SalesDisposable Income

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

F O R E C A S T

1.7%

3.6%

3.8%

3.9%

4.2%

0% 1% 2% 3% 4% 5%

Taverns, Bars andNightclubs

Contract and SocialCaterers

Limited-serviceRestaurants

Total CommercialFoodservice

Full-serviceRestaurants

After factoring out inflation and population growth, foodservicesales will remain relatively flat, with average annual real percapita growth of just 0.5% between 2007 and 2010. This marksa sharp deceleration from the 3.5% average annual real percapita growth registered between 1997 and 2000.

While income and employment will remain the dominant forces driving foodservice demand, commercial foodservicesales will continue to underperform income growth, limited by the following factors:

A plateau in the number of unitsIn the past five years, the number of foodservice units fell1.9%, compared to a 4.1% increase between 1997 and 2000. In the coming years, it is expected that the number of unitopenings will offset closures, maintaining the total populationof restaurants, bars and catering locations between 62,500 and 63,500 units to 2010.

Slower economic growth in OntarioOntario accounts for nearly 40% of Canada’s foodservice industry, but foodservice sales growth in the province has fallenbelow the national average due to significant job losses in themanufacturing sector, a decline in tourists and slow disposableincome growth. Between 2007 and 2010, sluggish economicgrowth and a further decline in tourism will continue torestrain foodservice sales.

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

CRFA’s Foodservice Forecast: Change in Sales(2007-2010)

Source: CRFA’s Long Term Forecast

Source: CRFA's Long Term Forecast

Change in Commercial Foodservice Sales

CRFA uses an econometric model to forecast commercial foodservice salesby using the Conference Board of Canada’s forecasts of disposable income,real GDP, employment and tourism.

WESTERN GROWTH• 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 strongesteconomy and fastest employment growth in 2007. Foodservicesales in British Columbia and Alberta will mirror this trend –growing 5.1% and 5.4% respectively – making these the toptwo 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 continueto 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 disposableincome 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.

Atlantic Canada5.5%

Ontario and Quebec60.6%

Prairie Provinces5.0%

Western Canada28.9%

Commercial Foodservice: Western Canada

1 Growth rates are undjusted for menu inflation2 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

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%

TOP-LINETREND


Regional Share of Total CommercialFoodservice Sales in 2006

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

Employment GrowthReal GDP Growth

3.9%

2.4%

2.8%

1.5%

2.0%

0.9%

3.0%

0.5%

Western CanadaPrairie ProvincesOntario/QuebecAtlantic Canada

Economic Forecast - 2007

Source: Conference Board of CanadaSource: Statistics Canada

Growth in '07 1

Growth in '06 1

2006 Sales (in millions)

Average UnitVolume 2

UnitsChain

Share ofUnits

IndependentShare of

Units

Pre-tax Profit(% of operating

revenue)Bankruptcy

Rate


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

2006 was a strong year for foodservice sales in the Prairieprovinces, and a welcome change from 2005, which saw salesgrowth dip into negative territority. After a year of recovery,growth is expected to moderate in 2007.

• Saskatchewan, which saw flat foodservice sales in 2005, recorded 9.9% growth in 2006 – second only to Alberta.Growth in 2007 will be slightly below the national average.

• Foodservice sales in Manitoba posted a strong recovery in 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’sand Saskatchewan’s foodservice industries surpassed $1 billion in foodservice sales.

• Like provinces to the west, Saskatchewan and Manitoba will increasingly feel the effects of labour shortages in foodservice.

Commercial Foodservice: Prairie Provinces



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%

Growth in '07 1

Growth in '06 1



UnitsChain

Share ofUnits

IndependentShare of

Units


revenue)Bankruptcy

Rate

Atlantic Canada5.5%



Western Canada28.9%

Regional Share of Total Commercial Foodservice Sales in 2006

4.3%

5.6%

3.3%3.7%

0%

1%

2%

3%

4%

5%

6%

Western Canada Prairie Provinces Ontario/Quebec Atlantic Canada

2005 Operating Profit Margins(% of operating revenue)

Source: 2007 Foodservice Operations Report, Statistics Canada and CRFA

Source: Statistics Canada


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 nationalfoodservice sales.

As Canada’s two largest provincial economies, heavily relianton manufacturing, Ontario and Quebec are sensitive to the highCanadian dollar, which limits exports, and economic conditionsin the U.S., which are expected to be weak in 2007.

As a result, job and income growth in Ontario and Quebecwill remain sluggish in 2007, and foodservice sales in theseprovinces will underperform the national average for the sixthtime in the past seven years.

• 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.

Commercial Foodservice: Ontario and Quebec

-8.9%

-29.6%

-2.5%

-15.4%

-35%

-30%

-25%

-20%

-15%

-10%

-5%

0%

Ontario and Quebec

Rest of Canada

Manufacturing Jobs International Tourists

Economic Impact of a High Canadian Dollar(decline in manufacturing and tourism since 2002)


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%

• 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%.

1 Growth rates are undjusted for menu inflation2 Data are based on unit counts from the Monthly Restaurant, Caterers and Taverns SurveySource: Statistics Canada, CRFA's Long Term Forecast and ReCount/NPD Group

Growth in '07 1

Growth in '06 1



UnitsChain

Share ofUnits

IndependentShare of

Units


revenue)Bankruptcy

Rate

Atlantic Canada5.5%


Prairie Provinces

5.0%

Western Canada28.9%




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%

ATLANTIC CANADA• Sluggish employment gains stall foodservice sales in Atlantic Canada

Atlantic Canada ranked last in foodservice sales growth in2006 as sales declines in Newfoundland and Labrador and New Brunswick combined to offset the gains in Prince EdwardIsland and Nova Scotia.

A decline in tourism, rising gasoline prices and below-averagedisposable income growth are largely to blame for lacklustreregional sales that have underperformed the national averagein 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.

• 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% of all foodservice establishments closed in Canada since 2000 – a notable figure given that the region accounts for just 6.8% of foodservice establishments in Canada.

• A decline in units, combined with a drop in domestic and tourist spending, reduced foodservice sales in Newfoundlandand 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, lacklustrespending will limit foodservice sales growth in 2007 to 2.8%.

• On the heels of a respectable 4.5% gain in foodservice salesin 2006, foodservice sales in PEI will advance 4.3% in 2007.

Commercial Foodservice: Atlantic Canada

• Foodservice sales in Nova Scotia rose 6.0% in 2006 followinga 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.



Growth in '07 1

Growth in '06 1



UnitsChain

Share ofUnits

IndependentShare of

Units


revenue)Bankruptcy

Rate

Atlantic Canada5.5%



Western Canada28.9%




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 inagriculture; forestry, pulp and paper; banking; and oil andgas extraction combined.

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

• Most foodservice operations are small businesses. In 2003, 55.5% of foodservice operators employed fewer than 10 people. Another 42.9% employ between 10 and 99. Only1.6% of foodservice businesses employ 100 or more people.

870.0 873.4 910.6 920.8 943.5 951.01,006.2 1,017.5 1,036.9 1,009.0

1,040.3

0

200

400

600

800

1,000

1,200

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

(in thousands)

Number of Foodservice Employees in Canada

7.1% 5.4%

12.1%13.9%

0%

5%

10%

15%

20%

25%

20062000

Domestic TouristsForeign Tourists

19.2% 19.3%

Tourism Share of Total Foodservice Sales

Source: Labour Force Survey, Statistics Canada

• Tourism accounts for 19.3% of total foodservice sales in Canada• Domestic tourism increasing in importance to foodservice

International travel to Canada stallsInternational tourism accounts for 5.4% of spending on foodservice but has been in steady decline in recent years. Thenumber of international travellers to Canada has fallen 31.3%since 2000 and international tourist spending on foodservicehas decreased 5.9%. This decline in the number of international visitors is largely due to border delays, high gas prices and the high Canadian dollar, which have caused the number ofsame-day trips from the U.S. to Canada to plummet.

The outlook for international travel is equally bleak. Overthe next several years, a strong Canadian dollar, above-averageoil prices and the Western Hemisphere Travel Initiative (WHTI)– which imposes new passport requirements on Canada/U.S.travellers – will further discourage cross-border travel, with theeconomic impact felt most strongly by border communitiesand provinces that rely on tourism originating in the U.S.Analysis by the Conference Board of Canada indicates thatWHTI will cost the Canadian tourism industry $3.3 billion inlost revenue between 2007 and 2010, with the largest declinesin Ontario and British Columbia.

Domestic tourism takes flightThe good news is that while international tourism declines,spending on foodservice by domestic travellers is on the upswing.Since 2000, domestic tourist spending on foodservice hasincreased 43.0%, and domestic travel now accounts for 13.9% of total foodservice revenue.

TOURISM CHALLENGESTOP-LINE

TREND

Source: Statistics Canada and CRFA


1.8%1.7%

0.9%

0.0%

0.5%

1.0%

1.5%

2.0%

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

Young workers in short supplyThe industry provides a wide range of part-time and entrylevel 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 following11 years. By 2022, there will be 340,000 fewer young people in Canada than there are today, creating another challenge forfoodservice operators.

• 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 findpeople 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 thismost acutely, but operators in every region of Canada areexperiencing a labour crunch.

Even in Atlantic Canada, where the unemployment rates arethe highest in Canada, there is a chronic shortage of workers dueto out-migration. Between July 2005 and July 2006, 13,000people in Atlantic Canada left the region for work in Alberta.

Labour shortages have profound effects for foodservice operators:

Higher wages, fewer workersIn Alberta, average weekly wages in foodservice have soaredby more than 18.7% in the past two years – almost twice asfast as the province’s average industrial wage. At the sametime, because the labour crisis is a “people shortage” and notjust a “skills shortage,” operators are often unable to findenough workers to adequately staff their establishments, forcingthem to reduce hours of operation and forgo potential sales.

Lack of people = lost opportunitiesDespite a booming economy and growing incomes, sales atfull-service restaurants in Alberta were flat in 2006 – due inpart to decreased hours of operation for many restaurants.Similarly, even though Alberta is home to the fastest-growingfoodservice industry in Canada, unit growth has not kept pace with sales growth due to the difficulty in finding skilledtradespeople to construct and renovate a new restaurant, andpeople to staff the restaurant.

What’s neededOver the next nine years, Canada’s commercial foodserviceindustry will require an additional 181,000 workers. While thedemand for foodservice employees will grow an average of1.8% per year over the next nine years, the working-age population of 15- to 69-year-olds will grow by just 0.9%.

0

3,500

4,000

4,500

'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 '24 '25

(in thousands)

Population of 15 to 24 Year Olds to 2025(Canada)

Demand For Labour Will Outpace Canada’s Population Growth(Average annual growth, 2006 — 2015)


LABOUR SHORTAGETOP-LINE

TREND

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

PROFIT MARGINS


• The average pre-tax profit margin for foodservice operators in Canada has declined from 5.8% to 3.8%

Food and beverage costs

35.6%

Salaries and wages31.5%

Rental and leasing7.0%

Repair andmaintenance

2.4%

Depreciation2.8%

All other expenses11.3%

Pre-tax profit3.8%

Utilities includingtelephone

2.8%

Advertising andpromotion

2.8%

Financial Operating Ratios - 2005(share of operating revenue)

5.6%6.0%

4.3%

7.0%

5.8%

3.1%

4.9%

2.7%3.3%

3.8%

0%

1%

2%

3%

4%

5%

6%

7%

8%


Limited-serviceRestaurants

Contract and Social Caterers

Taverns, Bars and Nightclubs

Total Industry

20012005

Operating Profit Margins



The pre-tax profit margin for Canadian restaurants, bars andcaterers rose to 3.8% in 2005 – a small improvement over the3.7% recorded in 2004, but well below the 5.8% profit marginachieved in 2001.

Food and labour costs – the two largest expenses for foodservice operators – consumed 67.1% of operating revenuein 2005, up from 66.5% in 2004. In contrast, rental and leasingcosts fell in 2005, to 7.0% from 7.3% in 2004. A decline in therepair and maintenance and ‘all other expenses’ categoriesalso led to a slight increase in the profit margin.

Limited-service stays strong• 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 restaurantsrose 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 fares best, Ontario falters• 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 everydollar spent at restaurants in Quebec went to payroll – the highest percentage in the country.

FOODSERVICE UNITS


• The number of commercial foodservice units in Canada stays relatively flat• Chain restaurants continue to expand their market share

The number of restaurants, caterers and bars rose just 0.1% to62,666 units in 2006. While there was a slight increase in thenumber of restaurants, these gains were partially offset by a5.5% decline in the number of taverns, bars and nightclubs.Since 2000, the number of taverns, bars and nightclubs hasdeclined by 18.0% – a loss of 1,096 units.

Unit growth slows in recent yearsDuring the 1990s, the number of foodservice units rose anaverage of 3.5% per year. In recent years, however, the numberof units has been relatively flat, indicating a balance betweensupply and demand for food away from home.

Chains and Top 50 stay strongSince 1998, the market share of chain restaurant units hasincreased from 32.7% to 37.9% in 2005.

The top 50 foodservice companies account for 53.5% oftotal commercial foodservice sales, and 36.1% of units. Morethan one quarter (26.1%) of all commercial foodservice salesare generated by the top five foodservice companies, whichalso account for 13.7% of units.

Bankruptcies tumbleThe number of commercial foodservice bankruptcies1 fell from 777 in 2005 to 705 in 2006. The bankruptcy rate in thefoodservice industry slipped to 1.1% in 2006, its lowest levelin more than two decades.

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

42,4

70 47,8

7251

,091

53,12

455

,853

58,7

8160

,162

61,2

2462

,663

62,7

7163

,744

63,8

5063

,332

63,5

1763

,306

62,6

2962

,666

Commercial Foodservice Units

53.5%

43.3%

36.1%

29.1%

0%

10%

20%

30%

40%

50%

60%

50028991

Share of Commercial Foodservice Revenue

Share of Commercial Foodservice Units

Top 50 Foodservice Companies

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.

Source: Business Register, Statistics Canada

Source: CRFA; Foodservice & Hospitality; and Business Register, Statistics CanadaSales and units for a small number of the top 50 companies include operations outside of Canada.

-14.5%

-5.0%

1.8%

2.0%

2.5%

8.4%

14.1%

21.6%

24.2%

41.2%

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

Italian

Other QSR

Chicken

Hamburger

Pizza

Mexican

Donut

Gournet Coffee and Tea

Asian

Subs

Fastest-Growing Menu Themes(QSR units, 2005 over 2000)

Source: ReCount/NPD Group

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


Grocery continues to dominateHealthy growth in household spending at restaurants has beenmatched by increased spending at grocery stores. As a result,the foodservice share of the household food dollar has remainedrelatively flat at 24.5% – an increase of only 2.5 percentagepoints in the last decade.

The vast majority of meals – seven out of 10 – are preparedat home. Restaurants provide only one in ten meal occasions.

The income connectionHousehold spending on foodservice is closely tied to income.For every $1,000 increase in income, foodservice spendingrises by $28.90.

Bars lose out to liquor storesIn recent years, there has been a shift to household spending atliquor stores – a 26.7% increase since 2000, compared to a6.7% increase in alcohol purchases at licensed establishments.While this trend can be partially attributed to an aging populationand smoking bans in many parts of the country, rising alcoholprices at licensed establishments may be the biggest factor.

The average Canadian household spent $1,931 on food and alcoholfrom restaurants and bars in 2005, $154 – or 8.7% – more thanin 2004. Of that total amount, $1,677 was spent on food fromrestaurants and $254 on alcohol from licensed establishments.

Rising disposable incomes and the busy lifestyles of manyCanadians are largely responsible for this spending increase.Other notable trends in household spending include:

Regional disparityGrowth in spending in 2005 was driven primarily by BritishColumbia and Alberta, where residents enjoy above-averagedisposable 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.

$1,381$1,514 $1,538 $1,536

$1,654$1,737 $1,737 $1,777

$1,931

$0

$500

$1,000

$1,500

$2,000

1997 1998 1999 2000 2001 2002 2003 2004 2005

Average Household Spending at Restaurants in Canada

Source: 2005 Survey of Household Spending, Statistics Canada

Prepared and eaten at home

66% Ready-to-eat mealpurchased from

grocery - eaten inhome 2%

Skipped8%

Purchased from restaurant - eaten

in home 2%

All other away-from-home 8%

At a restaurant8%

Carried from home8%

Where Canadians Eat Their Meals

Source: Eating Patterns in Canada - October 2006

Between 2000 and 2006, drink prices at licensed establishmentsjumped 18.5%, compared to an 11.8% increase in prices atliquor stores.

$1,096

$1,486

$1,504

$1,594

$1,651

$1,664

$1,777

$1,931

$2,057

$2,252

$2,293

$0 $500 $1,000 $1,500 $2,000 $2,500

Newfoundlandand Labrador

New Brunswick

Nova Scotia

Saskatchewan

Quebec

Prince EdwardIsland

Manitoba

Canada

Ontario

Alberta

British Columbia

Average Household Spending at Restaurants in 2005

Source: 2005 Survey of Household Spending, Statistics Canada


• Popularity of breakfast/morning snacks surges• Breakfast occasions outpace lunch at quick-service restaurants

Quick-serviceRestaurants


RestaurantAverage

Top 5 Menu Items*

BREAKFAST/MORNING SNACK

Average Check Size 1

Share of Meal Occasions

Percentage Off-Premise

$2.97

21.7%

69.0%

$2.29

26.1%

82.0%

$6.61

12.1%

8.0%

1. Regular coffee 58.8%2. Hash browns/home fries 10.2%3. Eggs (excluding omelette) 9.4%4. Sliced bread/toast/English muffin 8.4%5. Bagels 8.4%Fastest growing item: Iced coffee/frappes

LUNCH




$6.75

26.6%

46.0%

$5.28

24.3%

60.0%

$10.29

30.2%

18.0%

1. French fries 28.3%2. Regular soft drinks 22.3%3. Hamburgers 17.9%4. Regular coffee 13.4%5. Salads 11.8%Fastest growing item: Bacon cheeseburger

SUPPER




$10.30

35.7%

62.0%

$6.59

30.7%

83.0%

$15.90

53.3%

32.0%

1. French fries 30.6%2. Pizza 21.2%3. Chicken/turkey/poultry 20.9%4. Regular soft drink 20.2%5. Salads 17.5%Fastest growing item: Individual slice pizza

AFTERNOON/EVENING SNACK




$3.31

15.9%

73.0%

$2.69

18.8%

77.0%

$8.91

4.3%

29.0%

1. Regular coffee 30.8%2. Ice cream/yogurt/frozen yogurt 13.9%3. Donuts 9.2%4. Regular soft drinks 6.7%5. French fries 5.6%Fastest growing item: Cappuccino/latte

Meal Occasions by Daypart

1 Per person, includes taxes but excludes tipsSource: CREST/NPD Group * Share of daypart occasions

As Canadians try to balance busy work and home lives,fewer restaurant meals are eaten on premise. This is particularlytrue during the breakfast and supper dayparts, when more than80% of meals purchased at restaurants are eaten off premise.

Although breakfast is gaining in popularity, supper remainsthe most popular daypart, accounting for 30.7% of meal occasionsat quick-service restaurants and 53.3% of meal occasions atfull-service restaurants.

The share of breakfast/morning snack occasions has jumped to21.7% in 2006, up from 15.5% in 1996 – making breakfast thefastest growing daypart at Canadian restaurants.

For the first time, the breakfast/morning snack share ofoccasions at quick-service restaurants (26.1%) surpassed thelunch share of QSR meal occasions (24.3%). The introductionof new breakfast sandwiches and the growing popularity ofcoffee have contributed to this trend.

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.

CHANGING MEALTIMESTOP-LINE

TREND


RESTAURANT VISITS

• Time-starved consumers are eating more restaurant meals off-premise• Quick-service restaurants account for nearly two-thirds of restaurant visits

One or more members of a Canadian household visited arestaurant for a meal or snack an average of 536 times in 2006,up 1.9% over 2005 and 19.1% over 1996. The majority of visits,64.2%, were to quick-service restaurants.

205 209

290

50

100

150

200

27

41

113

163 188

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

On Premise Take Out Drive Through Telephone Delivery

Annual Number of Visits per Householdby On Premise and Off Premise

Source: CREST/NPD Group

344

73 63

8

47

0

50

100

150

200

250

300

350

400

Quick Service Family/Midscale Casual Dining Fine Dining Other

Annual Number of Visits per Household – 2006


Check sizes riseThe average check size per person rose to $6.62 – a 4.1% increaseover 2005. This increase marks the largest year-over-year growthsince CREST began collecting data in 1995.

2006 Year-over-yearchange

Quick Service

Family/Midscale

Casual Dining

Fine Dining

Other

$4.41

$9.66

$14.19

$30.20

$3.92

3.5%

4.4%

6.8%

4.5%

-6.7%

2005

$4.26

$9.25

$13.29

$28.89

$4.20

$6.36 $6.62 4.1%

Source: CREST/NPD Foodservice Information GroupAverage check includes taxes but excludes tips.

Average Check Per Person

Off-premise dining takes offCanadians are eating more restaurant meals off-premise,turning to drive-throughs and take-out as a way to enjoy theconvenience of prepared meals or snacks on the go. In 2006,the average Canadian household ate meals or snacks obtainedfrom drive-through, take-out or telephone delivery 328 times, compared to 233 occasions in 1997. The growth in the numberof 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 mealoccasions in 2006, has fallen from 45.6% in 1997.

For CREST definitions, see page 25.

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 Canadianrestaurants, but their share of meal occasions has dipped below the 20% mark for the first time since the Top 10 list was created in 1994.

Regular coffee remains the most popular beverage ordered atrestaurants, included in 23% of all meal occasions. Hot tea jumpedfrom fourth place to third – switching places with diet soft drinks.

French fries

Hamburgers

Salads

Chicken

Pizza

Sandwiches

Chinese/Oriental/stir fry

Ice cream/frozen yogurt

Donuts

Soup

19%

10%

10%

10%

10%

9%

5%

4%

4%

4%

-5.2

-1.9

-2.0

-1.7

-2.0

-0.1

-0.7

-0.9

1.0

-1.3

1

2

3

4

5

6

7

8

9

10

2006 Share ofOccasions

Change Since1998 (% points)

Top 10 Foods - 2006

Source: CREST/NPD Group and CRFAChicken: Nuggets/strips, fried, wings, BBQ/Grill/Charbroiled/Rotisserie, Baked/Roasted

Regular coffee

Regular soft drinks

Hot tea

Diet soft drinks

Juice

Milk/chocolate milk

Specialty coffee

Beer

Iced tea

Decaffeinated coffee

23%

14%

5%

4%

3%

3%

2%

2%

2%

2%

1.5

-3.3

1.3

-0.5

0.1

0.1

-0.3

-0.5

0.5

0.5

1

2

3

4

5

6

7

8

9

10

2006 Share ofOccasions

Change Since1998 (% points)

Top 10 Beverages - 2006

Source: CREST/NPD Group and CRFA

FASTEST GROWING

Iced coffee/frappes

Bacon cheeseburger

Side dish potato salad

Cookies (loose)

Tomato/vegetable juice

Individual pizza slice

Wrap/pita sandwich

Cocktails/liquor

Soft serve blend ice cream

Shakes/malts/floats etc.

WHAT'S SLOWING

Fried fish sandwich

Cinnamon rolls/buns

Lasagna/ravioli/stuffed veal

Main dish caesar salad

Hot/cold turkey sandwich

Brownies

Rice

Frozen yogurt

Soft serve ice cream sundaes


The changing popularity of various menu items is tracked by TheNPD Group’s CREST survey. The “growing” list shows the menuitems that made the biggest volume gains in 2006 compared to2005, while the “slowing” list shows the menu items that saw themost significant declines.

After slipping to fourth place in 2005, hamburgers regained second place in the top 10 foods of 2006, displacing salads andchicken. Pizza returned to its former position in fifth place, andChinese/Oriental/stir fry moved up one spot to seventh. Donuts,which were absent from the top 10 list 2005, reappeared at number nine while soup rounded out the top 10.

Since 1998, most of the top 10 foods have seen a drop inmeal occasions as Canadians’ tastes shift to ordering more ethnicfoods and fresh-prepared sandwiches and subs. These two categories have grown 27.7% and 47.1% respectively since 1998.

DEMOGRAPHIC SHIFT


48%

41%

59%

70% 70%72%71%69%74%

18% 21% 21% 21% 21%22%

33%

0%

20%

40%

60%

80%

Under 6years old

6 - 12years old

13-17years old

18-24years old

25-34years old

35-49years old

50-64years old

65 yearsand older

Quick-service restaurantsFull-service restaurants

2006 Share of Meal Occasions by Age Group and Segment


-2.8% -0.4%

29.5%

-5%0%5%

10%15%

20%25%30%35%

50+25–49< 25

2016Population

9.8million

13.4million

12.1million

Population Growth in Canada Between 2006 and 2016

Source: Ipsos-Reid, Jan. 26, 2005

• 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 expectedto grow by more than three million, to 38% of the population. Thismarks a sharp contrast from 25 years ago, when only 23% ofthe population was over the age of 50. Foodservice operators inall segments will need to adapt to the changing eating patternsand menu preferences of this rapidly growing age group.

Data from CREST/NPD Group show that as Canadians age, they tend to shift their restaurant visits from quick-service tofull-service restaurants. With more disposable income andmore time, seniors 65 and older source nearly 41% of mealoccasions at full-service restaurants, compared to less than22% for those aged 35-49.

Restaurants respondMany restaurants have added more options to their menus tomeet the needs of both older Canadians and younger households,offering more fresh, healthy menu items, premium ingredientsand portable snacks and meals. Some of the fastest-growingquick-service menu concepts feature freshly prepared subs andsandwiches, Asian foods and gourmet coffee and tea to meetthe on-the-go needs of busy consumers (see page 23).

Health concerns drive menu choices According to Ipsos-Reid surveys1, Canadians aged 50 and olderput more emphasis on freshness and nutrition than adults aged18 to 49. Older Canadians are also more concerned about sugarcontent, carbohydrates and eating enough vegetables. Concernabout the sodium content of foods also increases with age,with three-quarters of Canadians aged 55 and older expressinga desire to incorporate sodium-reduced foods into their diets.

Hectic lifestyles impact eating While younger Canadians share some of these health concerns,they are more likely to find busy lifestyles an impediment tohealthy eating. More than half of Canadians aged 18-34 agreethat their life is so hectic they find it hard to include healthierfood options on a daily basis, compared to 42% of Canadiansaged 35-54 and 30% of Canadians aged 55 and older. By contrast,as older Canadians reach retirement age, the work-life balanceshifts, affording more time to eat what and where they wish.

1Canadians aware of “good” and “bad carbohydrates” but do not really understand them (Mar. 10, 2004); Canadians on healthy eating (Jan. 26, 2005);President’s Choice second annual healthy eating survey (Feb. 2, 2006)

When shopping for groceries, do you look for versions of theproducts that have this feature: (respondents that answered yes)

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%

Age 18-34 35-54 55+

TOP-LINETREND


food service facts 2007

Documents