Many folks see owning a restaurant as a “license to print money.” We’re guessing that these are the same folks who recently purchased a swampfront timeshare and who believed their teenaged kid when s/he said that tattoo would “wash right off.”
Take the time to talk to the owner of a foodservice business and you’ll learn pretty quickly that the business realities of foodservice in Canada are a far cry from that lucrative license.
In 2006, the average foodservice operator in Canada earned pre-tax profits of 4.3%. That’s a decent improvement over 3.8% in 2005, but less than half the 9.5% for all Canadian industries. Food and labour costs are the two largest expenses for foodservice operators.
Curious about where the rest of the money goes?
If you want the full run-down, check out CRFA’s 2008 Foodservice Operations Report (now in print, it will be ready for release in early June). It can show you how your operating ratios compare with other establishments in your segment and your region. And feel free to quote from it extensively next time your brother-in-law wants to know why your new catering business can’t just “suck it up” whenever there’s another minimum wage hike.
If you’re looking for more top-line data, the 2008 edition of Foodservice Facts includes a full page on profit margins. Still meaty, just bite-sized!
