Canadian Occupational Projection System (COPS)

NAICS 7223; 7224; 7225

This industry comprises establishments engaged in preparing meals, snacks and beverages for immediate consumption on and off the premises. It is composed of three segments: special food services (caterers and mobile food services); drinking places serving alcoholic beverages (bars, taverns, pubs and night clubs); and full-services restaurants and limited-service eating places (family and fine-dining restaurants, fast food restaurants, coffee shops). It does not include food service activities that occur within establishments such as hotels, civic and social associations, amusement and recreation parks, and theatres. However, leased food-service locations in facilities such as hotels, shopping malls, airports and department stores are included. Full- and limited-services restaurants are by far the largest segment, accounting for 93% of employment in 2021, followed by special food services (5%) and drinking places (2%). The 4-digit NAICS breakdown for GDP is not available. Overall, the industry employed 827,200 workers in 2021 (down from 1,028,800 in 2019), distributed proportionally to provincial population: 38% in Ontario, 20% in Quebec, 17% in British Columbia, 12% in Alberta and 13% in the remaining provinces, with women accounting for the majority of the workforce (55%). The industry is characterized by much lower wages than the national average and by the largest concentration of part-time workers in the economy, accounting for 51% of its workforce. Food services also provide many young people with their first job, as 45% of workers were aged between 15 and 24. Key occupations (4-digit NOC) include:

• Food counter attendants, kitchen helpers and related support (6711)
• Cooks (6322)
• Food and beverage servers (6513)
• Restaurant and food service managers (0631)
• Food services supervisors (6311)
• Maîtres d’hôtel and hosts/hostesses (6511)
• Chefs (6321)
• Bartenders (6512)
• Bakers (6332)
• Delivery and courier service drivers (7514)

Food services are heavily reliant on consumer spending and are particularly sensitive to growth in disposable income and changes in discretionary expenditures. Tourism activity, both from the domestic and foreign sides, is an additional driver of demand, as non-local consumers account for about one quarter of the industry’s revenues. Demand for food services also relies, to a smaller degree, on business activity (e.g. business lunches, business travel and conferences). Following a slight contraction in the aftermath of the 2008-2009 recession, the industry’s output quickly recovered in 2011 and continued to expand at a solid pace until 2019. Robust growth in consumer spending, stimulated by a healthy labour market, rising disposable income and low interest rates, combined with a growing affinity of Canadians to dine out, were key drivers behind the industry’s solid performance. Tourism activity was an additional driver of growth, as the sharp depreciation of the Canadian dollar in 2014-2015 attracted a large number of foreign tourists to Canada, particularly Americans, and encouraged more Canadians to choose vacation within the country, increasing demand for food services. Lower transportation costs resulting from lower fuel costs, and major events such as the 150th anniversary of the Canadian Confederation and the 375th anniversary of Montreal, also promoted greater tourism activity.

However, the industry was devastated by the COVID-19 pandemic, with home confinement, physical distancing measures, telework policies and travel restrictions leading to a drastic fall of 31% in output in 2020 alone. Due to the continuation of public health restrictions in 2021 (such as closures or capacity limits to in-person dining/drinking at restaurants and bars), the demand for food services and drinking places remained far below typical levels, but the industry was able to recuperate some of its losses, with output rebounding by 14%, largely supported by food delivery and take-out services. This resulted in anemic growth in real GDP for the entire period 2012-2021, averaging 0.1% annually, although this indicator masks the fact that the industry experienced robust growth prior to the pandemic (+3.0 annually). After peaking in 2019, employment fell by 21% in 2020 and very few of the job losses were recuperated in 2021 (+2.6%), leaving employment well below its pre-pandemic level and resulting in an average decline of 1.0% per year over the past decade. Again, this indicator masks the fact that job creation in the industry was similar to the national average prior to the pandemic (+1.3% annually), recording all the gains in food services as employment contracted significantly in drinking places. Overall, productivity growth was positive, averaging 1.1% annually in the past ten years, with most of the gains occurring prior to the pandemic when restaurants begun to explore more sophisticated technological innovations, resulting in output growth exceeding employment growth. Applications such as self-service ordering kiosks and the ability for customers to place orders and pay via mobile devices have automated operations traditionally involving several steps and personal interaction with clients and among workers. The rise in minimum wages is an additional factor that encouraged firms to adopt new technologies and increase productivity to maintain their profit margins. The industry is also facing indirect competition from the growing popularity of home meal solutions and meal kit delivery services, such as those supplied by Goodfood and HelloFresh.

Over the projection period, output growth in food services is expected to accelerate markedly, as the industry continues to recover from the pandemic and keeps expanding. The lifting of public health restrictions; the reopening of restaurants and bars at full capacity; the gradual return of workers to the office; and the recovery in travel, tourism and recreational activities are all factors projected to lead to additional jumps in output in 2022 (+17%) and 2023 (+8%). However, once the output fully recovers, its pace of growth is expected to soften significantly, as strong inflation and higher interest rates will put pressures on household budgets, restraining growth in discretionary spending devoted to restaurants and bars. When inflation returns to its target rate of 2%, interest rates should eventually start to decline, relieving some pressures on household budgets and discretionary spending. That said, a number of factors are expected to limit the capacity of the industry to expand moving forward. For example, as more firms and organizations adopt a hybrid work model and use online platforms for meetings and conferences to save on business travel, the demand for food services in downtown office-centric areas will struggle to return to pre-pandemic levels. The gradual slowdown anticipated in Canada’s employment growth and massive retirements of baby-boomers from the labour market are also expected to restrain growth in disposable income and consumer spending over the longer term, including discretionary spending on food services. Moreover, if the dining habits among retiring baby-boomers follow the trends of the previous generation, they are likely to spend more of their food dollars at home as they age. On the positive side, tourism activity should continue to benefit from a favourable currency situation and a growing inflow of overseas travelers, particularly from emerging economies where demand for travelling is rising in line with higher incomes. The aging of Canada’s population is also expected to increase demand for food services from health care institutions, which account for more than half of institutional food services sales.

On average, the industry’s real GDP is projected to grow by a solid 3.9% annually over the period 2022-2031, driven by large increases in the first two years of the forecast. The strong acceleration in output growth relative to the previous decade is also expected to lead to a notable pick-up in employment, with job creation averaging 2.3% per year, recording most of the gains from 2022 to 2025. Thereafter, employment growth is expected to moderate in line with slower growth in output and additional gains in productivity. Overall, productivity growth is expected to accelerate at an average rate of 1.6% annually throughout the next decade, with a large part of the growth occurring in 2022-2023 in response to post-pandemic adjustments and frictions in labour supply. Indeed, because the industry was severely impacted by public health restrictions and a high level of uncertainty during the pandemic, many previously employed individuals have found jobs in more secure industries, leading to cyclical frictions in labour supply. Over the longer term, the industry will continue to explore ways to digitalize dining in order to improve productivity. Businesses are expected to increase the incorporation of data-gathering software and analytics programs into their operations via point-of-sale transactions, mobile applications, reservation systems, drive-thru traffic, customer rewards programs and social media. The technical feasibility of automation for various occupations within the industry given current technologies remains significant. For instance, the tasks performed by food counter attendants and kitchen helpers are at risk of being automated over the next 10 to 20 years. The shift in consumption patterns toward food delivery and take-out services, particularly from younger generations, is also expected to reduce labour intensity in some segments of the industry and increase productivity. Food services are characterized by a high degree of labour turnover due to the prevalence of part-time and seasonal work and much lower wages relative to other industries. Those factors, combined with demographic pressures on Canada’s labour force and a tight labour market, represent additional incentives for the industry to improve productivity as it may become increasingly challenging to compete with other industries to attract workers. As a result of significant gains in productivity and potential difficulties in retaining and attracting workers, employment in food services is not expected to return to pre-pandemic levels until the end of the projection period.

Real GDP and Employment Growth Rates in Food Services

Sources: Statistics Canada (historical) and ESDC 2022 COPS industrial projections.

Sources: Statistics Canada (historical) and ESDC 2022 COPS industrial projections.