Sales at full-service restaurants and limited-service eating places surpass pre-pandemic levels in 2022

Operators in the food services and drinking places subsector continued to recover in 2022, as most restrictions were lifted by mid-year and Canadians felt more comfortable going to restaurants and bars. Operating revenue at food services and drinking places increased by almost one-quarter (+24.3%) year over year to $84.2 billion in 2022, up 7.4% from 2019, just prior to the COVID-19 pandemic.

Three years after the start of the pandemic, sales at full-service restaurants and limited-service eating places exceeded pre-pandemic levels, while sales at special food services and drinking places had not yet fully recovered.

Ontario (+26.3%), Quebec (+32.0%) and British Columbia (+21.7%) reported the largest increases in dollar terms in 2022, accounting for about three-quarters (75.9%) of national sales.

Operating expenses for the subsector increased in 2022 to $80.7 billion, or 95.7% of operating revenue, up from $63.6 billion (93.8%) in 2021. With operating expenses growing at a faster pace than operating revenues, the subsector recorded a smaller profit margin in 2022 (4.3%).

The cost of goods sold remained the largest operating expense at food services and drinking places in 2022, accounting for just over one-third (35.8%) of total operating expenses (up 0.3% from 2021). The next largest operating expense was salaries, wages, commissions and benefits (32.6%), unchanged from a year earlier.

Fewer Canadians ordering takeout or delivery

E-commerce sales as a proportion of total sales declined by 2.4% to 9.8% in 2022, as customers returned to restaurants and relied less on takeout meals. Nevertheless, this was over double (117.2%) the e-commerce sales reported in 2019. The share of firms reporting e-commerce sales increased from approximately one-third (33.7%) in 2019 to just over half (51.4%) in 2022. The leading forms of e-commerce sales in 2022 were third-party websites (62.4%) and mobile apps (52.4%).

Alcohol sales up but remain below pre-pandemic levels 

Sales of food and non-alcoholic beverages accounted for 87.0% of total sales at food services and drinking places in 2022, down from 89.3% in 2021. As customers returned to licensed establishments, the share of alcoholic beverage sales rose from 8.1% in 2021 to 10.2% in 2022, but it remained 1.3% below the pre-pandemic level.

The remaining 2.8% of sales included other sales, such as merchandise sales, fees, slot machine sales, vending machine sales and other sales. “Other sales” could include grocery and other retail goods that restaurants sold during the pandemic to boost revenues.

Canadians paying more for food and drinks at restaurants and bars

Canadians were paying more for food purchased from restaurants (+6.7%) and alcoholic beverages served in licensed establishments (+4.2%) in 2022.

Sales at full-service restaurants outpace sales at limited-service eating places for the first time since 2019

Full-service restaurants contributed the most to the overall decline in operating revenues during the first two years of the pandemic. In 2022, however, sales bounced back by one-third (+33.8%) from the previous year to $38.2 billion, surpassing 2019 levels for the first time since the onset of the pandemic. Operating expenses at full-service restaurants rose at a higher rate (+35.8%) to $36.6 billion, resulting in a 4.3% operating profit margin.

Operating revenue at limited-service eating places (mostly fast-food restaurants) rose 12.1% in 2022 to $37.7 billion, also surpassing 2019 levels. Operating expenses increased 15.7% to $36.2 billion, resulting in an operating profit margin of 4.0%.

Sales at special food services rose by 47.8% to $5.9 billion in 2022. Despite robust growth, sales remained 9.8% below the 2019 level. Operating expenses in the special food services industry group increased 43.9% to $5.6 billion in 2022, resulting in an operating profit margin of 5.1%.

Operating revenues at drinking places, which include bars and taverns, increased 52.2% to $2.4 billion, while sales remained 13.2% lower than in 2019. Operating expenses increased 50.2% to $2.2 billion, resulting in an operating profit margin of 5.8%.

Food and drink sales continue to grow in 2023

In the 12 months to December 2023, the Monthly Survey of Food Services and Drinking Places reported that sales at food services and drinking places rose 12.9% from a year earlier.

Prices for food purchased from restaurants rose 6.5% in 2023, while prices for alcoholic beverages served in licensed establishments increased 5.3%.

Challenges remained as restaurants, bars and caterers dealt with rising prices, labour shortages and business closures.

To learn more about how businesses are facing these challenges, check out the Canadian Survey on Business Conditions.