Restaurant profits hold steady as menu prices increase: StatsCan

A third of restaurant goers (32 per cent) in British Columbia will leave no tip when the service is “below average” and their server is “clearly not busy" according to the poll.

If you want to open a restaurant and make money for a long time to come, then offering your guests table service might be your best bet.

New data from Statistics Canada shows that full-service restaurants have seen steady growth in profits over the past few years, while “limited-service” restaurants focused on fast-food and take-out orders have seen their profits shrink.

Full-service restaurants reported an operating profit of 3.4 per cent in 2016 – up from three per cent in 2015 and 2.8 per cent in 2014.

At 4.3 per cent in 2016, limited-service restaurants had higher profits – but that number was down from 4.7 per cent one year earlier and five per cent the year before that.

Both full-service and limited-service restaurants reported record revenue and expense levels in 2016.

Special food services – the term for food trucks, caterers and similar services – saw 1.1 per cent revenue growth, which was the smallest increase those businesses had seen since 2009.

Across the restaurant industry as a whole, the breakdown for 2016 saw operating revenue of $68 million and operating expenses of $65.2 million – each of which represent increases of more than six per cent over the year before.

In total, restaurants reported a profit margin of 4.2 per cent. Since Statistics Canada started tracking these numbers in 2012, operating profit has fluctuated between 4.2 per cent and 4.3 per cent.

According to Statistics Canada, menu inflation was one factor which drove the revenue increase. Restaurant food prices rose by 2.6 per cent in 2016, while restaurants rose their alcohol prices by 1.8 per cent, according to the Consumer Price Index.

On the expense side, Statistics Canada found that the cost of food and beverages represented 36.7 per cent of restaurants’ operating expenses, while salaries, wages, commissions and benefits made up 32.2 per cent of total expenses.