Rising Wage Costs Eat Into Food Industry Profitability

    OTTAWA, March 15 /CNW Telbec/ - Canada's food services industry is
expected to turn a profit of about $350 million in 2007, returning profits
almost to 2005 levels, according to the Conference Board's first Canadian
Industrial Outlook: Canada's Food Services Industry - Winter 2007.
    "Rising labour costs caused industry profits to fall last year, and the
improved forecast in 2007 is due largely to food service operators passing
costs onto consumers," said Louis Thériault, Director, Canadian Industrial
Outlook Service. "For now, the costs associated with tight labour markets are
outweighing the benefits of strong growth in both sales and prices."
    Weak spending by foreign tourists on food, due to a declining number of
U.S. visitors, is also limiting the industry's performance. This outlook is
not expected to improve until after 2008 once travellers have adjusted to new
passport rules.
    Recently implemented public smoking bans in Ontario and Quebec have
curtailed receipts for drinking establishments by six per cent through the
first nine months of 2006 compared to the same period one year earlier. Losses
in this segment did not hold back the industry as a whole, which recorded
growth in receipts of 5.3 per cent over the same period. Since drinking
establishments account for only seven per cent of food service receipts, the
overall effect on the industry is small and can be considered a one-time shift
in sales.
    Canadian Industrial Outlook: Canada's Food Services Industry is a new
publication by the Conference Board. The Winter 2007 outlook is the first
publication of the food services industry forecast.

For further information:

For further information: Brent Dowdall, Media Relations, (613) 526-3090
ext. 448, corpcomm@conferenceboard.ca

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