BRIEF FROM THE CANADIAN RESTAURANT
AND FOODSERVICES ASSOCIATION
Executive Summary
The Canadian Restaurant and Foodservices Association (CRFA)
represents the nation’s $61 billion restaurant industry, one of the largest
private sector employers in the country.
CRFA is pleased to have the opportunity to put forth specific
recommendations, which will advance the committee’s goals to attain high levels
of job growth and business investment in order to ensure shared prosperity and
a high standard of living for all.
Respecting the instructions from the committee, CRFA has limited
its recommendations to three and avoided multi-part recommendations. However,
given the myriad challenges facing the industry and the tremendous
opportunities to broaden the economic and social contributions of the industry,
this was a challenging task.
CRFA’s overarching recommendation is to establish a Private/Public
Task Force to study the central role of restaurants in Canada and make
recommendations to promote and grow this industry. This recommendation would
have limited cost implications but would create an opportunity to break down the
agriculture and tourism silos in Canada and unleash the potential of one of
Canada’s most important industries.
Under the broad category of healthy living, CRFA’s recommendation
is for government to provide adequate funding support for the Sodium Working
Group’s full slate of recommendations, and in particular a comprehensive,
multi-year consumer education campaign to increase awareness about the
importance of sodium reduction in the diets of Canadians. It is estimated that
$50 million is required for a sustained, national, consumer campaign.
Reducing the burden of profit-insensitive, job-killing payroll
taxes has always been a priority for labour-intensive restaurant businesses. CRFA
is proposing the introduction of a $2,000 Year’s Basic Exemption (YBE) ,
modeled after the YBE in the Canada Pension Plan, as the most efficient and
cost-effective way to deliver payroll tax relief to the groups most affected -
entry level workers and labour-intensive businesses. It is estimated that a $2,000
YBE would reduce EI revenue by approximately $1.4 billion per year.
Restaurant Industry Task Force
Background
During the recent federal election, food and agriculture policy
received a great deal of attention from politicians of all stripes. Although
the economic and employment contributions of restaurants exceed those of
agriculture and all supplier groups, the restaurant industry is treated as
secondary in food policy discussions. Similarly, over 50% of the jobs in the
tourism industry - by far the largest component of tourism jobs - are
restaurant jobs, and yet, the restaurant industry is an afterthought in
Canada’s tourism strategy.
Canada’s restaurant and foodservice industry is one of the largest
industries in the Canadian economy with annual sales of over $60 billion. More
than 1 million Canadians are proudly employed by the restaurant industry,
making it one of the country’s largest private sector employers. The industry’s
workforce represents 6.4% of the country’s employment, more people than
agriculture, forestry, automotive manufacturing, mining, oil and gas extraction
combined. An additional 250,000 Canadians are indirectly employed by the
industry as suppliers, distributors and consultants.
A recent poll commissioned by Kraft Foodservice Canada and CRFA
showed that the industry is the number one source of first jobs for Canadians
and that 80% of Canadians recognize restaurants as a vital source of
employment.
Every one million dollars in restaurant sales creates nearly 27
jobs, making our industry one of the top five job creators in Canada. The
diverse nature of our industry means the benefits are felt in every community,
not just major centres.
However, the industry is much more than a huge contributor to the
Canadian economy and, a major job creator. It is at the heart of what Canada is
about - food, youth, multiculturalism, agriculture, health and community.
It is comprised of passionate, entrepreneurial, creative and
resilient Canadians who continue to innovate to grow their businesses without
government subsidies or handouts. This is reflected in CRFA’s recently-released
Restaurant Outlook Survey based on results from the second quarter in 2011. Although
the restaurant industry has faced challenge after challenge, a guarded but
positive attitude prevails. Eight-two per cent of restaurant respondents expect
their sales will continue to grow at the same or greater pace over the next six
months. Eighty-three per cent of respondents said they will keep their
employment levels the same or increase employees over the next six months. As a
major employer of youth, this is good news for Canada and communities across
the country.
However, the industry is faced with some daunting challenges. The
high Canadian dollar relative to the U.S. and weak economic conditions
internationally have discouraged visitors to come to Canada and devastated
tourism. Food and labour represent the largest components of a foodservice
operator’s costs and there has been a sharp climb in both. Eight in 10
respondents to CRFA’s Restaurant Outlook Survey indicated rising food costs are
having a negative impact on their business. Two-thirds indicated that rising
labour costs are having a negative impact, and one in four operators is
struggling to find qualified labour. Given the competitive nature of the
business and the price-sensitivity of restaurant consumers, particularly in a
weak economy, it is difficult for operators to pass on higher costs. Nearly 60%
of respondents said they would likely have to raise menu prices over the next
six months due to higher operating costs and another 40% plan to hold menu
prices at their current level.
In recent years the federal government has focused resources on
capital and resource-based sectors that are a fraction the size of the
foodservice industry in addition to the agriculture and tourism sectors. It is
time for government to recognize the significant social and economic
contributions of the foodservice industry and its growth potential. Since
foodservice is a touchstone for so many government priorities - youth,
immigration, health, employment, economic development, agriculture, multi-culturalism,
etc., it is important that government take a more holistic approach to this
industry beginning with the establishment of a Task Force to study it. The cost
of a establishing a Task Force and the development of a strategy for the
foodservice industry is expected to be minimal (less than $50,000). (It is
noted that costs for the National Tourism Strategy are provisioned in the
fiscal framework without a cost allegation.)
RECOMMENDATION #1:
Establish a Private Sector/Public Sector Task Force to study the
central role of foodservice in Canada’s economy and make recommendations to
promote and grow Canada’s restaurant and foodservices industry.
Healthy Living
Background
Healthy living is a major imperative for CRFA and the restaurant
industry. Last year CRFA’s Board of Directors developed a healthy living vision
and 10 principles which highlight the industry’s commitment to contribute to
healthy living solutions. Restaurants and foodservice providers have introduced
a wide array of lighter menu items and continue to expand their selection of
higher nutrition options. CRFA was an active stakeholder on the Trans Fat Task
Force and the Sodium Working Group and the restaurant industry has made
significant contributions to reducing trans fat in the Canadian food supply.
Currently the industry is reformulating and working with suppliers to reduce
sodium in menu items. CRFA works closely with the federal government, and
specifically Health Canada, on these issues, in addition to a new nutrition
information disclosure initiative.
The industry also spends millions of dollars each year on
activity-based sponsorships and promotions, both nationally and in virtually
every community across Canada. Foodservice operators are involved in
fundraising for children’s programs from summer camps to school playgrounds and
support a variety of organizations and programs promoting healthy living.
As an active participant on the Sodium Working Group, CRFA
continues to support the recommendations in the Sodium Working Group report,
which include six over-arching recommendations and twenty-seven specific
recommendations under three prongs of a population health strategy to reduce
the dietary sodium intake levels of Canadians. The three prongs are:
· a voluntary reduction of sodium levels in processed food products
and foods sold in foodservice establishments;
· education and awareness of
consumers, industry, health professionals and other key stakeholders; and research.
These three prongs must be implemented concurrently in a
comprehensive and integrated way for the sodium reduction strategy to succeed. The
hundreds of millions of dollars being spent on product reformulation will be
wasted if Canadians are not informed and engaged in the lifestyle changes necessary
to support the efforts of the manufacturing and foodservice industries. The recommendations
on awareness, education, and research cannot be separated from the food supply recommendations.
They are needed to change the demand for and purchasing of foods lower in
sodium content.
It is estimated that the cost of a 3 to 5 year, large-scale,
national campaign that would be in multi-languages and include mass media
advertising in addition to social media would be in the $50 million range. This
is a reasonable investment considering that the food and foodservice industries
are expected to spend hundreds of millions of dollars to fundamentally change
our food supply.
RECOMMENDATION #2:
Provide adequate funding support for the Sodium Working Group’s
full slate of recommendations, and in particular a comprehensive, multi-year
consumer education campaign to increase awareness about the importance of
sodium reduction in the diets of Canadians.
Payroll Taxes
Background
EI premiums place a disproportionate tax burden on lower-income
earners and have a particularly negative impact on the labour-intensive
foodservice industry. They provide a disincentive to hire young, inexperienced
workers, whose tax rate compared to their wages is disproportionately high.
Reducing payroll taxes would be the most effective way to stimulate
job creation in the foodservice industry and would allow government to recover
tax revenue quicker than any other form of tax cut. These should be priority
considerations during times of economic uncertainty.
A Year’s Basic Exemption (YBE) would be the most efficient and
cost-effective way to deliver payroll tax relief to the groups most affected by
these regressive taxes - entry level workers and labour-intensive businesses. At
the same time, universal application makes it easy and fair to administer. It
is modeled after the YBE in the Canada Pension Plan and Quebec Pension Plan.
CRFA is proposing a YBE of $2,000 to start. The YBE refers to the
annual earnings level in which premiums are not applied and not to the first
$2,000 of earnings. In terms of benefits, the implementation of a YBE would not
necessitate a change in the calculation of benefits. In fact, CRFA would
recommend including the $2,000 exemption in the contribution base.
Currently, employees earning less than $2,000 per year can apply
for a full EI premium refund. Those employees earning slightly more than $2,000,
however, cannot, despite having no chance of qualifying for EI benefits. Only
two-thirds of the individuals eligible for a rebate actually receive it. In
addition, the existing rebate applies only to employees and not to employers.
A YBE will:
· reduce the heavy payroll tax burden on labour-intensive
businesses;
· make a regressive, job-killing tax more progressive;
· be fairer to those at the lower end of the income scale who are
currently taxed at a rate disproportionately high, in comparison to their
wages;
· increase the take-home pay and expand job opportunities for
Canada’s youth;
· target tax relief to job creators - employers investing in
Canadians.
At current premium rates of $1.78/$100 of earnings, using an
estimate of employer/employee stakeholders of 16.8 million, the reduction in EI
revenue of a $2,000 YBE could roughly estimated to be $1.4 billion per year.
While this is of significant dollar value it is less than the
yearly interest owed to employer/employee stakeholders from the accumulated EI
surplus.
RECOMMENDATION #3:
Introduce a $2,000 Year’s Basic Exemption (YBE) to the Employment
Insurance system (similar to the CPP/QPP YBE) as a way to alleviate the tax
burden on low income Canadians, and directly target tax relief, to
labour-intensive employers.