Newfoundland and Labrador’s Foodservice Industry Creating Jobs and Economic Growth Throughout the Province Independent Tax Review Presentation May 2018

Number of Commercial Foodservice Establishments Newfoundland and Labrador’s Restaurant Industry Number of Commercial Foodservice Establishments $1.1 billion in sales (Commercial + non-commercial) 1,184 establishments Source: Restaurants Canada and Statistics Canada

6.8% of the province’s workforce One of Newfoundland and Labrador’s Largest Employers 15,300 direct jobs 6.8% of the province’s workforce 5,800 youth jobs Source: Restaurants Canada and Statistics Canada

Canada 5.3% 2017 Provincial Foodservice Sales 2.2% 7.7% 2.4% 3.3% -0.6% 6.9% 5.6% 5.9% 1.1% 3.0% Source: Statistics Canada and Restaurants Canada

Financial Operating Ratios – Newfoundland and Labrador (as a percentage of operating revenue) Source: Restaurants Canada and Statistics Canada

Total Foodservice Sales Newfoundland and Labrador (year-over-year nominal change) Source: Statistics Canada

Basic Personal Tax Exemptions January 2018 Newfoundland has among the lowest Personal Exemption in Canada Decreases disposable income and stifles sales Penalizes low income workers putting pressure on wages

Newfoundland restaurant owners are forced to pay to collect government tax: The increased use of electronic payments means restaurateurs are forced to pay credit card fees to collect government HST. Assuming 50% of sales use credit cards this equates to over $2 million per year in Newfoundland and Labrador. A mid-sized, upscale restaurant will pay over $50,000 in credit card fees. This issue is exacerbated when restaurateurs are also forced to pay bank fees when collecting employee tips.

Is this fair? Credit Card companies make more than the restaurant owner on a $50 meal. Source: Statistics Canada and Restaurants Canada

Newfoundland Liquor Taxes are Extremely High Example: Case of 24 domestic beer: Canadian Beer Taxes are 5 times higher than the US $20.31 vs $4.12 Newfoundland beer taxes are 20% higher than Canadian average $23.96 vs $20.31

Newfoundland Liquor Licensees can’t purchase wholesale from NLC Despite purchasing in bulk, licensees pay full retail price for alcohol Up until 2006 licensees actually paid 12% more for alcohol Difficult to provide competitive priced products to customers, declining market share Does not recognize the added value of the industry Agency Stores who in many instances buy less receive wholesale pricing Other Atlantic Provinces provide discounts PEI Wholesale Pricing Program 13% wine 10% spirits 10% draught 10% ready to drink $4 reduction in 24’s of beer for licensees Nova Scotia Wholesale Pricing Program 10% wine

A Restaurants Canada survey of licensees said: 72% Said the cost of beer, wine and spirits has a negative impact on their business 97% Want to see wholesale pricing 82% Said their customers complain about the high cost of alcoholic drinks 78% Said they were dissatisfied with the cost of alcohol Said current liquor laws have a negative impact on profitability 30% Said they receive value from their local liquor/beer supplier

The Payroll Tax is regressive and a tax on jobs The threshold increase has helped but still impacts many restaurants. The tax does not recognize profitability Full service restaurant profit is only 1.6% . Restaurant industry is extremely restaurant labour intensive. Most multi-unit holders are negatively impacted. Tax on growth.

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