The Canadian restaurant industry is facing another challenging year, with real sales expected to grow by just 0.8% in 2025, according to the latest Quarterly Report from Restaurants Canada. Despite an initial boost from the GST and HST holiday in the first quarter, ongoing economic pressures, including tariff threats, immigration policy changes, and low consumer confidence, continue to impact the sector.
Foodservice Industry Outlook
The report projects that total restaurant, caterer, and bar sales will surpass $100 billion in 2025, marking a 3.9% nominal increase over 2024. However, when adjusted for menu inflation, real growth remains modest at 0.8%. This follows a period of stagnation in 2024, reflecting persistent economic headwinds.
Caterers are expected to lead industry growth with a 4.3% increase in sales, followed by quick-service restaurants (4.0%), full-service restaurants (3.8%), and drinking places (1.5%).
Declining Consumer Spending
A major concern for the industry is shifting consumer behavior. More than a third of Canadians (36%) report dining out less frequently. Gen X diners have reduced visits to full-service restaurants the most (41%), while Gen Z consumers are cutting back on quick-service restaurant spending (42%).
Despite these challenges, menu inflation has begun to moderate. In November 2024, menu prices were 3.4% higher than the previous year, offering some relief for consumers and businesses alike.
Impact of the GST/HST Holiday
The GST and HST holiday has provided a much-needed short-term lift. Restaurants Canada estimates that foodservice sales could be $1.5 billion higher during this period than they would have been otherwise. The organization is urging governments to make this tax relief permanent to support the struggling sector.
Call for Government Action
Kelly Higginson, President and CEO of Restaurants Canada, emphasized the challenges ahead:
“2024 was a very difficult year for the restaurant industry, and our forecasting tells us that we are not out of the woods yet. Restaurants face significant threats, including drastic cuts to immigration amid a very tight labour market in much of the country outside of urban centres, a tariff dispute with the U.S., and continued low consumer confidence.”
Higginson also reinforced the importance of policy changes to support the industry:
“We are calling on governments to permanently remove sales taxes from restaurant meals. Early data about the GST and HST holiday give us some hope for a stronger start in 2025. Restaurants are the fourth largest employer in the country with nearly 1.2 million workers, they support local economies and initiatives in every community across Canada, and they improve the day-to-day quality of life of Canadians. Restoring food tax fairness is a win for all.”
As the industry navigates these economic uncertainties, Restaurants Canada continues to advocate for policy changes that will strengthen the foodservice sector and encourage consumer spending.
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