Canada’s restaurant industry is bracing for another tough year.
Low foodservice sales projections for 2025 were mitigated by the temporary GST/HST holiday on restaurant meals, coupled with strong domestic travel. Profits remained off for the year in the face of rising operating costs and the U.S. tariff war, and nearly half of foodservice operators (46%) expect their profitability to be worse in 2026, according to Restaurants Canada’s Q4 Quarterly Report.
“Last year, the restaurant industry was buffered from the full impact of rising operation cost by the GST/HST holiday and stronger domestic tourism,” said Kelly Higginson, President and CEO of Restaurants Canada. “Unfortunately, we can’t count on that same support in 2026, so operators are bracing for a difficult year.”
Quarterly Report at a glance:
- After adjusting for inflation, Restaurants Canada expects real commercial foodservice sales to have grown by 2.4% in 2025 and to decline by 1.1% in 2026;
- Real per-capita foodservice spending rose 0.6% in 2025, the first increase since 2023. The strongest gains were recorded in Atlantic Canada, supported by the temporary GST/HST holiday and steady consumer activity throughout the peak travel season;
- 60% of operators report that profitability in 2025 was “worse” or “much worse” than expected compared with 2024, as rising operating costs continue to narrow margins. This impact is more pronounced among quick-service operators, 77% of whom report weaker-than-expected profitability, compared with 58% of full-service operators;
- As of November 2025, 44% of restaurants are operating at a loss or breaking even, up from 41% in June 2025 and a sharp contrast to 2019 levels of just 12%;
- Food costs remain a top concern for 88% of operators, up from 83% in June 2025, while labour costs are now cited by 89%, up from 80%;
- More than half of restaurant operators (55%) expect recent immigration policy changes to have a negative impact on their business and 57% say the changes will reduce their ability to hire kitchen staff.
Restaurants Canada, a national, not-for-profit association advancing Canada’s diverse and dynamic foodservice industry, says restaurants are a $125 billion industry employing nearly 1.2 million Canadians and the number one source of first-time jobs.
It is asking the federal government to help the foodservice industry bridge to better times.
“Permanently exempting all food from GST would help Canadians struggling with affordability and inject a much-needed sales boost in the restaurant sector, allowing it to protect and create jobs. The government can also work with the industry to address its chronic labour shortages by accelerating permanent residency for restaurant workers already in Canada and creating a rural, remote and tourism immigration stream for parts of the country with the biggest workforce gaps,” it said.
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