Even though the GST/HST holiday from the beginning of the year prevented foodservice bankruptcies, boosted sales, and increased employment in the first two months of 2025, a long-term trade war could reverse any progress that was made. Studies show that 79 per cent of consumers think that the trade war with the U.S. will continue to raise prices, and 69 per cent said they are eating more at home these days to save money. With diners continuing to watch their pennies, seven per cent are planning to cut their spending at restaurants this summer.
Grocery shopping trends may also indicate a drop in restaurant sales, as items like frozen pizza have jumped in sales, suggesting that consumers are skipping restaurant visits in favour of cheaper home options.
As more employees are returning to work, some restaurants have been focusing on growing their breakfast menus to attract commuting customers, but research shows that 75 per cent of people are planning to prepare breakfast at home. And while off-premise dining remains a large part of restaurant income for many operators, 19 per cent of diners are currently spending less than $50 monthly on takeout. With 92 per cent of people confirming that their cost of living has increased, restaurants can expect to see less traffic and fewer sales this summer season.
In an effort to regain strength in the foodservice industry, Restaurants Canada is urging the federal government to permanently eliminate GST/HST on food. In addition to making all food and alcohol sold at restaurants tax-free, they are advising the government to further strengthen the sector by reducing interprovincial trade barriers, reducing EI payroll taxes, and exempting food and food-safe packaging from retaliatory tariffs.
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“We now have definite proof that the GST/HST holiday boosted sales and created jobs in the foodservice sector, while preventing bankruptcies,” said Kelly Higginson, President and CEO of Restaurants Canada. “The new federal government can protect Canadian jobs and businesses in every community across the country and help Canadians with affordability by removing sales tax from all food permanently. Taxing a necessity like food is simply a bad approach to taxation.”
