Restaurants Struggle for Survival with Slim Margins

Restaurants Canada, a pivotal voice for the foodservice sector, is sounding the alarm on the federal government’s planned 4.7% alcohol excise tax increase, advocating instead for a continued 2% cap. This call to action is driven by the steep challenges currently facing the industry, including unprecedented inflation affecting everything from ingredients to rent, alongside broader economic instability.

The proposed tax hike represents a significant financial burden, adding thousands in annual costs for restaurant owners, exacerbating the inflationary pressures already squeezing the sector. According to Kelly Higginson, President & CEO of Restaurants Canada, this move could have dire consequences for an industry already on the brink. Higginson is advocating for the government to retain the 2% tax escalator cap until inflation stabilizes, offering a degree of predictability and relief essential for the industry’s survival.

The association’s latest figures paint a grim picture, revealing that 62% of restaurants are either operating at a loss or barely breaking even, a sharp increase from 53% in the summer of 2023, and a stark contrast to the 10% pre-pandemic level. This situation underscores the critical need for a more measured approach to tax policy during such volatile times.

Higginson further emphasizes the detrimental impact on consumer spending, with higher prices likely to deter already cautious spenders, questioning the timing of such a tax increase during the industry’s most challenging period.

Echoing Restaurants Canada’s plea is a broad coalition of stakeholders, including brewers, unions, consumers, farmers, retailers, and hospitality professionals, all unified in their call for a cap on the alcohol excise tax. This collective stance aims to protect and ensure the long-term viability of Canada’s vital restaurant and foodservice industry.

About Restaurants Canada:

Restaurants Canada is a not-for-profit national association committed to supporting the country’s vibrant foodservice industry. Representing a $110 billion sector that employs 1.2 million individuals and serves 22 million customers daily, the organization is at the forefront of advocating for the interests and sustainability of Canada’s diverse and dynamic foodservice landscape.