Group calls on Ottawa to accelerate permanent residency for restaurant workers
Recent federal immigration policy changes are expected to intensify chronic labour shortages in Canada’s restaurant sector, with more than half of operators anticipating a negative impact on their businesses, according to Restaurants Canada.
The industry association’s latest Q4 Quarterly Report says 55% of restaurant operators expect recent immigration changes to hurt their operations, while 57% believe the new rules will reduce their ability to hire kitchen staff.
For HR professionals, this signals a tighter labour pool for back-of-house roles that have long depended on newcomer workers to fill difficult-to-staff positions.
Restaurants Canada is urging Ottawa to respond by accelerating permanent residency for restaurant workers already in the country and creating a dedicated rural, remote and tourism immigration stream for regions with the largest workforce gaps. The association argues that without targeted immigration measures, staffing pressures will worsen just as operators confront a more challenging financial environment in 2026.
The federal government has made numerous changes to its immigration policies in the past couple of years.
Industry outlook for 2026
The warning on labour comes as the restaurant industry prepares for a tougher year, with temporary supports that buoyed 2025 no longer in place and underlying cost pressures persisting.
Restaurants Canada says low foodservice sales projections for 2025 were partially offset by the federal government’s temporary GST/HST holiday on restaurant meals and strong domestic tourism. Even so, profits remained under strain from higher operating costs and the U.S. tariff war, and 46% of foodservice operators now expect their profitability to be worse in 2026 than in 2025.
“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.”
Previously, Restaurants Canada called on the federal government to take immediate action on immigration reforms, urging Ottawa to grant immediate work permits to asylum seekers.
Sales, spending and profitability
After adjusting for inflation, Restaurants Canada estimates that real commercial foodservice sales grew by 2.4% in 2025 but are forecast to decline by 1.1% in 2026.
Real per-capita foodservice spending rose by 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 during the peak travel season.
Despite the boost from tax relief and domestic travel, 60% of operators reported that profitability in 2025 was “worse” or “much worse” than expected compared with 2024, as rising operating costs continued to narrow margins. The impact is more acute in quick service, where 77% of operators reported weaker-than-expected profitability, compared with 58% of full-service operators.
Rising financial strain and escalating costs
Also, the share of restaurants under financial strain has climbed sharply from pre-pandemic levels. As of November 2025, 44% of restaurants were operating at a loss or only breaking even, up from 41% in June 2025 and far above the 12% recorded in 2019.
Cost pressures remain the dominant challenge. Food costs are cited as a top concern by 88% of operators, up from 83% in June 2025, while labour costs are now flagged by 89%, up from 80%.
CEO confidence in global revenue growth has dropped to its lowest level in five years, with artificial intelligence (AI), cyber risk and geopolitical pressures forcing employers to rethink workforce and capability strategies, according to a previous survey.
Calls for tax reform and policy support
To help the industry “bridge to better times,” Restaurants Canada is calling on the federal government to permanently exempt all food from GST, saying this would both help Canadians struggling with affordability and “inject a much-needed sales boost in the restaurant sector, allowing it to protect and create jobs.”
Alongside tax reform, the association is pressing for tailored immigration measures, including faster pathways to permanent residency for restaurant workers already in Canada and a new stream focused on rural, remote and tourism regions with the biggest workforce gaps.
