Canada’s restaurant industry says pressure is mounting after an uneven first financial quarter of the year.Restaurants Canada’s quarterly report reveals an industry “under growing financial strain” in early 2026, as business owners face the brunt of the nationwide affordability crisis, rising operating costs and inconsistent spending.President and CEO Kelly Higginson says Canadians visit eateries 23 million times every day, supporting more than 1 million jobs, but when affordability is strained, there’s a ripple effect.“The restaurant industry is typically the first to feel economic pressure when Canadians are struggling. And right now, that pressure is building,” said Higginson.The report says nearly 50 per cent of restaurant operators reported lower sales in Q1, more than half reported fewer guests, and 71 per cent reported declining profitability.After 2.4 per cent growth in 2025, the report predicts a 0.2 per cent decline in real commercial foodservice sales in 2026.The vast majority of restaurateurs report food costs, labour, and seeing fewer customers as challenges. Thirty-six per cent of Canadian restaurants are reportedly operating at a loss or only breaking even — three times the rate in 2019.Under former Prime Minister Justin Trudeau’s Liberal Party, the federal government introduced a temporary Goods and Services Tax (GST) holiday on certain items, including restaurant meals, from December 2024 to February 2025.Restaurants Canada is calling for a permanent exemption of GST on all food in the country.“Permanently exempting all food from GST would provide direct relief to Canadians while addressing a fundamental issue of tax fairness. Today, similar food items can be taxed differently depending on where they are purchased. This distorts consumer behaviour and undermines affordability objectives,” it explained.Higginson said consistency across the tax system would help Canadians and strengthen the economy.—With files from Sonia Aslam