How Tariffs Hit Canadian Restaurant Food Costs

Thirty-seven per cent. That's how much food costs climbed for Canadian full-service operators since the tariff war with the US kicked off in March 2025, according to TouchBistro's 2026 State of Restaurants Report. More than half of those operators saw increases between 21% and 50%.

For a 40-seat independent doing $800,000 a year with a 32% food cost, a 37% jump in ingredient prices means roughly $95,000 more walking out the door annually. That's not a rounding error. That's a second cook's salary.

And here's the part that matters for independents specifically: the tariffs were removed on most food products in September 2025. Prices didn't come back down.

What actually happened with the tariffs

The trade war between Canada and the US unfolded fast. On March 4, 2025, Canada imposed 25% retaliatory tariffs on $30 billion in US goods, including orange juice, peanut butter, wine, spirits, beer, and coffee. Nine days later, a second round hit steel, aluminum, and foodservice equipment. The US had already slapped 25% tariffs on Canadian exports.

The list of affected food products read like a restaurant's weekly order: fresh and frozen poultry, leafy greens, berries, peppers, tomatoes, onions, canned and frozen produce, French fries, tortillas, dressings, and imported wines and spirits. Even cleaning products and stainless steel cookware got caught.

Canada eventually lifted the retaliatory tariffs on USMCA-compliant agricultural products effective September 1, 2025. But six months of disruption had already rewired supply chains and reset price expectations across the industry.

Why prices stayed high after tariffs were lifted

If you're wondering why your produce invoices didn't drop back to pre-March 2025 levels, you're not alone. Three forces kept prices elevated.

First, suppliers locked in new pricing during the tariff period and had no competitive pressure to roll it back. Distributors had already renegotiated contracts with growers, and those contracts don't reset overnight.

Second, the tariffs triggered a broader supply chain reorganization. Operators and distributors who shifted sourcing to Mexico, domestic growers, or alternative suppliers built new relationships. Some of those alternatives cost more, some cost less, but the shift itself created transition costs that got baked into pricing.

Third, Canada's underlying food inflation was already running hot. The Dalhousie University Food Price Report projected 4% to 6% overall food price increases for 2026, with the average Canadian family of four expected to spend $17,572 on food, up nearly $1,000 from the previous year. Restaurant meal prices specifically were forecast to rise another 4% to 6% on top of that.

The tariffs weren't the only driver. But they were the accelerant.

The real cost for a Canadian independent

Let's put specific numbers on this.

Foodtastic, which operates over 1,000 restaurant locations across Canada, estimated an additional $10,000 per restaurant per year from tariff-related cost increases. And Foodtastic has national purchasing power, direct supplier relationships, and a procurement team.

If you're a single-location operator ordering through a distributor, your cost increase was almost certainly higher.

Impact area	What changed	Estimated cost increase
Fresh produce (leafy greens, tomatoes, berries)	25% tariff during March-Sept 2025, lingering price elevation	15-25% above pre-tariff pricing
Imported wines and spirits	Tariff + provincial bans on US alcohol	Variable, some categories 20%+
Cleaning products and chemicals	25% tariff on US-made products	10-15% increase
Stainless steel cookware and equipment	Steel and aluminum tariffs (still active)	15-25% on US-origin equipment
Menu prices passed to consumers	71% of operators raised prices	Average 13% menu price increase

Here's the uncomfortable math: Restaurants Canada's May 2026 report found that 91% of operators cite food costs as a pressure point, 71% report declining profitability, and 36% are operating at a loss or breaking even. That last number is triple what it was in 2019.

Raising menu prices is the obvious response. And 71% of operators did exactly that, with an average increase of 13%. But there's a ceiling. Restaurants Canada reports that 69% of operators say customers are dining out less because of affordability concerns. Push prices too high and you lose the covers that make the math work.

What chains can do that you can't (and what you can do instead)

The gap between chains and independents widened during the tariff period. Foodtastic moved to sourcing less than 10% of its supplies from the US, secured direct produce shipments from Mexico, and launched expanded Canadian wine lists across all locations. That's the advantage of 1,000 restaurants and a national procurement team.

Independents don't have that leverage. You can't call a Mexican grower and negotiate a direct shipping deal. You probably don't have a dedicated procurement person at all.

But independents have advantages too. Smaller menus are easier to restructure. You can change suppliers next week instead of next quarter. And you have a direct relationship with your customers that makes explaining price changes a conversation, not a press release.

Here's what's actually working for independent operators across Canada.

Tighten your menu around what's local and in season. The 43% of operators planning to increase locally sourced ingredients aren't doing it for the marketing story. They're doing it because local supply chains didn't break when the tariffs hit. A 30-seat bistro in Ontario that built its winter menu around root vegetables and preserved local produce had a completely different cost experience than one dependent on California lettuce.

Audit your actual US import exposure. Most independents don't know what percentage of their food cost comes from US-origin products. Your distributor does. Ask for a breakdown. You might find that 60% of your produce spend is US-origin, and a targeted switch on three or four items could cut your tariff exposure in half.

Renegotiate with your distributor, or get a second quote. The tariff period created a window where distributors raised prices across the board. Some of those increases were justified. Some stuck because nobody pushed back. If you haven't reviewed your pricing since early 2025, you're probably overpaying on items where tariffs no longer apply.

Run your food cost weekly, not monthly. When ingredient prices are volatile, a monthly food cost review means you find out about a problem four weeks too late. A weekly check takes 20 minutes and a clipboard. Track your top 10 items by cost, compare to the previous week, and flag anything that moved more than 5%.

Simplify before you raise prices again. Menu simplification reduces waste, lowers prep labour, and lets you negotiate better prices on fewer items. Cutting three dishes that each require a unique ingredient nobody else on the menu uses can save you more than a 2% price increase across the board.

What's still in play

The tariff situation isn't fully resolved. Steel and aluminum tariffs remain active on both sides, which means US-origin kitchen equipment and cookware still carry a premium. The US imposed a global 10% tariff in February 2026, though CUSMA-compliant goods are currently exempt.

Restaurants Canada continues to advocate for the permanent removal of GST/HST on restaurant meals through its Food is Food campaign. The temporary GST/HST holiday from December 2024 to February 2025 generated an 8.6% sales bump and 24,000 new jobs in two months. A permanent exemption would give operators room to absorb cost increases without passing all of them to customers.

The bigger shift is structural. The tariff disruption proved that Canadian restaurants were too dependent on a single source country for critical ingredients. The operators who used the disruption as a catalyst to diversify, whether through local sourcing, seasonal menu design, or tighter inventory management, are in a stronger position now than they were before the tariffs hit.

The ones who waited for prices to come back down are still waiting.

Sources: TouchBistro 2026 Canadian State of Restaurants Report, Restaurants Canada Tariffs FAQ, Restaurants Canada May 2026 Report, Dalhousie University Food Price Report 2026, Foodservice and Hospitality Magazine, USDA Foreign Agricultural Service.

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