Grocery, convenience store PST relief unfair to restaurants, industry advocates argue

Restaurant advocates are warning of layoffs and a strain on Manitoba’s economy if proposed legislation moves forward.

On Monday, Restaurants Canada renewed calls for the provincial government to axe the retail sales tax on restaurant food.

“What’s the difference between a baked blueberry muffin between one location and another — in a grocery store and a café?” said Kelly Higginson, president of the national organization.

“This policy is… just shifting demand away from our sector.”

The industry began ringing alarm bells in March, when Premier Wab Kinew announced the plan to remove PST from grocery-store items.

That promise has since been extended to convenience stores. The New Democrats aim to roll back the tax on July 1; new legislation was introduced in a budget bill last Thursday.

Restaurants Canada issued a statement Monday after learning, despite meeting with the province’s finance minister, that restaurant food would continue to be taxed provincially.

It’s pushing for a legislative change before the law is passed.

“It’s shocking that we have a government that… has a policy that’s going to go into place, and it’s going to negatively impact a significant economic driver,” Higginson said.

The industry generates roughly $3.5 billion in annual sales in Manitoba, the organization said, adding at least 42,000 people work in the sector, 40 per cent of whom are youth.

It counted 2,726 Manitoba food-service businesses in 2025.

Grocery stores typically need three staff members to produce $1 million in sales. In contrast, restaurants need 12 to 14.

“(This legislation) puts those jobs at risk,” Higginson said.

She said she expects eateries to cut jobs and hours of operation if sales decline — a possible result of adding the provincial tax to meals while competitors don’t.

Lower-income households tend to spend more of their income at restaurants, Higginson added.

In a statement, Finance Minister Adrien Sala said the government is “focused on helping Manitobans with affordability.”

The best way is “relief at the checkout,” leading to the grocery store PST removal, his statement said.

“It’d be very helpful, and also I think fair, if they did take it off,” said Thomas Schneider, owner of Tommy’s Pizzeria on Corydon Avenue.

He said he views ready-made meals in grocery stores as direct competition. Many offer pizza to go.

Tommy’s Pizzeria has seen fewer customers than normal over the past year, Schneider said, chalking it up to economic pressures, including the skyrocketing price of gas.

Meantime, costs to run the business — from equipment fixes to food and paper products — have risen recently.

“We have to watch our labour, like, every single day and (have made) cuts,” Schneider said. “I didn’t have as much money for marketing.

“We have to do what we have to do to survive.”

He said he’s since boosted his employee pool — more than doubling it, to nearly 60 people — in preparation for summer.

But sales “aren’t there” to meet the training cost increase, Schneider said.

“A lot of us — even people with multiple restaurants — it’s hard,” he said. “I wish they would take that into consideration and help us out.”

Manitoba’s restaurant industry is seeing negative growth, said Shaun Jeffrey, executive director of the Manitoba Restaurant and Foodservices Association.

Nationally, Restaurants Canada is projecting a 0.2 per cent food-service sales decline this year. Nearly half of businesses are reporting lower sales in 2026; 36 per cent are operating at a loss or breaking even, which is triple 2019’s number.

“People are just changing spending habits, and our business is suffering because of it,” Jeffrey said.

Removing the PST at convenience stores — on top of grocery chains — is another blow to restaurants, he said.

“We’re competing against (a grocery) industry that is not necessarily local,” he said.

The provincial retail sales tax is seven per cent. Maria Pepe, co-owner of Nucci’s Gelati, called a blanket PST cut on restaurant food a “good” idea, adding it’s not clear how much of a difference it’d make on sales until it was implemented.

Manitoba’s revenue was projected to drop $24 million due to the tax change in the province’s spring budget. The calculation was done before convenience stores were added.

gabrielle.piche@winnipegfreepress.com