Alberta Budget 2025: Restaurant Association Stakeholder Brief

Executive Summary

Alberta Budget 2025 affects the restaurant sector through multiple channels. The $750 per person income tax cut increases consumer dining budgets starting after July 2025, and AGLC liquor markup regime changes address long-standing industry equity concerns. However, Canadian retaliatory tariffs on U.S. food products raise ingredient costs, the weaker Canadian dollar (69.6 US cents) increases import costs across supply chains, and consumer spending is constrained by rising unemployment (7.4%) and inflation (2.6%). Restaurant operators face a classic squeeze: rising input costs meeting weakening demand. The one relative bright spot is labour availability, as the higher unemployment rate eases the chronic hiring difficulty that has plagued the hospitality sector.

Top 5 Relevant Budget Measures

1. Personal Income Tax Cut: $750 per person savings -- The new 8% bracket on the first $60,000 of income directly increases disposable income for restaurant customers. Most taxpayers see paycheque benefits after July 1, 2025. Taxpayers earning less than $60,000 see a 20% reduction in personal income taxes, creating meaningful spending capacity for dining out.

2. AGLC Liquor Markup Regime Changes -- Budget 2025 reflects restructured liquor markups that address industry concerns and improve equity within the system. These changes support Alberta's liquor manufacturing industry and may improve margins for restaurants on beverage sales. AGLC gaming/lottery income is $1.54 billion and liquor income is $783 million in 2025-26.

Tariff Assumptions: 15% on goods, Canadian retaliation on consumer goods -- Retaliatory tariffs on U.S. food products (produce, meat, dairy, packaged foods) directly increase restaurant supply costs. The fiscal plan notes that consumers are expected to be more cautious, directly affecting dining-out frequency.

Employment and Income Support: $1,255 million (+26%) -- The 26% increase, including $38 million for tariff anticipation, signals expected labour market disruption. For the restaurant sector, this means some customers will face income pressure, but also that displaced workers may increase the available labour pool.

CPI Inflation: 2.6% with upward tariff pressure -- The fiscal plan notes that retaliatory tariffs and a lower Canadian dollar will temporarily drive inflation higher. Food price inflation is particularly sensitive to import costs and currency movements, directly affecting restaurant input costs.

Risks

Food cost inflation from tariffs and currency movements is the primary operational risk. Canadian retaliatory tariffs on U.S. food products directly increase wholesale costs for fruits, vegetables, dairy, meat, and packaged ingredients sourced from American suppliers. The weaker Canadian dollar amplifies this effect for all imported food products, regardless of origin. Restaurants operating on typical margins of 3-5% net income have minimal capacity to absorb cost increases without either raising menu prices or reducing portions.

Consumer demand softening creates the demand-side risk. With retail sales growth decelerating from 4.3% to 1.8% and unemployment rising to 7.4%, dining out -- as a discretionary expense -- is among the first categories consumers reduce. The fiscal plan explicitly states that consumers are expected to be more cautious, and the budget's emphasis on housing affordability and income support suggests the government expects household budgets to be stretched.

Property cost increases add to the cost structure. The education property tax increase to $4.00 per $1,000 of non-residential equalized assessment raises occupancy costs for restaurant locations. Combined with ongoing commercial rent pressures in growth areas, the occupancy cost line is increasing.

The full fuel tax of 13 cents per litre with no relief expected increases delivery and distribution costs that affect food supply chains. From farm-to-distributor-to-restaurant, fuel costs feed through at every stage.

Opportunities

The tax cut provides a clear consumer spending stimulus. With $750 per person in annual savings and most benefits flowing after July 2025, the second half of the year should see improved consumer spending capacity. Restaurants can develop promotions and marketing strategies that coincide with the payroll withholding adjustment.

The AGLC liquor markup regime changes represent a potentially significant operational improvement. If the restructured markups reduce costs for restaurants on beverage purchases, this directly improves one of the highest-margin categories in food service operations. The changes are designed to improve equity and support Alberta's liquor manufacturing industry, which could also create sourcing opportunities for locally produced beverages.

Higher unemployment at 7.4% eases the chronic labour shortage in food service. The restaurant sector has struggled with recruitment and retention for years, with high turnover and intense competition for workers. A softer labour market provides an opportunity to build more stable teams, reduce overtime costs, and improve service quality through better staffing levels.

Population growth at 2.5% and continued interprovincial migration sustain baseline demand for restaurant services. New residents need to eat, and the restaurant sector captures a growing share of food spending as urbanization and dual-income household formation continue.

Tourism infrastructure investment -- including $293 million in Forestry and Parks capital, event centre development in Calgary ($173 million) and Edmonton ($52 million), and the Active Communities Initiative -- drives visitor traffic that generates dining demand.

Likely Government Intent

The government's primary consumer-facing measures (tax cut, no sales tax) are indirect supports for the restaurant sector. There is no restaurant-specific programming or recognition of hospitality as a priority sector in the budget. The AGLC markup regime changes are the most sector-relevant policy action, driven by industry advocacy over multiple years.

The government expects tariff impacts on consumers to be moderate and partially offset by the tax cut and lower interest rates. The $4 billion contingency provides flexibility if the situation worsens, but no pre-committed hospitality support exists.

Immediate Questions to Ask Ministries

1. What are the specific changes to the AGLC liquor markup regime, and when do they take effect? What is the estimated margin impact for restaurants?

2. What food product categories are targeted by Canadian retaliatory tariffs? Can the government provide a detailed list relevant to food service sourcing?

3. What red tape reduction measures are planned for the food service industry? Are there simplification opportunities in health inspection, licensing, or permits?

4. How will the $38 million tariff anticipation funding in Employment and Income Support be accessed by hospitality workers?

5. Is the government considering any temporary measures to support food service businesses facing simultaneous cost increases from tariffs, property taxes, and fuel?

48-Hour Action Checklist

• Survey members on anticipated food cost increases from retaliatory tariffs on U.S. food products
• Request details on AGLC liquor markup regime changes and implementation timeline
• Prepare a public statement on restaurant sector tariff impacts and food cost inflation
• Assess the education property tax increase impact on restaurant commercial leases
• Contact Service Alberta on food service-specific red tape reduction opportunities

30-Day Monitoring Checklist

• Develop a food cost inflation model incorporating tariff, currency, and fuel cost pressures
• Engage with AGLC on liquor markup regime implementation and transition support
• Monitor Employment and Income Support caseload data for consumer spending capacity indicators
• Coordinate with tourism operators on visitor dining demand forecasts for summer 2025
• Submit workforce development recommendations to Jobs, Economy and Trade for hospitality training
• Track food price index data from Statistics Canada for Alberta-specific trends
• Monitor consumer confidence surveys for dining-out intention data

Suggested Message Frames

Frame 1 -- Consumer Offset: "Restaurants are where communities gather and visitors spend. The tax cut helps consumer budgets, but tariff-driven food cost inflation threatens to offset those gains at the dining table."

Frame 2 -- Markup Reform: "AGLC markup reform is long overdue. Fair beverage pricing helps restaurants survive cost pressures from tariffs, rising property taxes, and fuel costs."

Frame 3 -- Trade and Jobs: "With 7.4% unemployment, restaurants finally have access to the workers they need. But if consumer spending weakens further, those jobs will disappear. Trade certainty is job security for hospitality."

Opposition Narratives to Anticipate

Consumer advocates will argue that restaurants will simply pass tariff costs to diners, negating the tax cut benefits. Labour advocates will focus on minimum wage adequacy and hospitality working conditions. Small business advocates may argue that the government has no hospitality-specific relief despite the sector employing tens of thousands of Albertans. Health advocates may use the food cost discussion to push for nutritional policy measures.

Restaurant associations should emphasize the sector's role as an employer, community anchor, and tourism driver, while making clear that cost-push inflation from tariffs is a government trade policy outcome that requires government support to manage.

Data Points to Monitor

• Monthly food price index data for Alberta from Statistics Canada
• Restaurant industry sales data and year-over-year comparisons
• Consumer confidence index and dining-out spending intentions
• AGLC liquor markup regime change implementation milestones
• Unemployment rate in accommodation and food services sector
• Retaliatory tariff list updates and food product-specific rates
• Education property tax assessment notices for non-residential properties
• Fuel pricing data and delivery cost trends