The Ontario government is dialing back a financial break for the province's hospitality sector, a move that industry advocates warn will drive up costs for businesses and likely lead to higher prices for patrons. Premier Doug Ford's administration has confirmed it will reduce a temporary wholesale discount on alcohol for restaurants, bars, and convenience stores.
Discount Reduction Timelines and Details
The current 15% discount on LCBO purchases for licensed establishments will be scaled back to 10%, effective December 31, 2025. This change was announced as part of broader modifications to how alcohol is sold in the province. The government initially introduced a standard 10% wholesale discount for all retailers last year, pending a new pricing structure.
In a temporary relief measure this past spring, the discount was boosted to 15% specifically for bars, restaurants, and convenience stores. This was designed to shield them from the impacts of U.S. tariffs. Notably, the discount for grocery stores remained at the original 10% level throughout.
Industry Reaction and Economic Impact
Restaurants Canada, a key industry association, has expressed significant disappointment with the decision. The organization's Vice-President, Kris Barnier, stated that the previous discounts were "warmly welcomed moves" that provided targeted relief to a sector still recovering from pandemic-era challenges.
"We were disappointed to learn that the 15% LCBO discount for restaurants and bars would return to 10% on January 1," Barnier said. He emphasized that many businesses are still fighting to stay open, especially those reliant on alcohol sales. Keeping consumer prices affordable, he argued, is integral to their survival.
The stakes are high for Ontario's economy. Barnier noted that bars and restaurants directly support the jobs of more than 447,000 Ontarians. The industry operates on notoriously tight margins, with Restaurants Canada reporting that 41% of restaurants are currently unprofitable.
What This Means for Consumers and Future Price Hikes
The direct consequence of this policy shift is that the cost of purchasing alcohol wholesale will rise for bars and restaurants. Given the precarious financial state of many establishments, it is considered highly likely that a portion of these increased costs will be passed on to customers through higher menu prices for drinks.
This discount reduction is not the only price pressure on the horizon. In April 2026, the LCBO is set to implement a new pricing formula that will add taxes, markups, and fees to a supplier's base price, which could further increase retail costs.
In response to concerns about rising prices, a spokesperson for the Ontario Ministry of Finance, which oversees the LCBO, offered a different perspective. "The government is not raising prices on alcohol," the statement read. It pointed out that retailers other than the LCBO and its convenience outlets have the flexibility to set competitive prices based on consumer demand.
As the 2026 deadline approaches, Ontario's hospitality industry is bracing for a more challenging financial landscape, with the potential for consumers to ultimately foot the bill for their evening out.
