A recent study suggests that many restaurants are experiencing financial challenges due to reduced customer traffic and escalating expenses. A survey conducted by Restaurants Canada revealed that, as of November 2025, 26% of the 220 participating restaurants were operating at a loss, with an additional 18% barely breaking even. This marks a significant increase from 2019 when only 12% of restaurants faced financial struggles.
Despite the concerning numbers, there was a slight improvement compared to the previous year, where 53% of surveyed restaurants were either losing money or just breaking even. Kelly Higginson, the president and CEO of Restaurants Canada, expressed worry about the impact on jobs and anticipated more closures in the industry. Rising costs in various aspects such as food supplies, rent, and utensils are posing significant challenges for restaurant owners.
The survey highlighted that food and labor costs were the primary concerns for respondents, with 89% expressing worries about labor expenses and 88% about the increasing cost of food. Inflation, particularly affecting grocery prices, soared by 5% in December 2025 compared to the previous year.
Food economist and University of Guelph professor Mike von Massow acknowledged the struggles faced by Canadian restaurant owners, emphasizing the double blow of rising food costs on businesses and consumer spending. Frederic Chartier, owner of Beyond the Gate restaurant in Shelburne, Ontario, shared his challenges, including taking on multiple roles within his establishment due to declining customer numbers.
Looking ahead, restaurant owners are considering raising prices by an average of four percent in 2026 to cope with slim profit margins. However, balancing cost coverage while retaining customers poses a dilemma, as affordability remains a key concern for Canadians. The potential price hikes may impact customer retention unless alternative strategies like value meals or diversified menu options are implemented.
Chartier’s experience reflects the industry’s struggle to adapt to changing economic landscapes, with incremental price increases and innovative menu offerings being utilized to stay afloat. The report also highlighted the positive impact of government initiatives like the GST holiday and domestic tourism, while calling for further support, including the removal of federal GST on all food items served at restaurants.
Higginson stressed the vital role of restaurants in every community and emphasized the broader implications of their financial challenges, including job losses and economic impacts at the local level. The industry’s resilience and ability to navigate these tough times will be crucial to its survival and recovery.