A recent survey suggests that many restaurants are facing financial challenges due to decreased foot traffic and escalating expenses. According to a study conducted by Restaurants Canada, 26% of the surveyed restaurants were operating at a loss as of November 2025, with an additional 18% barely breaking even. This marks a significant increase from 2019 when only 12% of restaurants were in a similar financial predicament.
The survey revealed a slight improvement compared to 2024, where 53% of restaurants were either losing money or just managing to stay afloat. Restaurants Canada’s President and CEO, Kelly Higginson, expressed concerns about the impact on jobs and the likelihood of more restaurant closures in the future. Rising costs, including food, rent, and supplies like cutlery, were cited as major challenges for restaurant owners.
Labour and food expenses were highlighted as the top concerns among respondents, with 89% expressing worry about labour costs and 88% about the increasing price of food. Inflation, particularly affecting grocery prices, has surged by five percent in December compared to the previous year, while the overall inflation rate stood at 2.4%.
Food economist and University of Guelph professor, Mike von Massow, noted the dual impact of rising food costs on restaurants, affecting both operational expenses and consumer spending habits. Some restaurants, like Frederic Chartier’s French restaurant in Shelburne, Ontario, have resorted to measures such as reducing services and taking on additional roles to cope with financial strains.
In anticipation of the challenging financial landscape, restaurant owners are planning an average price increase of four percent in 2026. However, balancing the need to cover costs while retaining customers amidst affordability concerns poses a dilemma for many establishments. Implementing strategies like value meals and offering diverse menu options have been explored to mitigate the need for drastic price hikes.
As Canadians dine out less due to rising living costs, restaurant owners are hopeful for government interventions to support consumer spending. Suggestions include removing federal GST on all food, including restaurant meals, to alleviate financial burdens. Despite some relief from initiatives like the GST holiday and domestic tourism boosts, further assistance is sought to sustain the struggling restaurant industry and prevent broader economic impacts.
