A recent survey suggests that many restaurants are facing financial challenges due to reduced foot traffic and increased operating expenses. The study, conducted by Restaurants Canada and involving 220 members in late 2025, revealed that 26% of the surveyed restaurants were operating at a loss, while 18% were barely breaking even by November 2025. This marks a significant increase from 2019, when only 12% of restaurants were in a similar financial predicament.
Despite these concerning numbers, there was a slight improvement compared to 2024, where 53% of restaurants were either losing money or just breaking even. Kelly Higginson, the president and CEO of Restaurants Canada, expressed her worry about the impact on jobs and anticipated more closures in the industry. Rising costs, including food, rent, and supplies like cutlery, were cited as major challenges for restaurant owners.
Food and labor expenses were highlighted as the top concerns among respondents, with 89% expressing worries about labor costs and 88% about the escalating cost of food. Inflation, particularly in grocery prices, has surged, with a five percent increase reported in December compared to the previous year, while the overall inflation rate stood at 2.4%.
Food economist Mike von Massow from the University of Guelph emphasized the struggles faced by restaurant owners amidst increasing food prices. He explained how the competitive nature with grocery stores impacts consumer dining choices. Frederic Chartier, owner of a French restaurant in Shelburne, Ontario, shared his personal challenges, including canceling services and taking on additional roles due to decreased customer traffic.
Looking ahead, restaurant owners anticipate a four percent price increase in 2026 to manage their tight profit margins. Higginson acknowledged the delicate balance required to cover costs while retaining customers’ loyalty amid affordability concerns. Various strategies, such as offering value meals and adjusting menu options, are being explored to address these challenges.
As Canadians dine out less due to rising costs, the industry faces mounting pressure. Chartier’s experience with incremental price adjustments and value menu offerings reflects the ongoing struggle to adapt. The report also emphasized the temporary relief provided by the government’s GST holiday and domestic tourism boost in 2025, highlighting the need for further support, such as removing federal GST on all food items.
Higginson stressed the widespread impact of struggling restaurants on communities and the economy, underscoring the need for continued government assistance to mitigate job losses and economic repercussions nationwide.