A recent survey suggests that many restaurants are facing financial challenges due to reduced foot traffic and increased operating costs.
According to a report by Restaurants Canada, which surveyed 220 restaurant owners in late 2025, 26% of the establishments 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 situation.
Although the numbers were slightly better than in 2024, where 53% of restaurants were either losing money or breaking even, the current situation remains concerning for the industry.
Kelly Higginson, the president and CEO of Restaurants Canada, expressed worries about the impact on jobs and operations, noting that rising costs in various areas such as food, rent, and supplies are putting a strain on restaurants.
Among the top concerns highlighted in the survey were escalating food and labor costs, with 89% of respondents expressing concern about labor expenses and 88% about the rising cost of food.
Food prices have been significantly affected by inflation, with grocery item prices experiencing a five percent increase in December compared to the previous year, while the overall inflation rate stood at 2.4%.
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Mike von Massow, a food economist and professor at the University of Guelph, emphasized that the surge in food costs has a dual impact on restaurants, affecting both their operational expenses and consumer behavior. The competition with grocery stores further complicates the situation, as consumers may dine out less when faced with higher grocery prices.
One restaurant owner, Frederic Chartier of Beyond the Gate in Shelburne, Ontario, shared his struggles, mentioning that the business has seen a decline in customers, leading to him taking on additional roles to keep the restaurant afloat.
With slim profit margins, surveyed restaurant owners anticipate an average price increase of four percent in 2026 to offset their growing costs. However, balancing the need to cover expenses while retaining customers amid affordability concerns poses a challenge.
Restaurants Canada is exploring various strategies to avoid significant price hikes, such as offering value meals or introducing mid-level options to cater to cost-conscious consumers.
Amid reports indicating a decline in dining out frequency among Canadians due to cost considerations, restaurant owners like Chartier are cautiously adjusting prices to adapt to changing market conditions.
While Chartier hopes for government support to alleviate the financial burden on consumers, Restaurants Canada advocates for the removal of federal GST on all food, including restaurant meals.
Despite temporary relief from initiatives like the GST holiday and a boost from domestic tourism, the industry is still in need of further assistance to navigate the ongoing challenges.
Higginson stressed the widespread impact of struggling restaurants on communities nationwide, warning of potential job losses and economic repercussions if support is not provided.