A recent survey suggests that many restaurants are facing financial challenges due to decreased customer 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, while another 18% were barely breaking even. This indicates a significant increase from 2019 when only 12% of restaurants were in a similar financial situation.
Despite the concerning numbers, there was a slight improvement compared to 2024, when 53% of restaurants were either losing money or just managing to stay afloat. Kelly Higginson, the president and CEO of Restaurants Canada, expressed worries about the impact on jobs and the potential closure of more restaurants in the future.
The main concerns highlighted in the survey were rising food and labor costs. Nearly 89% of respondents expressed concerns about labor costs, while 88% cited the increasing cost of food as a significant issue. Inflation, especially in grocery prices, has been a major contributing factor. For instance, grocery inflation in December rose by 5% compared to the previous year.
Mike von Massow, a food economist and professor at the University of Guelph, pointed out that the increasing food costs have put a strain on restaurant owners. This not only affects their bottom line but also impacts consumer behavior, as individuals may dine out less frequently due to higher grocery expenses.
Frederic Chartier, the owner of a French restaurant in Shelburne, Ontario, shared his struggles, mentioning how he has taken on additional roles like washing dishes and serving due to a decline in customers. He emphasized the mental toll of trying to keep his business afloat amidst financial challenges.
Looking ahead, restaurant owners anticipate implementing a 4% price increase in 2026 on average to offset their rising costs. However, balancing the need to cover expenses while maintaining affordability for customers poses a significant challenge.
Restaurant owners are exploring various strategies to mitigate the impact, such as offering value meals or introducing mid-level options to cater to cost-conscious customers. Despite efforts to adapt, the survey indicates that a significant portion of Canadians are dining out less frequently due to cost concerns.
Higginson expressed the need for further government support, advocating for the removal of federal GST on all food items, including those served at restaurants. She emphasized that the struggles faced by the restaurant industry have far-reaching implications, affecting communities nationwide through potential job losses and reduced economic activity.