A recent survey suggests that many restaurants are facing financial challenges as a result of slower customer traffic and increased operating expenses. According to a study conducted by Restaurants Canada, which gathered input from 220 restaurant owners in late 2025, a significant portion of establishments are struggling to stay afloat. The survey revealed that 26 percent of the restaurants were operating at a loss in November 2025, with an additional 18 percent just breaking even. This marks a substantial increase from 2019 when only 12 percent of restaurants were in similar financial distress.
While the situation showed slight improvement from the previous year, with 53 percent of restaurants facing losses or breaking even in 2024, the current scenario remains challenging. Kelly Higginson, president and CEO of Restaurants Canada, expressed concern over the impact these financial difficulties could have on jobs and the overall industry landscape. Rising costs, spanning from food expenses to rent and even basic items like cutlery, are posing significant challenges for restaurant operators.
The survey highlighted that food and labor costs were the primary concerns for respondents, with 89 percent expressing worry about labor expenses and 88 percent citing rising food costs as a major issue. Inflation, particularly affecting food prices, has been a key factor contributing to the financial strain on restaurants. Grocery item inflation surged by five percent in December compared to the previous year, while the overall inflation rate stood at 2.4 percent during the same period.
Food economist and University of Guelph professor, Mike von Massow, acknowledged the struggles faced by Canadian restaurant owners, emphasizing that the escalating cost of food puts additional pressure on businesses. Customers feeling the financial impact of rising grocery prices may opt to dine out less frequently, further impacting restaurant revenues.
Owners like Frederic Chartier of Beyond the Gate, a French restaurant in Shelburne, Ontario, are feeling the brunt of these challenges firsthand. Despite initially successful years before and after the pandemic, recent times have been tough for Chartier as dwindling foot traffic led to service cutbacks and the need for additional work to make ends meet. He emphasized the mental toll of the situation, with operational changes and financial constraints affecting the overall dining experience for both customers and staff.
Given the tight profit margins, restaurant owners anticipate implementing an average four percent price increase in 2026 to cope with escalating costs. Higginson stressed the delicate balance required by establishments to cover expenses while ensuring affordability for customers. Strategies such as offering value meals or introducing mid-level dining options have been explored to retain clientele amid price hikes.
Chartier’s experience reflects the broader trend of Canadians dining out less frequently due to cost concerns. He highlighted the importance of government support to alleviate the financial burden on consumers, enabling them to allocate more disposable income for dining experiences.
While some relief was experienced through the federal government’s GST holiday and domestic tourism boost in 2025, ongoing support is crucial for the industry’s recovery. Restaurants Canada advocates for the removal of federal GST on all food items, including those served in restaurants, to alleviate financial strain. Higginson emphasized the pervasive impact of struggling restaurants on communities nationwide, underscoring the need for sustained government assistance to prevent widespread job losses and economic repercussions.