A recent survey suggests that many restaurants are facing financial challenges due to reduced customer traffic and increasing operational expenses. The study conducted by Restaurants Canada in late 2025 revealed that 26% of surveyed restaurants were operating at a loss, while another 18% were barely breaking even. These figures indicate 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 the previous year, with 53% of restaurants struggling financially in 2024. Kelly Higginson, the president and CEO of Restaurants Canada, expressed worry about the impact on jobs and the potential for more restaurant closures.
The primary concerns highlighted in the report were escalating food and labor costs, with 89% of respondents expressing worry about labor expenses and 88% about the rising cost of food. Inflation, particularly in grocery prices, has been a major contributing factor, with a five percent increase in grocery item prices in December compared to the previous year.
Food economist Mike von Massow pointed out that the rising food costs not only affect the restaurant’s expenses but also influence consumer behavior, potentially leading to fewer dining-out occasions. Frederic Chartier, owner of a French restaurant in Shelburne, Ontario, shared his struggles with declining customer numbers, forcing him to take on additional roles within his establishment.
In response to the financial challenges, restaurant owners are considering raising prices by an average of four percent in 2026. However, balancing the need to cover costs while retaining customers poses a significant challenge. Some owners are exploring alternative strategies, such as offering value meals or introducing mid-level options to cater to cost-conscious customers.
Chartier, who has incrementally raised prices to offset growing expenses, emphasized the importance of government support to alleviate the cost burden on consumers. The report also highlighted the positive impact of the GST holiday and domestic tourism on the industry but emphasized the need for further government assistance, such as removing federal GST from all food items.
Higginson stressed the widespread implications of restaurant struggles, noting that the repercussions would be felt across various communities, impacting jobs and local economies. The call for government intervention to support the struggling restaurant industry remains crucial in ensuring its sustainability.