The latest survey shows that many restaurants are facing financial challenges due to declining customer traffic and escalating expenses. A recent study conducted by Restaurants Canada revealed that as of November 2025, 26% of surveyed restaurants were operating at a loss, while another 18% were barely breaking even. This marks a significant increase from 2019 when only 12% of restaurants were in a similar financial situation.
While these numbers show a slight improvement from 2024, when 53% of restaurants were either losing money or just breaking even, the overall picture remains concerning. Kelly Higginson, the president and CEO of Restaurants Canada, expressed worry about the impact on jobs and the potential closure of more restaurants. She highlighted that rising costs, including food, rent, and supplies like cutlery, are putting immense pressure on restaurant owners.
The survey indicated that food and labor costs were the top concerns for respondents, with 89% expressing worries about labor expenses and 88% about the increasing cost of food. Inflation, particularly affecting food prices, has been a major contributing factor. In December, grocery item inflation surged by five percent compared to the previous year, significantly higher than the overall inflation rate of 2.4%.
Food economist Mike von Massow from the University of Guelph stated that the rising food costs are doubly challenging for restaurant owners. Not only do they face higher operational expenses, but consumers feeling the impact of increased grocery prices may opt to dine out less frequently.
Frederic Chartier, the owner of a French restaurant in Shelburne, Ont., shared his struggles amidst dwindling customer numbers. He highlighted the need to take on multiple roles within his establishment, including dishwasher and accountant, due to the lack of customers to sustain additional staff. Chartier emphasized the mental toll of the situation, recalling a time when his business was thriving before the recent downturn.
Looking ahead, restaurant owners anticipate a four percent average price increase in 2026 to cope with tight profit margins. Higginson emphasized the delicate balance between covering costs and retaining customers in the face of affordability challenges. She mentioned that some establishments are exploring alternative strategies, such as offering value meals or introducing mid-range options to cater to cost-conscious patrons.
Despite the hardships, Chartier remains hopeful for government intervention to alleviate the financial burden on consumers, allowing them more disposable income for dining out. The report also highlighted the temporary relief provided to restaurant owners through the federal government’s GST holiday and a boost from domestic tourism during the summer. However, more sustained support, such as the removal of federal GST on all food, is desired to aid the struggling restaurant industry nationwide.
