A recent survey suggests that many restaurants are facing financial challenges due to reduced customer traffic and escalating expenses. The study conducted by Restaurants Canada involved 220 restaurant members in late 2025. Findings revealed that 26% of the surveyed restaurants were operating at a loss by November 2025, while another 18% were barely breaking even. This indicates that a total of 44% of respondents were not profitable, a significant increase from the 12% reported in 2019.
Although the numbers showed a slight improvement from 2024, when 53% of restaurants were either losing money or just breaking even, the current situation remains concerning. Kelly Higginson, the president and CEO of Restaurants Canada, expressed worries about the impact on jobs and the potential for more restaurant closures. Rising costs, including expenses for food, rent, and supplies like cutlery, are major challenges faced by restaurant owners.
The survey highlighted that respondents were particularly concerned about escalating food and labor costs, with 89% expressing worry about labor costs and 88% about the rising cost of food. Inflation, especially in grocery prices, has been a significant factor. In December, grocery item inflation surged by five percent compared to the previous year, while the overall inflation rate stood at 2.4%.
Food economist and University of Guelph professor Mike von Massow emphasized that restaurant owners are struggling, especially with the double impact of rising food costs. Consumers feeling the pinch at the grocery store may opt to dine out less frequently, further impacting restaurant revenues. Frederic Chartier, owner of Beyond the Gate, a French restaurant in Shelburne, Ontario, shared his challenges, including the need to take on multiple roles within his business due to reduced customer numbers.
Considering the tight profit margins, surveyed restaurant owners indicated they planned to increase prices by an average of four percent in 2026. Higginson mentioned the delicate balance required by members to cover costs while retaining price-sensitive customers. Strategies like offering value meals and introducing mid-range options have been explored to mitigate the need for significant price hikes.
As Canadians are dining out less due to cost concerns, some restaurant owners, like Chartier, have cautiously implemented price adjustments over time. Despite efforts to introduce value menus, maintaining customer interest and profitability remains a constant struggle. Chartier hopes for government interventions to alleviate the cost burden on consumers, potentially stimulating more spending in restaurants.
While the report noted some relief from the federal government’s GST holiday and robust summer tourism in 2025, further support is desired. Restaurants Canada advocates for the removal of federal GST on all food items, including those served in restaurants. Higginson highlighted the widespread impact of struggling restaurants on local economies and emphasized the need for government assistance to prevent job losses and shifts reductions across communities.
