The latest survey indicates that many restaurants are facing financial challenges due to reduced customer traffic and escalating expenses. According to a recent study by Restaurants Canada involving 220 restaurant operators in late 2025, it was revealed that 26% of the establishments were operating at a loss, with an additional 18% barely breaking even. This means a total of 44% of the surveyed restaurants were not making profits, a significant increase from 2019 when only 12% were in a similar financial predicament.
Despite the concerning figures, there was a slight improvement compared to 2024, where 53% of the restaurants were either losing money or just managing to break even. Kelly Higginson, the president and CEO of Restaurants Canada, expressed deep concern over the impact on jobs and the potential for more closures within the restaurant industry. She highlighted that rising costs, spanning from food expenses to rent and even basic supplies like cutlery, were posing significant challenges for restaurant owners.
The survey highlighted that the two major worries for respondents were escalating food and labor costs, with 89% expressing concerns about labor expenses and 88% troubled by the increasing cost of food. The inflation rate for grocery items witnessed a notable surge of five percent in December compared to the previous year, while the general inflation rate stood at 2.4%.
Food economist Mike von Massow from the University of Guelph noted that the rising food costs were a double-edged sword for restaurant owners, impacting both their operational expenses and consumer behavior. He emphasized the tough competition restaurants face from grocery stores, where consumers might opt for home-cooked meals over dining out in response to inflated grocery prices.
Owners like Frederic Chartier of Beyond the Gate restaurant in Shelburne, Ontario, shared their personal struggles, citing a decline in customer footfall and the need to take on multiple roles within the business due to financial constraints. Chartier mentioned the challenges of increasing prices gradually to offset rising costs, pointing out the impact on consumer spending habits and the need for government intervention to support customers’ purchasing power.
Looking ahead, restaurant owners are considering raising prices by an average of four percent in 2026 to cope with financial pressures. Higginson highlighted the delicate balance required to adjust prices while retaining customer loyalty in the face of affordability concerns. She mentioned various strategies being explored by restaurant operators to mitigate the need for significant price hikes, such as offering value meals or introducing mid-level options to cater to budget-conscious diners.
Despite temporary relief from the government’s GST holiday and a boost from domestic tourism, Restaurants Canada is advocating for further governmental support to alleviate financial burdens on the industry. Higginson emphasized the need for broader initiatives, such as removing federal GST on all food, including restaurant meals, to aid struggling businesses nationwide and prevent adverse economic repercussions on communities.
