A recent survey indicates that many restaurants are facing financial challenges, with slowing foot traffic and increasing expenses putting pressure on their bottom line. The survey conducted by Restaurants Canada in late 2025 revealed that 26% of the 220 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 predicament. Although the current figures show a slight improvement from 2024, when 53% of restaurants were either losing money or just breaking even, the situation remains concerning.
According to Kelly Higginson, the president and CEO of Restaurants Canada, rising costs, including food, rent, and supplies like cutlery, are posing major challenges for restaurants. In the survey, respondents expressed the most concern about escalating food and labor costs, with 89% worried about labor expenses and 88% about the rising cost of food.
The impact of inflation, particularly on food prices, has been significant, with grocery inflation reaching 5% in December 2025 compared to the previous year. This has put additional strain on restaurant owners, as consumers may opt to dine out less due to increased grocery costs.
Mike von Massow, a food economist and professor, highlighted the tough situation faced by restaurant owners, who not only contend with higher business costs but also compete with grocery stores for consumer spending. The struggle to balance costs and retain customers has led some restaurant owners to consider raising prices in 2026 by an average of four percent.
Despite the challenges, some restaurant owners are exploring alternative strategies to mitigate the need for price hikes, such as offering value meals or introducing mid-level options to cater to cost-conscious customers. However, the overarching trend of Canadians dining out less due to rising costs remains a concern for the industry.
As restaurant owners navigate these financial hurdles, there is a call for government support to alleviate the burden on businesses and consumers alike. Suggestions include removing federal GST from all food items, including those served in restaurants, to provide relief to struggling establishments.
The impact of financial difficulties in the restaurant sector is not limited to individual businesses but extends to communities nationwide. Job losses, reduced shifts, and economic repercussions are anticipated if the challenges faced by restaurants are not addressed promptly.