A recent survey suggests that many restaurants are facing financial challenges due to declining foot traffic and increasing operating costs. The survey conducted by Restaurants Canada in late 2025 found that 26% of the 220 surveyed restaurants were operating at a loss, while 18% were just breaking even. This indicates 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 2024 when 53% of restaurants were either losing money or barely breaking even. Kelly Higginson, the president and CEO of Restaurants Canada, expressed her worries about the impact on jobs and the potential for more restaurant closures due to the challenging financial landscape.
The main concerns highlighted in the survey were related to rising food and labor costs, with 89% of respondents worried about labor costs and 88% concerned about the escalating cost of food. Inflation has notably affected food prices, with grocery item inflation rising by five percent in December compared to the previous year.
Food economist and University of Guelph professor, Mike von Massow, emphasized the struggles faced by restaurant owners, especially with the double impact of increased food costs on their businesses and consumer spending habits. Frederic Chartier, owner of Beyond the Gate, a French restaurant in Shelburne, Ontario, shared his personal challenges, including canceling services and taking on additional roles to cope with the decline in customers.
Looking ahead, restaurant owners anticipate a four percent increase in prices in 2026 to cover their rising costs. However, balancing the need to remain profitable while retaining customers is a delicate task. Higginson highlighted the challenges faced by restaurant owners in adjusting prices while ensuring affordability for customers.
The report also mentioned some initiatives taken by restaurant owners to mitigate the impact of rising costs, such as offering value meals or introducing mid-level options. The broader trend of Canadians dining out less frequently due to cost concerns has also affected the industry.
Higginson called for further government support, suggesting the removal of federal GST from all food, including restaurant meals, to alleviate the financial strain on the industry. She emphasized the far-reaching impact of struggling restaurants on communities and the economy, emphasizing the need for collective action to support the sector.