A recent survey suggests that many restaurants are facing financial challenges due to decreased foot traffic and escalating expenses. According to a study conducted by Restaurants Canada, a significant number of their members are experiencing financial strain. In November 2025, 26% of the surveyed restaurants were operating at a loss, while an additional 18% were barely breaking even. This marks a substantial increase from 2019, where only 12% of restaurants were in a similar financial predicament.
The report indicates that rising costs in various areas, such as food, rent, and even basic supplies like cutlery, are putting pressure on restaurant owners. Concerns about escalating food and labor costs were the top worries for respondents, with 89% expressing concerns about labor expenses and 88% about the rising cost of food. Inflation, particularly in grocery prices, has been a major contributing factor. Grocery inflation stood at five percent in December, significantly higher than the overall inflation rate of 2.4%.
Food economist Mike von Massow from the University of Guelph noted that restaurants are facing challenges due to increased food costs, which impact both their operational expenses and consumer behavior. The competition with grocery stores further complicates the situation, as consumers may opt to dine out less frequently if faced with higher grocery prices.
Frederic Chartier, owner of a French restaurant in Shelburne, Ontario, shared his struggles amid declining customer numbers. To cope with the financial strain, he has taken on additional roles within his restaurant and even secured a part-time job at a local burger joint. Chartier’s experience reflects the broader trend of restaurants adjusting to economic pressures by reducing staff and services.
Given the tight profit margins, restaurant owners anticipate a four percent increase in menu prices in 2026. However, balancing the need to cover costs with the risk of alienating price-sensitive customers poses a significant challenge. Some establishments are exploring alternative strategies, such as offering value meals or diversifying menu options to cater to different customer preferences.
Despite efforts to adapt, the survey highlights the impact of cost-of-living challenges on the restaurant industry. Chartier emphasized the need for government support to alleviate financial burdens on consumers, enabling them to spend more on dining out. Restaurants Canada advocates for policy changes, including the removal of federal GST on all food items, to support the struggling hospitality sector.
In conclusion, the financial strain on restaurants not only affects individual businesses but also has broader implications for employment and economic stability in communities across the country. As the industry grapples with ongoing challenges, collaborative efforts between businesses and government entities are crucial to ensure the sustainability of Canada’s restaurant sector.