A recent survey indicates that many restaurants are facing financial challenges due to reduced foot traffic and increased operational expenses. According to a study conducted by Restaurants Canada, 26% of the surveyed restaurants were operating at a loss as of November 2025, while an additional 18% were just breaking even. This combined figure of 44% not making profits is significantly higher compared to 2019, when only 12% were in a similar financial predicament.
Despite these numbers, there has been a slight improvement from the previous year, where 53% of restaurants were either losing money or barely breaking even. Kelly Higginson, the President and CEO of Restaurants Canada, expressed concern over the impact of these financial challenges on jobs and overall operations within the industry. Rising costs, including food prices, rent, and even basic supplies like cutlery, are cited as major hurdles for restaurant owners.
The survey highlighted that food and labor costs were the primary concerns for respondents, with 89% worried about labor expenses and 88% troubled by the escalating cost of food. Inflation, particularly in grocery prices, has been a significant factor affecting restaurant operations. Recent data shows a 5% increase in grocery inflation compared to the previous year, while the general inflation rate stands at 2.4%.
Food economist and University of Guelph professor, Mike von Massow, noted that the surge in food prices poses a dual challenge for restaurant owners. They not only face increased operational costs but also contend with consumers cutting back on dining out due to higher grocery expenses. This trend has led some establishments to struggle with reduced patronage, forcing owners like Frederic Chartier of Beyond the Gate in Shelburne, Ont., to take on additional roles within their businesses to stay afloat.
With slim profit margins, many restaurant owners are considering price adjustments in 2026, with an average expected increase of four percent. Higginson emphasized the delicate balance required to cover expenses without alienating customers who may be deterred by higher prices. Strategies like offering value meals or diversifying menu options are being explored to maintain customer loyalty amid rising costs.
Despite temporary relief from initiatives such as the GST holiday and domestic tourism, the industry is calling for further government support. Restaurants Canada advocates for the removal of federal GST on all food items, including meals served at restaurants, to alleviate financial strain on businesses nationwide. Higginson emphasized the widespread impact of restaurant struggles, highlighting potential job losses and reduced economic activity in communities across the country.