A recent study suggests that many restaurants are facing financial challenges due to reduced foot traffic and escalating expenses. The survey, conducted by Restaurants Canada, involved 220 members in late 2025. Findings revealed that 26% of the surveyed restaurants were operating at a loss by November 2025, with an additional 18% just breaking even. This indicates that a significant 44% of respondents were not profitable, contrasting sharply with the 12% from 2019 in a similar financial situation.
While the situation showed some improvement compared to 2024, when 53% of restaurants were either losing money or breaking even, the current figures still raise concerns. Kelly Higginson, the President and CEO of Restaurants Canada, emphasized the impact on jobs and operational shifts, foreseeing more closures within the industry. Rising costs, including food, rent, and supplies like cutlery, were highlighted as key challenges faced by restaurants.
In the survey, respondents expressed particular concerns about escalating food and labor costs, with 89% worried about labor expenses and 88% troubled by the increasing cost of food. Inflation has significantly affected food prices, with grocery item inflation reaching 5% in December compared to the previous year, while overall inflation stood at 2.4%.
Food economist and University of Guelph professor, Mike von Massow, noted the struggles faced by restaurant owners, especially with the double impact of rising food costs on both businesses and consumers. Owners like Frederic Chartier of Beyond the Gate in Shelburne, Ont., have been compelled to take on additional roles like dishwasher and accountant to cope with fewer customers and declining revenues.
Given the tight profit margins, surveyed restaurant owners anticipate an average price increase of four percent in 2026. Higginson acknowledged the delicate balance required to cover costs while retaining customers amid affordability challenges. Efforts to avoid price hikes include offering value meals and introducing mid-level options at high-end restaurants.
Chartier’s experience reflects the industry trend of adapting to rising costs by incrementally adjusting prices. Despite introducing value menus and occasional price increases, the financial strain persists for many restaurant owners. Chartier expressed hope for government interventions to alleviate the cost burden on consumers, allowing them more disposable income for dining out.
Although some relief was experienced through the federal government’s GST holiday and a successful summer of domestic tourism in 2025, more support from authorities is sought. Restaurants Canada advocates for the removal of federal GST on all food items, including those served in restaurants, to aid struggling businesses across the nation and mitigate the broader economic impact.
