A recent survey suggests that many restaurants are facing financial challenges due to decreased foot traffic and escalating expenses. The study, conducted by Restaurants Canada, involved 220 members in late 2025 and revealed that a significant portion of restaurants, 44 percent, were not making profits. This marks a notable increase from 2019 when only 12 percent were in a similar financial predicament.
While the situation showed a slight improvement compared to 2024, with 53 percent of restaurants struggling financially, the current scenario remains concerning. Kelly Higginson, the president and CEO of Restaurants Canada, expressed worries about the impact on jobs and the likelihood of more closures in the industry. Rising costs, including food, rent, and essential items like cutlery, are cited as major challenges for restaurants.
The survey highlighted that respondents were particularly troubled by escalating food and labor costs, with 89 percent expressing concerns about labor expenses and 88 percent about the rising cost of food. Inflation, especially affecting grocery prices, has been significant, with a five percent increase in December compared to the previous year.
Mike von Massow, a food economist at the University of Guelph, noted that the surge in food prices poses a dual challenge for restaurant owners. They face increased operational costs while also dealing with consumers reducing dining out due to higher grocery expenses. This dynamic creates a tough situation for the restaurant industry.
Frederic Chartier, owner of Beyond the Gate, a French restaurant in Shelburne, Ontario, shared his struggle with declining customer numbers and rising costs. He has resorted to taking on multiple roles in his establishment, including dishwasher and server, to cope with the financial strain. Despite previous successful years, the recent decline in business has forced him to make adjustments, such as canceling certain services and taking on extra work elsewhere.
Given the tight profit margins, many restaurant owners are considering price increases in 2026, with an average projected hike of four percent. Balancing the need to cover expenses while retaining customers is a delicate task, as noted by Higginson. She emphasized the challenges faced by restaurant operators in maintaining affordability while ensuring sustainability.
Restaurants Canada is advocating for government support, including the removal of federal Goods and Services Tax (GST) on all food, to alleviate financial burdens on the industry. Higginson emphasized the widespread impact of struggling restaurants on communities and the economy, highlighting the need for assistance to prevent further job losses and economic repercussions.