New Report Reveals Canadian Restaurants’ Profit Struggles

A recent survey highlights significant profit struggles within the Canadian restaurant industry. Conducted by Restaurants Canada, the report surveyed 220 of its members in late 2025, revealing alarming financial trends. The survey results indicate that 26% of respondents are operating at a loss, while 18% are barely breaking even. Together, nearly 44% of restaurants report they are not profitable, a stark increase from just 12% in 2019.

Financial Struggles in the Restaurant Sector

The findings of this report are slightly improved compared to 2024, when 53% of surveyed restaurants struggled financially. Kelly Higginson, president and CEO of Restaurants Canada, expressed concern over these figures, emphasizing that the current situation threatens jobs and may lead to more closures.

Impact of Rising Costs

Rising costs are a primary concern for restaurant owners, particularly in relation to food and labor. The survey reported that 89% of respondents are anxious about increasing labor costs, while 88% are troubled by food price inflation.

• Food Inflation: December saw a 5% increase in grocery prices compared to the previous year.
• Overall Inflation: General inflation for other categories was only at 2.4%.

Mike von Massow, a food economist from the University of Guelph, notes that rising food costs impact restaurants in two ways. Not only do these costs increase operational expenses, but they also reduce consumer willingness to dine out.

Real Stories from Restaurant Owners

Frederic Chartier, the chef and owner of Beyond the Gate in Shelburne, Ontario, has felt the strain personally. After eight years of operation, he now takes on multiple roles within his restaurant, including dishwasher and server, due to dwindling customer traffic. Chartier has even secured a part-time job at a burger restaurant to support his financial stability.

Despite a successful pre-COVID-19 era, Chartier’s business has suffered in recent years. He has had to eliminate certain services and reduce staff in response to the decrease in customer visits.

Price Adjustments on the Horizon

Given the tight profit margins, respondents in the survey indicate they plan to raise menu prices by an average of 4% in 2026. However, Higginson warns this increase may not adequately reflect rising operational costs while putting pressure on customer retention.

Many restaurateurs have been diversifying their offerings, introducing value meals, or exploring different pricing strategies to attract cost-conscious diners.

• Three-course recession menu introduced at Beyond the Gate for $30.
• Steady increase in staple dish prices, such as beef tenderloin, now priced at $60 compared to $45 three years ago.

Government Support and Solutions

Chartier and other restaurant owners hope for government initiatives to ease financial burdens on consumers, allowing them more flexibility to dine out. Higginson suggests eliminating GST on food served in restaurants as a potential solution.

The survey reflects a broader trend of Canadians reducing dining out to save money, with three-quarters of respondents indicating they are eating out less frequently. Chartier’s experiences and the survey findings underscore the significant impact these financial pressures have on community-based restaurant businesses.

As the restaurant industry grapples with these challenges, the implications for employment and local economies could be profound. Ensuring the viability of restaurants is crucial, as they play a vital role in the social and economic landscape of communities across Canada.