Feb 23, 2026
Nearly half of Canadian restaurants are operating at a loss or barely breaking even, as rising costs and cautious consumers squeeze margins across the country.
A new report from Restaurants Canada (1) found that 44% of operators were either losing money or just covering their costs as of November 2025, up from 41% in June and sharply higher than 12% in 2019. While overall sales showed modest growth last year, profitability remains under pressure.
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“It is a very concerning number that is going to impact jobs. It’s going to impact shifts. We’re going to see more restaurant closures,” Kelly Higginson, president and CEO of Restaurants Canada, told CBC (2).
GST holiday helped — but pressures are mounting
After adjusting for inflation, real commercial foodservice sales are estimated to have grown 2.4% in 2025. A temporary GST/HST holiday on restaurant meals and strong domestic tourism helped cushion what had been expected to be a weaker year. Real per-capita foodservice spending rose 0.6%, the first increase since 2023, with the strongest gains in Atlantic Canada during peak travel season.
But those gains didn’t translate into stronger bottom lines.
Sixty percent of operators said profitability in 2025 was “worse” or “much worse” than expected compared with 2024. The strain was particularly pronounced among quick-service restaurants, where 77% reported weaker-than-expected results, versus 58% of full-service operators.
Food and labour remain the biggest concerns. Eighty-nine percent of operators cited labour costs as a top pressure point, while 88% pointed to rising food costs. Restaurants Canada also flagged the impact of the ongoing U.S. tariff dispute as an additional drag on operating expenses.
“Last year, the restaurant industry was buffered from the full impact of rising operation cost by the GST/HST holiday and stronger domestic tourism,” Higginson said in a statement. “Unfortunately, we can’t count on that same support in 2026, so operators are bracing for a difficult year.”
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What it could mean for diners in 2026
Restaurants Canada expects real foodservice sales to decline 1.1% in 2026. Nearly half of operators (46%) say they expect profitability to worsen further this year.
For consumers, that could mean more menu price increases. Operators surveyed expect to raise prices by about 4% on average in 2026, though many say that still won’t fully offset rising costs.
“We know Canadians are struggling with affordability,” Higginson told CBC. “So while we might see that four percent increase in menu prices, that definitely does not reflect the increase in operations for our businesses.”
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Labour shortages are another growing concern. More than half of operators (55%) believe recent immigration policy changes will negatively affect their business, and 57% say those changes will reduce their ability to hire kitchen staff.
Restaurants Canada is urging the federal government to permanently remove GST on all food, including restaurant meals, and to address labour shortages through immigration pathways targeted to hospitality workers.
“You’re going to feel it in every community,” Higginson told CBC. “You’re going to see job loss, you’re going to see shifts cut and that’s going to have a direct impact on the economy and the communities that we continue to serve.”
For Canadians dining out less frequently due to cost-of-living pressures, the data shows that restaurant owners are feeling many of the same financial strains.
Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
Restaurants Canada (1); CBC News (2)
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Steven Brennan is a freelance finance writer based in Vancouver, BC. He holds a BA and an MA from Maynooth University, Ireland. His work regularly appears at Canadian Mortgage Trends, Lowest Rates, Loans Canada and other Canadian and US brands, while also working as a ghostwriter for financial influencers.
