Canadian restaurants are facing a serious profitability crisis, with a recent report from Restaurants Canada indicating that a significant number of establishments are operating at a loss or barely breaking even. The survey of Restaurants Canada members revealed that 44% of respondents were in this precarious financial position as of November 2025, a stark contrast to pre-pandemic levels in 2019 when only 12% faced similar struggles. This concerning trend is expected to lead to job losses and potential restaurant closures across the country, according to Kelly Higginson, president and CEO of Restaurants Canada.
Several factors contribute to the challenges faced by Canadian restaurants. Soaring food prices, rising operational costs (including rent, insurance, and wages), and changing consumer habits are squeezing profit margins. Many Canadians are reducing their discretionary spending, including dining out, due to affordability issues and broader economic concerns. Restaurants Canada also points to the end of the GST/HST holiday on restaurant meals, which provided temporary relief in some provinces in 2025, as a contributing factor to the current difficulties.
Analysts predict that thousands of Canadian eateries may shut down in 2026. A recent study by Dalhousie University projects that Canada could lose a net of 4,000 restaurants this year, following a year in 2025 that saw 7,000 closures. The situation is particularly challenging for smaller, independently-owned restaurants, which may lack the resources to weather the storm.
Restaurants Canada is advocating for measures to alleviate the burden on the industry, including the removal of GST on food. The association is also working with all levels of government to address issues such as rising costs, labour shortages, and immigration policies that impact the restaurant sector. The organization emphasizes the importance of a strong restaurant industry, which contributes jobs, investment, and culinary choices to communities across Canada.
