Nearly four in ten Canadian restaurants now losing money or breaking even

Nearly four in ten Canadian restaurants are now operating at a loss or just breaking even, a sign that the country’s dining room economy has slipped deeper into strain as 2026 begins. Restaurants Canada said 41% of foodservice businesses were in that position in June 2025, up from 12% in 2019, and the share climbed to 44% by November.

The association said the pressure is coming from several directions at once: affordability challenges, higher operating costs and uneven consumer spending. Lower-income Canadians are pulling back most sharply, leaving operators to absorb rising food costs while also paying more for labor, insurance and utilities. For restaurants already running thin schedules and tight prep, that means fewer dollars left to cover payroll, repairs and the kind of small cushion that keeps a slow week from turning into a crisis.

Kelly Higginson, Restaurants Canada’s president and CEO, said Canadians visit restaurants 23 million times every day, supporting 1.2 million jobs across the country. That scale is why the current slowdown matters well beyond the dining room. When traffic softens, servers see fewer tables, line cooks get fewer hours, bartenders lose lucrative shifts and managers spend more time deciding which cost to cut next.

The industry group’s outlook is still weaker ahead. Restaurants Canada expects real commercial foodservice sales to decline by 0.2% in 2026 after growing 2.3% in 2025, and it said profitability is expected to worsen for many operators. It also warned that Canada could lose roughly 4,000 restaurants on a net basis this year if current cost and spending trends continue.

Quick-service operators are expected to be hit especially hard, a warning that carries particular weight in a sector where margins are already thinnest and turnover is high. A temporary GST/HST holiday helped cushion sales in 2025, but the association said that relief is fading just as consumers are getting more selective about where and how often they eat out. For workers and managers, the result is a familiar but harsher squeeze: fewer covers, tighter schedules and more pressure on every shift to make the math work.