Empty Tables Ahead?

Canada’s restaurant industry, already strained by rising costs and slowing customer demand, is bracing for another difficult year. According to a new report by Dalhousie University’s Agri-Food Analytics Lab, the country could see a net loss of about 4,000 restaurants in 2026, meaning that more restaurants will close than open.

Why is the Industry Struggling?

The report highlights that Canada’s restaurant sector has been under continuous economic pressure since at least 2021. Pandemic-era financial supports - like wage subsidies and rent relief - helped many restaurants stay afloat temporarily, but those supports have since ended.

Even though the total number of food service businesses surpassed pre-pandemic levels on paper, the lived reality for restaurant owners has been very different. Rising operational costs including labour, rent, and food prices have squeezed profit margins.

Shifting Consumer Behaviour

Part of the challenge comes from consumers themselves. Many Canadians are spending less on dining out, prioritizing groceries and home cooking instead due to higher living costs. Restaurants Canada data referenced in the reporting showed that a large proportion of Canadians reduced their restaurant visits because of rising expenses.

One of the most significant issues for restaurants has been the decline in alcohol sales, a major profit driver for many establishments. As Canadians drink less alcohol overall, restaurants lose a valuable revenue stream that often helps offset other high costs.

Smaller Operators Hit Hardest

While some larger chains may weather the storm thanks to broader business structures or stronger capital reserves, independently owned restaurants are more vulnerable. Smaller establishments with tighter margins are less able to absorb ongoing financial strain.

What the Numbers Say

According to the Dalhousie report:

• Canada could lose roughly 4,000 restaurants on a net basis in 2026.
• This comes after a difficult 2025, when many restaurants already closed due to economic pressures.
• Roughly 41% of food service businesses were operating at a loss or just breaking even in late 2025, making sustainability challenging.

What Comes Next?

Restaurant owners and industry groups are watching closely to see how consumer budgets, labour availability, and supply costs evolve through 2026. While challenges remain, continued reporting and industry analysis will play a key role in understanding how Canada’s restaurant landscape changes in the year ahead.