Sales growth may be stronger than expected but Canada’s restaurant industry continues to face significant financial pressures as 67% of restaurants report lower profitability compared to a year ago and 44% express pessimism about 2027, according to Restaurants Canada in its latest Quarterly report.
Commercial foodservice sales are projected to grow by 5.1% in 2026.
“Stronger sales don’t necessarily mean healthier restaurants,” said Chris Elliott, Chief Economist and Vice-President of Research at Restaurants Canada. “While industry sales have exceeded expectations, rising food and labour costs, softer guest traffic and limited room to increase menu prices are putting significant pressure on restaurant profitability. That disconnect is shaping operators’ expectations for 2027.”
While 44% of restaurant operators say they are pessimistic about 2027, there are 30% who are optimistic. Also, 38% expect profitability to decline next year, while just 21% anticipate an improvement. Employment expectations are also restrained, with 29% of operators expecting to employ fewer workers and only 9% anticipating an increase, said the report.
“Restaurants are being squeezed between rising operating costs and consumers who simply can’t afford higher prices,” said Kelly Higginson, President and CEO of Restaurants Canada. “When restaurants can no longer make the economics work, Canada loses far more than places to eat – Canadians lose jobs, farmers and food producers lose customers, and communities across the country lose essential economic activity that keeps them vibrant.
“Canada needs a strong, competitive restaurant industry. That means giving operators the confidence to invest in their businesses, support their employees and serve their communities,” added Higginson. “We’ll be looking at next week’s federal budget for concrete measures that improve affordability and restore business confidence, including steps toward a comprehensive review of Canada’s tax system to reduce the burden on businesses and support long-term growth.”
The organization said restaurants, a $129 billion industry, are the fourth largest private sector employer in Canada, with 1.2 million workers, and serve 24 million customer visits every day.
Restaurants Canada said it will continue working with the federal and provincial governments to identify policy and regulatory measures that will reduce operating costs, strengthen restaurant competitiveness and restore business confidence. The federal government’s recent Productivity Mega Deduction is an example of positive steps that governments can take to help restaurant businesses thrive and grow, supporting jobs and communities across the country.
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