Canada’s restaurant sector is facing another difficult year, with thousands of establishments expected to close as rising costs and shifting consumer behaviour continue to squeeze margins, according to Sylvain Charlebois, senior director of the AgriFood Analytics Lab at Dalhousie University.
Charlebois said his team’s analysis suggests Canada experienced a net loss of roughly 7,000 restaurant establishments in 2025 and is on track to lose about another 4,000 in 2026, as closures continue to outpace openings. He noted that these estimates differ from official figures because they focus on active, viable restaurants rather than simply registered businesses. The lab cross-references establishment data with broader economic indicators such as employment trends and consumer spending patterns to identify longer-term shifts in the sector.
He attributed the pressure on restaurants to a combination of factors, including persistently high input costs, labour shortages, and changes to the temporary foreign worker program that have made staffing more difficult. Charlebois also pointed to declining alcohol consumption as a major challenge, explaining that alcohol sales have traditionally helped restaurants offset their thin food margins. As customers order fewer drinks, appetizers, and desserts, profitability becomes harder to achieve.
The growth of delivery and takeout since the pandemic has further complicated the picture. Charlebois said off-premise dining reduces opportunities for high-margin beverage sales, putting additional strain on operators, particularly independent restaurants that lack the purchasing power and marketing support of large franchise systems.
Despite the wave of closures, Charlebois does not see the industry as being in crisis. Instead, he described the current period as a “right-sizing” following the pandemic, emphasizing the sector’s long-term resilience. However, he warned that the loss of independent restaurants could slow food innovation, which has historically influenced both dining culture and grocery retail in Canada.
Still, Charlebois said entrepreneurial optimism continues to drive new restaurant openings, underscoring the role of risk-taking in a healthy economy.
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