Canada is expected to lose 4,000 restaurants nationwide this year, a new report by Dalhousie University’s Agri-Food Analytics Lab suggests.
The figure refers to the number of restaurants Canada will lose on a “net basis,” meaning the number of closures will exceed the number of new restaurants opening by 4,000.
The study analyzes data from Statistics Canada on food services and drinking places, as well as from Restaurants Canada.
“Based on current cost trajectories, balance-sheet conditions, and consumer behaviour, we expect Canada to lose roughly 4,000 restaurants on a net basis in 2026. This adjustment is already underway, even if it is not yet visible in headline statistics,” the report said.
“The problem is not that restaurants are failing suddenly. It is that the sector has been operating in a prolonged state of economic stress since 2021,” the report argues, adding that pandemic-era supports such as wage subsidies, rent relief, loan deferrals and tax postponements kept many restaurants afloat.
This report comes as Restaurants Canada estimates show 41 per cent of food service businesses are operating at a loss or just breaking even and 41 per cent of Canadians say they reduced restaurant visits last year because of higher costs.
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Higher input costs and labour costs since the start of the pandemic, coupled with the changes to the temporary foreign workers program, have all contributed to the challenges facing the restaurant industry, the report says.
Canadians are more frugal with how much they spend on eating out, the report said, adding that the softer demand is hitting one of the industry’s biggest money makers — alcohol.
While bigger businesses and chain restaurants might be able to weather the storm, smaller independently-owned restaurants might be the hardest hit, the report said.
“We have to appreciate the fact that we’re almost six years after the start of the pandemic, and the pandemic years were quite disruptive (for the restaurant industry) and there were many programs maintaining many establishments alive artificially,” said Silvain Charlebois, director of the Agri-Food Analytics Lab and author of the report.
“We’re seeing an industry being right-sized, essentially, based on the economic fundamentals we’re seeing out there,” he added.
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