Restaurants are under pressure as consumers steer away from dining out, while rising operational costs squeeze profit margins, a new report shows.
Three in four Canadians are eating out less, often because of the high cost of living, a Restaurants Canada report published Monday found. That share is even higher among those aged 18 to 34 at 81 per cent.
Restaurants Canada chief executive Kelly Higginson said it’s an “alarming” trend for the foodservice industry.
She said the younger generation in particular is “who we’re really going to be targeting more and more as they start to grow into the main consumer of the demographic.”
The report found younger Canadians placed higher importance on price, value and convenience compared with older Canadians.
Restaurant spending has slowed compared with pre-pandemic levels.
Per capita, Canadians are expected to spend $1,035 at full-service restaurants and $1,135 at quick-service restaurants this year. In 2019, they were spending $1,165 and $1,150, respectively.
As fewer people dine in, sales of alcohol at restaurants have also slowed because of rising menu prices and a consumer shift toward wellness, the report found.
Forty-one per cent of Canadians surveyed said their alcohol consumption has decreased over the past year.
“With our operators seeing less drinking or no alcohol, it’s making it even more challenging to be able to focus on those value meals that Canadians need right now, and also be able have some profit at the end of the day,” Higginson said.
Sales in the foodservice industry are projected to reach $124 billion this year. However, when adjusted for inflation, the growth is going to remain relatively muted.
As consumers pull back on spending, businesses are also dealing with rising operational expenses. The cost of food, labour, insurance and utilities, among other expenses, have grown by double digits between 2023 and 2025, the report said.
The report showed 41 per cent of businesses were operating at a loss or breaking even as of June 2025.
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