Canada could see a sharp thinning of its restaurant sector and is forecasted to witness a net loss of 4,000 restaurants in 2026, according to a Dalhousie University’s Agri-Food Analytics Lab report.
The projection is measured on a “net basis”, meaning closures are expected to exceed the number of new restaurants opening by approximately 4,000. The study draws on Statistics Canada data covering food services and drinking places and includes information from Restaurants Canada, Global News reported.
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The warning comes alongside Restaurants Canada estimates that suggest 41% of food service businesses are operating at a loss or just breaking even.
The report said: “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 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 added that the restaurant industry’s challenges are being driven by higher input and labour costs since the start of the pandemic, along with changes to the temporary foreign workers programme.
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By GlobalDataIt further stated that pandemic-era wage subsidies, rent relief, loan deferrals and tax postponements helped keep many businesses afloat.
Additionally, it points to softer demand as Canadians become more cautious with discretionary spending. The report noted that this is affecting alcohol sales, which is often a major contributor to margins.
While larger chains may have greater capacity to absorb prolonged cost and demand pressures, smaller, independently owned restaurants are likely to face the most difficulty if conditions do not improve.
Agri-Food Analytics Lab director and report author Silvain Charlebois was quoted by the publication as saying: “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 programmes maintaining many establishments alive artificially.
“We’re seeing an industry being right-sized, essentially, based on the economic fundamentals we’re seeing out there.”
