Canada is poised to lose an estimated 4,000 restaurants across the country this year, according to the Agri-Food Analytics Lab at Dalhousie University.
“We expect Canada to lose roughly 4,000 restaurants on a net basis in 2026,” he wrote, adding the process was “already underway.”
“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, masked temporarily by extraordinary policy interventions,” Charlebois said, adding that many “pandemic-era supports” such as wage subsidies, loan deferrals and tax postponements “kept thousands of establishments afloat.”
“These measures were effective at preventing an immediate collapse, but they also delayed the necessary adjustment,” he wrote. “That adjustment is now unavoidable.”
Charlebois said that the business model for restaurants has “fundamentally shifted,” as commercial rents increase and consumer traffic drops.
He said that Canadian restaurants are being “squeezed” between rising costs and demand that is “increasingly price-sensitive.”
A previous report from the lab, released in November 2025, found many Canadians were spending less on eating out, with one-third of the 3,000 survey respondents saying they spend less than $50 a month on restaurant food. About 25 percent of respondents said they spend between $51 and $100 a month.
Charlebois said it was not just that Canadians are eating out less, but they are also drinking less, leading to a drop in alcohol sales, which once bolstered the restaurant industry.
“Alcohol—particularly beer, wine, and spirits—has historically subsidized food margins. As alcohol volumes decline, operators lose one of the few high-margin categories capable of offsetting rising kitchen and labour costs,” he wrote.
The report also noted that menu price inflation was a “symptom of distress.”
“Operators are raising prices to slow losses, not to expand margins. Many are surviving by drawing down savings, refinancing debt, renegotiating leases, or delaying reinvestment,” Charlebois wrote.” These are not indicators of health; they are indicators of exhaustion.”
Charlebois said the losses will hit independent restaurants the hardest, and have an economic and cultural impact.
“These businesses are also among the sector’s most important contributors to food innovation and culinary artistry. They are often the first to experiment, the first to take risks, and the first to introduce Canadians to new cuisines, flavours, and dining concepts that later become mainstream,” he said, adding the loss of such restaurants would “narrow Canada’s culinary landscape.”
