Thousands of restaurants in Canada could close in 2026, says new study

A new study suggests thousands of restaurants in Canada could close in 2026 amid rising prices and changing consumer habits. CTV’s Kimberley Johnson reports.

A new study shows that thousands of restaurants in Canada have closed, with more to follow in 2026.

The study done out of Dalhousie University shows that more than 4,000 restaurants across Canada could go out of business this year, while 7,000 restaurants closed in 2025.

Sylvain Charlebois, the director of the Dalhousie University Agri-Food Analytics Lab, says consumer habits are changing as costs mount everywhere.

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“What we’re seeing right now are consumers under tremendous financial pressure,” he said in an interview with CTV News Ottawa. “They’re having a hard time buying food at the grocery store, so they’re not spending as much time in food service.”

Charlebois says ordering take-out and delivery is becoming more popular, and when people do go out, they are spending less.

“They’re not necessarily buying an appetizer or a dessert or an expensive bottle of wine,” he explained.

At Al’s Diner, breakfast has been served up for 36 years. In all that time, Al Ayoub says his industry has seen challenges and right now is a tough time.

“Your bottom line gets smaller and smaller,” he said. “And, I mean, if you want to raise your prices, you take a chance and scare people away. I’m not one to do that.”

Food prices and wages going up are his biggest expenses. To keep costs down he shops around and says owning his building has helped him a lot.

With dedicated customers, Ayoub says Al’s Diner is not at risk of closing, but a study showing that thousands of businesses like his could be forced to shut down this year doesn’t come as a shock.

“I feel sorry for the ones that can’t adapt to it. There’s a lot of restaurants out there that are struggling and having a hard time, and it doesn’t matter how big of a chain you are, or just a small place,” he said.

“I mean, the old saying was you need at least five years ago to get established. And I think that’s even going to be harder now.”

Many restaurants barely breaking even

Restaurants Canada says other pressures for restaurants include rent and insurance. The group says 41 per cent of restaurants are operating at a loss or barely breaking even but they are working to keep prices low because they know customers are budgeting.

Charlebois says another consumer habit that’s changing is customers are drinking less.

“Alcohol consumption is way down, and typically that certainly helps restaurant operators to generate more income,” he said.

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Some customers say they plan on making changes as the cost of living rises.

“I probably plan on eating out less,” said Marney Koritko. “It’s gotten really expensive. It’s nice to go once in a while, though, just for the experience and the atmosphere.”

“I would say probably about the same (amount of eating out), but spending less,” said Gord Maddison. “Looking for cafes rather than full restaurants, looking for snacks rather than full meals.”

Charlebois says legislation could help some of these businesses – for instance last year’s GST tax break can help if made permanent. Restaurants Canada says it would also support the move.