Introduction to the Canadian Food Service Industry
The Canadian food service industry is facing an "alarming" trend, according to Kelly Higginson, Managing Director of Restaurants Canada. This trend is particularly concerning for the younger generation, who will soon become the main consumer group. A recent report revealed that younger Canadians prioritize price, value, and comfort when it comes to dining out, more so than older Canadians.
Rising Costs and Weaker Expenses Squeeze Restaurant Profits
The restaurant industry has slowed down compared to pre-pandemic levels. Canadians are expected to spend $1,035 in full-service restaurants and $1,135 in quick-service restaurants this year, which is a decrease from $1,165 and $1,150 in 2019. The sale of alcohol in restaurants has also slowed down due to increasing menu prices and a shift towards wellness, with 41% of Canadians surveyed stating that their alcohol consumption decreased last year.
Challenges Facing the Industry
The food service industry is expected to reach $124 billion in sales this year, but growth remains relatively subdued when adjusted for inflation. Companies are dealing with increasing operating costs, including food, labor, insurance, and supply costs, which have grown in double digits between 2023 and 2025. The report found that 41% of companies were operating at a loss or breaking even by June 2025.
Impact on Rural and Remote Areas
The industry is also facing a labor shortage, particularly in rural and remote areas. Restaurants in these areas will be hit the hardest, as important positions such as cooks and bakers are more difficult to fill. This will affect the overall viability of restaurants in these areas.
Adapting to Changing Consumer Habits
Many restaurants are trying to adapt to the difficult operating environment by changing their menus to reduce waste and operating hours on slow days to reduce costs. Some companies are serving brunch instead of dinner services, as demand for breakfast has increased. The demand for dinner has fallen, and Canadians are increasing their spending on breakfast and lunch, which tends to be less profitable for restaurants.
Shift to Snacking
There is also a shift in the industry to capture the snack trend, especially in quick-service restaurants. Snacking is most common among younger generations, who use it as a replacement for meals. The snack segment is an opportunity for the industry to benefit, as it allows restaurants to meet consumers where they are.
Conclusion
In conclusion, the Canadian food service industry is facing significant challenges, including rising costs, weaker expenses, and changing consumer habits. Restaurants are adapting to these changes by changing their menus, operating hours, and targeting the snack trend. However, the industry still faces significant challenges, particularly in rural and remote areas, and will need to continue to innovate and adapt to remain viable.