Quebec’s restaurant industry: understanding the challenges and finding lasting solutions

Increasing costs that eat into profits

Since 2023, operating costs have jumped. Food, labour, energy and insurance are all more expensive now. Profit margins, which were already slim, are now even lower. According to Restaurants Canada, 41% of establishments are currently operating at a loss or barely breaking even.

Restaurant owners had no choice but to increase their prices, but this increase was not enough to offset inflation. Customers have also changed their habits and are ordering fewer starters and desserts and less wine. Even the fast food sector is under pressure because meals advertised as “affordable” are more expensive than before.

More cautious customers and new spending habits

Three out of four Canadians are eating out in restaurants less often* and that share rises to 81% for those aged 18 to 34. Young Canadians are prioritizing price, value and quick service above all.

Per capita spending in full-service restaurants has dropped from $1,165 to $1,035 since 2019 while spending in quick-service restaurants has decreased from $1,150 to $1,135.

At the same time, alcohol consumption has slowed and 41% of Canadians report that they’re drinking less. This directly impacts restaurant revenue since alcohol previously generated significant profit margins.

Customer habits have also changed, For example:

• Lunch and brunch have become more popular;
• Patrons are choosing happy hour over dinner;
• Replacing meals with snacks has become increasingly common among young people in particular.

Even high-end restaurants have seen a drop in the average bill (between $15 and $20 per client on average), which translates to lower profitability at the end of the month.

Difficulty recruiting and retaining workers

The restaurant industry is struggling with a chronic labour shortage. Cooks, wait staff and dishwashers are scarce outside of major cities and towns in particular. Tighter immigration criteria have also reduced access to foreign workers who filled critical roles in kitchens.

On the restaurant floor, recent changes to tip calculation (now based on the price before taxes) has negatively impacted employee income. Several workers have left the sector which forced employers to increase wages and review their opening hours.

This labour shortage has led to constant cost increases and more complex day-to-day management.

Seven concrete ways to get back on your feet

Do any of these situations apply to you? Here are a few tips to help you regain control.

1. Assess your business’s financial health

   Take stock of your profit margins, debts and non-profitable dishes to determine what you should prioritize.

2. Make intelligent changes to your menu

   Prioritize local, seasonal and more profitable ingredients and simplify your dishes.

3. Review your pricing structure

   Slightly adjusting your pricing is better than selling at a loss. Lunch and set-price menus could attract new customers.

4. Optimize your fixed costs management

   Negotiate with suppliers, combine purchases with other restaurant owners and limit off-peak hours.

5. Stabilize your workforce

   Offer attractive working conditions, flexibility and training to foster employee loyalty.

6. Protect your cashflow

   Plan payments, maintain a liquidity buffer and avoid short-term debt.

7. Seek help quickly

   If your restaurant is going through a difficult period, don’t waste time. Raymond Chabot’s Licensed Insolvency Trustees can help you to restructure your debt, renegotiate your agreements and get back on track before it’s too late.

*Restaurants Canada’s 2025 Report