Canadian Restaurants Grapple with 37% Food Cost Increase Amid U.S. Trade Tensions
As the threat of 100 percent tariffs from the United States continues to loom over Canada, a comprehensive new industry report has uncovered a significant financial strain on restaurant operators nationwide. According to the inaugural Canadian State of Restaurants Report by TouchBistro, establishments are now spending an average of 37 percent more on food directly as a result of the ongoing trade war.
Survey Reveals Widespread Impact of Tariffs and Trade Restrictions
Toronto-based restaurant software company TouchBistro conducted its survey across 600 full-service restaurants in Canada. The findings paint a clear picture of the challenges faced by the industry. A substantial 79 percent of operators reported that tariffs and trade restrictions contributed directly to inventory challenges throughout 2025. Furthermore, approximately half of all surveyed restaurants, 51 percent, indicated they spent between 21 and 50 percent more on food costs compared to the previous year.
Samir Zabaneh, Chairman and CEO of TouchBistro, emphasized the unique pressures on the Canadian market. "We believe the Canadian market is different from the one in the U.S. It has its own dynamics, its own opportunities and challenges, and Canada is diverse itself. Restaurants' opportunities in Ontario are different from British Columbia," Zabaneh stated upon the report's launch.
Operators Forced to Adapt Menus and Raise Prices
The financial pressure has compelled restaurant owners to implement various strategies to maintain viability. The most common response has been increasing menu prices. The report found that 71 percent of operators raised their prices by an average of 13 percent in 2025. This tactic was most prevalent in fine-dining establishments, where 78 percent increased prices, followed by bars and grills (75%), family-style restaurants (71%), and brasseries, bistros, and cafés (60%).
Beyond price adjustments, many restaurants are fundamentally changing their offerings. In the next six months, operators plan to:
- Use more local ingredients (43%)
- Add more vegetarian options (30%)
- Reduce the total number of menu items (27%)
- Limit the number of daily specials (27%)
A fine-dining restaurant owner in Calgary highlighted the direct impact, noting in the report, "The biggest money problem for my restaurant in the last year has been the rising cost of food, mostly because of tariffs. Some dishes on our menu have been changed or taken off because the key ingredients became too expensive."
Optimism Persists Despite Rising Costs and Labour Shortages
Despite the significant headwinds from tariffs, rising food costs, and ongoing labour shortages, the report identifies several positive indicators for the industry's recovery. Restaurant profit margins remain strong at an average of 10.4 percent. Customer traffic has also shown a notable rebound, with 79 percent of operators reporting an increase in visits, averaging a 34 percent growth in traffic. The report credits part of this recovery to return-to-office mandates boosting lunch and dinner business.
Additionally, nearly three-quarters of restaurants, 74 percent, experienced an uptick in takeout and delivery sales compared to the previous year, indicating a sustained shift in consumer dining habits post-pandemic.
Symon of The Grizzly Paw Brewing Company in Canmore, Alberta, summarized the adaptive approach many are taking: "Rising food costs, especially for proteins like beef, have forced us to rethink menu pricing — adjusting cuts, modifying ingredients and selectively absorbing costs to protect the guest experience."
The 2026 Canadian State of Restaurants Report ultimately portrays an industry under considerable pressure from external economic forces, yet demonstrating remarkable resilience and adaptability in its ongoing recovery.
