Kelly Higginson, CEO of Canadian Restaurants, said it was a “shocking” trend in the food service industry. The younger generation, in particular, is “as they start to grow into the main consumers of the population, we will really be targeting more and more.” The report found that younger Canadians are more important to price, value and convenience than older Canadians.
Rising costs and weaker spending squeeze restaurant profits
Restaurant spending has slowed compared to pre-pandemic levels. Canadians per capita are expected to spend $1,035 on full-service restaurants this year, compared to $1,135 on speed-service restaurants this year. In 2019, they spent $1,165 and $1,150 respectively.
The report found that alcohol sales at restaurants have also slowed as menu prices rise and consumers move towards health. 41% of Canadians surveyed said alcohol consumption has declined in the past year.
“Because our operators are seeing drinking or without alcohol, it’s even more challenging to focus on those valued meals Canadians need now and can also make a profit at the end of the day,” Higginson said.
Sales in the catering service industry are expected to reach $124 billion this year. However, if inflation is adjusted, growth will remain relatively stationary.
As consumers retreat, businesses are also dealing with rising operating expenses. The report said the costs of food, labor, insurance and utilities, as well as other expenses, increased by double digits between 2023 and 2025. The report shows that even as of June 2025, 41% of businesses are losing money or going bankrupt.
“Over the past five years, our operators have indeed been incorporated into the pressure cooker of how to keep profitable businesses to keep doors open and continue to serve employees and to the communities they are in,” Higginson said.
As population growth slows down, the industry faces a labor shortage. Restaurants in rural and remote areas will see the worst impact, Higginson said. She said key locations, such as chefs or early-morning bakers, are difficult to fill rural areas, which can affect the business of restaurants.
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As demand for dinner falls, restaurant hubs and snack hubs and snacks
Many restaurants try to adapt to difficult operating environments by changing menus and reduce working hours on slow days to reduce costs. Higginson said some businesses are heading for brunch instead of serving dinner because demand for breakfast has increased. “Due to the lack of disposable spending, Canadians are increasing their spending in the breakfast space and less in the dinner space, which tends to be more expensive,” she said.
During the first five months of 2025, lunch hour sales in fast-service restaurants increased by 7.6%, a level at large community levels that reflects the authorization and shift towards value for the return trip. “It really affected our operators because dinner used to be a more profitable expense for our operators,” Higginson said. “Now, they are making less profits from both segments, breakfast and lunch.”
There is also a shift in the industry that captures snack trends, especially in fast-service restaurants. Dinner and evening snack traffic increased by 3.4% and 4% respectively. The report found that snacks are the most common alternatives to alternative foods among younger generations.
Hickinson said snacks are an opportunity for capitalization in the industry. “It’s time to do a light boot and see where we can meet the consumers they are in,” she said.
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