In 2024, restaurant bankruptcies in Canada surged by 30%—a stark reflection of rapidly shifting consumer behaviors.
The Canadian restaurant industry now finds itself at a critical inflection point. Once a pillar of social life and local economies, restaurants are now facing a maelstrom of compounding pressures—ranging from inflation and labour shortages to increasingly discerning customers and evolving dining habits. As we reach the midpoint of 2025, one truth is becoming clear: the traditional playbook no longer applies.
In this article, we explore how changing consumer behaviours are reshaping Canada’s restaurant industry, and how restauranteurs can adapt.
Across the country, foot traffic to restaurants has been under pressure—though the picture is nuanced. According to a 2024 report by Colliers Canada, external factors such as inflation, cost of living, and hybrid work models have significantly altered consumer foot traffic patterns.
While some segments like quick service restaurants (QSRs) have captured a larger share of the remaining traffic, full-service and metropolitan establishments have seen notable declines, particularly in areas where office occupancy remains low.
Extreme weather events and economic uncertainty have also played a role. An analysis of early 2024 trends found that cold snaps and rising costs led many Canadians to stay home and cut back on dining out, especially during the first quarter of the year. These trends have extended into 2025.
These shifts are forcing restaurateurs to rethink everything—from pricing and promotions to the in-store experience and location strategy. One key consideration: physical footprint. If most customers are ordering takeout or delivery, does a large dining area still make sense? Downsizing or reconfiguring space to better align with off-premises demand could help reduce overhead and improve operational efficiency.
Today’s diners are more selective than ever. With tighter budgets and fewer restaurant visits, every meal out is a deliberate choice—and expectations are high. Consumers are no longer just paying for food; they’re paying for an experience. In this climate, one underwhelming dish, a long wait, or inattentive service isn’t just a minor misstep—it can cost a restaurant a loyal customer, a negative review, and a ripple effect of lost business.
The margin for error has shrunk dramatically. Online reviews, social media, and word-of-mouth can amplify even small lapses in quality. A single bad experience can be broadcast instantly, while a great one can turn a first-time guest into a brand advocate. This means consistency is critical. Restaurants must deliver excellence not just occasionally, but every time.
To meet this new standard, operators must rethink what “value” means. It’s not just about portion size or price—it’s about perceived worth. That includes the quality of ingredients, the attentiveness of staff, the ambiance, and even the ease of payment or ordering. In short, “good enough” is no longer good enough. Only those who consistently exceed expectations will earn repeat business in today’s hyper-competitive landscape.
Traditionally seen as recession-resistant, even fast food giants are now facing mounting pressure in Canada. While the industry was valued at $36.4 billion in 2024, growth has slowed significantly compared to pre-pandemic years. Despite a modest 3.8% compound annual growth rate CAGR between 2020 and 2025, consumer sentiment is shifting: only 11% of Canadians now say they eat fast food because they believe it offers good value for money.
This erosion of perceived value is critical. As menu prices rise faster than wages, Canadians are questioning whether fast food still delivers on its core promise of affordability and convenience. Moreover, less than 4% of Canadians say they would consider opening a fast-food restaurant today, reflecting waning confidence in the sector’s long-term viability.
These aren’t just numbers—they’re signals that the fast food model is being re-evaluated by both consumers and operators alike.
While dine-in experiences decline, delivery and takeout are becoming a default choice for many Canadians. Over 70% of consumers now order takeout regularly, with Millennials and Gen Z driving this surge. In Canada, more than half of consumers prefer to order through third-party apps like Uber Eats or DoorDash.
This shift brings opportunity—but also risk. Delivery app commissions can eat up 15% to 30% of each order’s revenue, while consumers pay up to 40% more than they would in-store. And one of the most profitable parts of a restaurant’s business—alcohol sales—is often lost in the transition. Liquor, which can carry margins of up to 70%, is either restricted or unavailable through many delivery platforms, cutting into a key revenue stream.
Restaurants are trapped in a paradox: they need delivery to stay relevant, but profitability remains elusive unless they can rethink logistics, pricing, and partnerships.
Despite persistent headwinds, the outlook for Canada’s foodservice industry is far from bleak. The market is projected to grow at a CAGR of 5.43% through 2033. However, this growth won’t be evenly distributed—it will favour those who are agile, innovative, and deeply attuned to the evolving expectations of today’s diner.
The restaurants most likely to succeed will be those that embrace change, prioritize exceptional experiences, and lead with purpose. Elevating the dining experience—whether in-person or digital—is no longer optional. From personalized service and thoughtfully designed spaces to seamless online ordering and loyalty programs, every interaction must deliver value. In a market where “good enough” no longer suffices, investing in quality—from ingredients to staff training—is essential.
Equally important is rethinking takeout and delivery. To protect margins and maintain control, restaurants should explore in-house delivery options, invest in smart, sustainable packaging, and leverage technology to streamline operations. At the same time, consumers are increasingly values-driven, favouring businesses that demonstrate sustainability, transparency, and community impact. Restaurants that lead with authenticity—highlighting local sourcing, reducing waste, or supporting social causes—can build deeper, more lasting loyalty.
Adaptability will define the winners. Whether through subscription dining models, ghost kitchens, or hybrid spaces that blend hospitality with retail or events, the future belongs to those who are nimble, creative, and relentlessly customer-focused.
Canada’s restaurant industry is at a crossroads. The path forward won’t be easy, but it’s full of opportunity for those willing to evolve. This isn’t the time to retreat. It’s the time to rethink, reinvest, and rebuild around the expectations of a new kind of diner.
Because the future of the restaurant industry won’t be decided by those who cling to what worked—it will belong to those who meet this moment with courage, clarity, and a customer-first mindset.
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