85% of Canadian restaurants are struggling with inflation in 2025 - here’s what they’re doing about it

The Canadian restaurant industry is no stranger to challenges. From fluctuating consumer tastes to ever-present competition, restaurateurs constantly adapt to stay afloat. 

However, a recent statistic casts a particularly long shadow. Research by Toast has revealed that 85% of Canadian restaurants feel that inflation has proven to be a challenge to some degree in 2025.

This figure, gleaned from Toast's Voice of the Canadian Restaurant Industry 2025 report, underscores a significant hurdle faced by the vast majority of Canadian eateries.

This isn't just about rising food costs; inflation ripples through every facet of a restaurant's operations, impacting labour, utilities, rent, and even consumer spending habits. For 85% of restaurants, this isn't a theoretical economic concept, but a tangible, daily battle for profitability and survival.

The pervasive impact of inflation

This startling figure signifies that the vast majority of Canadian restaurants are experiencing pressure on their margins. Ingredients now cost more, driving up the expense of every dish. Energy bills are higher, increasing overheads. This constant upward pressure on costs necessitates strategic adjustments, not just minor tweaks.

Moreover, inflation directly affects the consumer. Canadian consumers are noticeably more price-conscious, with 57% planning to reduce their spending due to economic uncertainty this year, according to the Bank of Canada. 

This creates a double whammy for restaurants: their costs are rising, while their customers are becoming more hesitant to spend. This dynamic demands a delicate balance of pricing strategies and value propositions to maintain customer loyalty and attract new diners.

Strategies for survival and success

So, how are restaurant owners responding to this inflationary environment? The Voice of the Canadian Restaurant Industry 2025 report highlights several key strategies that Canadian restaurateurs are employing to combat these pressures:

1. Reducing menu offerings This is a direct response to rising ingredient costs. By streamlining menus, restaurants can reduce waste, negotiate better bulk prices with suppliers for fewer items, and simplify kitchen operations. This strategic paring down isn't just about cost-cutting; it can also lead to higher-quality dishes, especially if restaurants opt for local suppliers and seasonal ingredients.

2. Using technology to offset labour costs In an era where labour is a significant expense, technology offers a path to greater efficiency. This could involve everything from Kitchen Display Systems that streamline order flow and reduce errors, to online ordering platforms that alleviate the need for additional phone staff, or even handheld POS devices that empower servers to manage more tables efficiently.

3. Increasing prices While often a last resort due to consumer price sensitivity, adjusting prices, plate cost, and coming up with a new menu pricing strategy is sometimes unavoidable to maintain profitability. However, this must be done strategically, often in conjunction with value-driven messaging or enhanced service to justify the increase to the customer.

4. Adjusting the number of suppliers Consolidating suppliers can lead to stronger relationships, better negotiated prices, and simplified procurement processes. This move aims to secure more favourable terms and ensure a consistent supply chain in volatile times.

5. Tracking ingredient prices This proactive approach is essential for dynamic menu management and menu engineering. By closely monitoring the price of commodity goods, restaurateurs can make informed decisions about menu item pricing, explore alternative ingredients, or adjust portion sizes to mitigate cost increases.

The role of restaurant technology

Smart restaurant technology has applications that encourage efficiency, data-driven decision-making, and streamlined operations. And the fact that 69% of the restaurants surveyed in Toast’s Voice of the Canadian Restaurant Industry 2025 report anticipated an increase in their technology spend in the next year, speaks volumes.

In a tight margin environment, restaurateurs aren’t seeing technology as a luxury, but rather a necessity. Systems that offer real-time data on sales, inventory, and labour can provide the crucial insights needed to adapt quickly to inflationary pressures. All-in-one POS systems are becoming indispensable by integrating various functions—from order management and payment processing to running loyalty programs—into a single, cohesive platform. This integration reduces complexity, minimizes errors, and empowers restaurant owners to make agile business decisions. 

For the 85% of Canadian restaurants grappling with inflation, the path forward is clear: a combination of astute operational adjustments, a keen eye on consumer behaviour, and a strategic investment in technology that delivers tangible efficiencies and insights. By embracing innovation and adapting to the economic headwinds, Canadian restaurateurs can continue to serve their communities and thrive.

Toast's 2025 Voice of the Canadian Market report

Are you interested in learning more key findings from Toast’s 2025 market survey? There’s plenty of data and insights on the latest Canadian consumer trends and restaurant technology adoption patterns in the Toast Voice of the Canadian Restaurant Industry 2025 report.

Download your copy of the full report on the state of the Canadian restaurant industry in 2025, here.