Industry News · Lenders
Restaurants Canada Q2 Report: 41% of Operators Now at a Loss or Breaking Even
Sales are forecast to grow 1.5 percent in 2026, but Restaurants Canada's Q2 report finds cost growth eating the margin, with 64 percent of operators less profitable than a year ago.
July 26, 2026 · 2 min read
Restaurants Canada published its Q2 Quarterly Report on July 20, and the numbers describe a widening margin squeeze across Canadian foodservice. Real commercial sales are expected to grow 1.5 percent in 2026 after inflation, yet 41 percent of operators are running at a loss or breaking even, up from 36 percent in March. For restaurant owners, the report means a growing share of the industry now carries the break-even financials that make borrowing harder.
Sales are growing, profits are not
The 1.5 percent real growth forecast is the good news in the report, and it is thin. Growth exists, but per the July 20 release it is not reaching the bottom line.
64 percent of operators say their profitability is lower than last year. The share operating at a loss or breaking even climbed five points in roughly four months, from 36 percent in the March survey to 41 percent now.
The release also points to rising fuel prices as a compounding pressure. Higher fuel raises operating costs on one side and trims what customers have left to spend on the other.
The industry's scale, and its ask of Ottawa
Restaurants Canada president and CEO Kelly Higginson said in the release, "Stronger sales are always welcome, but they aren't enough to offset the cost pressures restaurants continue to face."
The association is asking the federal government to permanently exempt all food, including restaurant meals, from GST and HST, and to make full first-year expensing of restaurant capital investments permanent under the Accelerated Investment Incentive. Per the report, 73 percent of operators say current tax policy limits their ability to invest and grow, and 71 percent say they would invest more if capital spending qualified for accelerated write-offs.
The stakes are not small. The industry generates $125 billion in annual sales, contributes nearly 4 percent of Canada's GDP, employs 1.2 million workers as the country's fourth-largest private-sector employer, and added roughly 50,000 youth to its workforce in the first half of 2026.
PFG’s View
A margin squeeze punishes an owner twice. It drains the account month by month, and it degrades the financial statements a lender will eventually read.
The practitioner move is to set up the line while the numbers are still healthy. A line of credit arranged off a profitable quarter sits ready for the slow stretch. The same application filed six months into break-even trading is a harder conversation, and the report says 41 percent of operators are already in that territory.
In our work with restaurant operators, the pattern repeats. Working capital arranged before distress is a tool. Working capital chased during distress is expensive money, when it is available at all.
Arrange the line before you need it. That is the whole playbook.
Stay ahead of market moves.
Market conditions change what is possible. Know what changed first, and what to do about it.