The restaurant industry in the GTA faced one if its toughest years in 2025

For restaurants across the GTA, 2025 has been a disastrous year.

The industry has struggled to find its footing since the pandemic, with numerous reports citing that this vital arm of local economies is living on borrowed time.

Beyond scars from past lockdowns, each year since the pandemic has brought some form of geopolitical stumbling block that, while impacting every industry unilaterally, has had a particularly severe effect on the hospitality sector.

An escalating cost-of-living crisis, coupled with a trade war between the U.S. and Canada, has stalled what would otherwise be a fundamental period of recovery.

While Canada’s current economic woes impact many components, spending, staffing, and tourism have been key areas that remain in disrepair for bars and restaurants.

In lockstep with these issues, new studies reveal the dire state of affairs, painting a tense picture of how far the service industry will fall if it remains reduced to scraps in 2026.

Tip Jar

In November, the Mark Carney administration applied a few band-aids to the ongoing economic turmoil with its new federal budget strategy.

Directly addressing year two of the ongoing trade war — via tariffs enacted by U.S. President Donald Trump — the feds launched the Regional Tariff Response Initiative (RTRI) alongside the 2025 budget.

The plan, with a price tag of $1 billion, focuses on assisting small to medium-sized businesses (SMEs), particularly in the manufacturing sector, to acquire financial relief as the cost of imports and exports continues to fluctuate.

This access to the federal piggy-bank has not gone unnoticed by the hospitality sector, which has had to contend with numerous locations shutting their doors permanently due to dwindling traffic, even as southern Ontario manufacturers receive small-scale bailouts.

“There are staff shortages and the cost of food and liquor on one side of things, and on the other, there is the consumer,” Sam Brenner, president of restaurant sales platform Silverware, told INsauga.com. “For the consumer, those who were used to going out for dinner once a week, well, they are questioning that a lot more, opting now to go out only once a month.”

Amid shifts in consumer behaviour, recent Silverware data indicate a 39 per cent increase in concerns about operational costs for restaurants, with nearly half of respondents reporting they couldn’t maintain staff due to inconsistencies plaguing the industry.

Specifically, available hours for staff, labour and the whims of the tipping public, who are grappling with their own economic struggles.

At the same time, those taking the plunge to go out for date night or grab drinks with a few friends are likely sticking with a regular spot or being more discerning when choosing a new one.

“This really isn’t an environment anymore, where the act of just opening a space, and just hoping it stays going is going to be enough,” says Brenner.

Respondents to Silverware’s survey reported that nearly a quarter of guests who pass through their locations—new or established—have told ownership that the increase in menu item costs is a wholesale deterrent to dining out.

Beyond disposable leisure funds, Brenner also states that the dining-out culture has changed in parallel with the cost-of-living crisis.

“There is a shifting trend around alcohol consumption, because that makes up for a huge driver in dollars in many of these environments, especially as food is now seeing smaller and smaller margins with increasing costs,” says Brenner.

Major events such as the Toronto Blue Jays making the World Series, however, were a significant boon for bars and restaurants in the GTA, with NielsenIQ data showing that during select games, restaurants in the region saw a nearly 40 per cent increase in food and liquor sales.

However, this was only a flash in the pan, and while this windfall did make up for some of the lost profits of the calendar year, it did little to get most locations out of the red in the GTA.

Brenner continued to note that, despite return-to-office orders in cities such as Toronto, Mississauga, Brampton, and Hamilton, bars and restaurants in the downtown cores of southern Ontario municipalities are still seeing slower-than-usual lunch rushes.

This, in turn, has left certain franchises and businesses more likely to innovate, with Brenner stating, “When it comes down to it, I think we are going to start seeing operators get really creative, at least the ones who need to get ahead and not rely on these external factors.”

30 Minutes or Less

In the GTA, one chain has followed the inconsistent rhythm of dine-in service and has opted to build its entire model around delivery and catering.

WingsUp!, a homegrown franchise with locations throughout southern Ontario, has seen immense success after reducing its seating rooms to only a handful of tables, overhauling its business structure to meet modern demands for delivery.

“Our thesis is that more and more people want options that can be delivered to their home, they want to sit in their living room — that’s the new paradigm of things. Everything now is about sitting on your couch, ordering what you need from Amazon, and watching Netflix,” WingsUp! President Darren Czarnogorski told INsauga.com.

Czarnogorski noted that the decision to retrofit his business was easy, as over the last few years, delivery has accounted for nearly half of all revenue.

As a result, all franchise locations have been either built from the ground up or renovated to accommodate high delivery volumes and minimal foot traffic.

“We end up not having to pay for all the overhead of all these empty seats, as there are often, for the most part, four nights a week when most restaurants aren’t full at capacity. So, we had to really think about how we were going to contend with that future,” says Czarnogorski.

Czarnogorski, however, does not think dine-in restaurants will become obsolete. That said, for locations seeing a huge spike in delivery demand, reducing their footprint, according to him, should be a no-brainer.

Much like Brenner’s initial thesis, Czarnogorski also believes that attitudes toward dining out have shifted significantly in the post-pandemic world.

“Working in an office, going out with a group of colleagues, three or four days a week to a local bar or restaurant, getting together with a few people and having some drinks and going home — I think those days are slowly coming to an end,” says Czarnogorski.

Czarnogorski continued to note that while the landscape of socialization has changed, one fundamental truth still holds: “people still need to eat.”

Aspects of office culture are also, to an extent, boosting sales for small-scale delivery enterprises like Czarnogorski’s, as even though lunch or after-work pub culture is no longer in vogue, a large number of people are returning to the office.

As a result, many corporate offices in the GTA have been calling on companies like WingsUp! to cater office lunches on average once a week or so, to treat office workers returning from years of work-from-home living.

“I think many of these employees resent the fact that they have to go back to the office; they’re not entirely on board, “ says Czarnogorski. “So we have found that a lot of employers are treating their employees to something nice when they show up.”

While buttering up worker morale with barbecue sauce has worked for some employers to improve their bottom line, concerns about staffing the restaurants themselves remain a separate issue.

Help Wanted

Silverware’s initial data shows that over 30 per cent of restaurants in Canada cite staffing as a vital concern, alongside other economic stressors.

In the face of this, players in hospitality, who rely on high-volume dine-in spaces, are not only stuck juggling rising costs but also vacant staffing positions amid a highly competitive environment.

“Cost pressures for restaurants these days are bad. The costs for both fresh produce and proteins have gone up significantly, Fahim Ahmadi, VP of Marketing for Naan Kabob, told INsauga.com. “The price tag for goods remains volatile, then on top of that, costs of labour also remain prominent, as wages for skilled workers have gone up alongside the competition required to bring them on.”

As for what has directly contributed to 2025’s landscape of high wages and stiff competition — especially in locations with a distinct culinary identity — Ahmadi was not shy about stating that changes in immigration policy have caused substantial disruptions.

In 2025, major changes were made to the Temporary Foreign Worker (TFW) Program in Canada, changes that, according to Ahmadi, shook up foundational standards for institutions like Naan Kabob.

Temporary placements built on Labour Market Impact Assessments (LMIA), documents that show that a skilled Canadian worker can’t do the job, were shortened from a year to six months.

“The restaurant industry depends heavily on skilled newcomers, whether they be bakers, cooks, grill chefs, supervisors or managers,” says Ahmadi. “What is happening with the current immigration policy is that the new format for work permits makes it harder to bring in experienced talent.”

Due to this major staff cut, productivity and training have taken substantial hits in 2025, while the limited availability of talent has locations spending money they don’t have to increase wages amid intense competition, according to Ahmadi.

“The longevity of that business, in turn, gets very shaky, because the long-term economics of it don’t make sense, especially when you’re managing an uptick in operational costs, product costs, and now labour — it hurts already laser-thin margins,” says Ahmadi.

For Ahmadi, an Afghan immigrant, the external policies affecting restaurants that rely heavily on skilled immigrant workers are also a concern, as they affect family units trying to establish not just businesses but also lives here in the GTA.

“The family cycle gets impacted, especially as qualified newcomers face tighter permits, longer processing, and further restrictions. The GTA is often a hub for families to establish a business foundation because everything is in close proximity. As a result, I see a lot of people sacrificing their quality of life so they can stay closer together,” says Ahmadi.

Closing Time

Taking into account dwindling kitchen staff, dips in the dining public, and a cavalier approach towards the new age of delivery, what are the odds for restaurant survival in 2026?

Kris Barnier, VP Central for Restaurants Canada, has been monitoring the evolving situation in the GTA over the past few years.

Barnier, who further confirmed to INsauga.com that all of the above-mentioned mechanisms of the industry are struggling, also noted that when it comes to any sort of Hail Mary save for the GTA service industry, it comes down to the consumer.

While at the same time, he is also keenly aware of the paradox that comes with asking an already struggling public to use what little they have to support an equally struggling industry.

“What the public is saying now, when looking at dining out, is, ‘I can just order the food from there, and if I want a couple of drinks to go along with it, I can now just go to the convenience store across the street and buy a couple of cans or a bottle of wine,” Barnier told INsauga.com.

In late 2024, Ontario’s provincial government gave the green light for certain alcoholic beverages to be sold at small-scale convenience and grocery locations. This, in tandem with the public for the most part opting not to dine out, is the number one variable that could shift the landscape further into the red in the new year.

This hemorrhaging of patrons — while not strictly correlative — is also mirroring the loss of viable staff due to a lack of opportunities, tips or tight policies.

Based on Bernier’s numbers from Restaurants Canada, projections indicate that Ontario’s hospitality workforce of 470,000 will face a shortage of more than 37,000 workers.

“For food service providers, we are expecting a 300 per cent increase in total position vacancies, and for chefs, about 275 per cent. Traditionally, you would have had more skilled workers coming in through immigration and programs in culinary colleges,” says Barnier.

Earlier this year, George Brown College in Toronto cut one-third of its entire culinary program roster, amid shifts in immigration and funding.

While the impact of this has yet to be seen en masse in Toronto proper, Barnier has seen firsthand how, in smaller municipalities, a lack of staff and dining public is stacking up.

“You walk around flabbergasted, how could this relatively popular restaurant be closed at noon on a Tuesday? Well, it’s because they don’t have enough people to fill a second shift. So they’re cutting days of the week or having a greatly decreased service window,” says Bernier. “We only fear it is going to get worse unless we do something different.”

In core areas of the GTA, Bernier also cited that violent crime, random or otherwise, has been a major deciding factor in how restaurants operate and how heavily they are staffed, citing numerous accounts of servers being attacked.

“There are companies in the GTA that have been advised by police to just take their tables and chairs out, and to turn away people. I mean, that’s the only solution these places are facing.”

Barnier noted that while dealing with an unruly public is, to some extent, part of the job, the increasing frequency of these incidents is cause for concern.

As for potential solutions, while there is no silver bullet for the issues affecting GTA’s service industry, Barnier noted that a return to a GST/HST break (seen last year) may encourage a cautious public to go out for a few drinks in the new year.

A potential new restaurant pricing model for alcohol, which may emerge in 2026, may also yield a bit more permanence.

In the meantime, until any sweeping policy, Bernier assures that he’ll keep an eye on things until morale — or the economy — improves, stating, “We remain concerned for all parts of this industry, and as a result, we are going to keep on advocating for everybody.”