Canadian restaurants are facing a perfect storm in 2025. Rising operational costs and shifting consumer habits are squeezing margins, while families are reconsidering dining out — often cutting it from their budget and considering it a discretionary expense. A recent report from Restaurants Canada shows three in four Canadians are eating out less due to the high cost of living — and Canadians between the ages of 18 to 34 are the first to pull back on this cost with 81% eating out less due to the high cost of living (1).
Kelly Higginson, chief executive of Restaurants Canada, called the trend “alarming” for the foodservice industry. In the report, she noted that younger Canadians — those between 18 and 34 — are the primary target with many foodservice providers targeting this demographic, as these consumers end up growing and spending more as they age. The report also found younger Canadians place higher importance on price, value and convenience compared to older consumers.
Slower spending, rising costs
Consumer spending at restaurants has slowed compared with pre-pandemic levels. According to the report, Canadians are expected to spend $1,035 per person at full-service restaurants and $1,135 at quick-service restaurants in 2025, down from $1,165 and $1,150 in 2019. Alcohol sales also decreased with 41% of Canadians reporting reduced consumption over the past year.
Higginson explained, “With our operators seeing less drinking or no alcohol, it’s making it even more challenging to be able to focus on those value meals that Canadians need right now, and also be able have some profit at the end of the day.”
Rising operational costs are compounding the challenge. Between 2023 and 2025, expenses for food, labour, insurance and utilities have grown by double digits. The report shows 41% of foodservice businesses were operating at a loss or breaking even as of June 2025. Many restaurants have adapted by revising menus to reduce waste, operating fewer hours on slow days and shifting towards breakfast and brunch, which have seen growing demand.
“Because of the lack of discretionary spending, Canadians are increasing their spend on breakfast segment and less on dinner segment, which tends to be a bit more expensive,” Higginson said.
Tipping fatigue adds pressure
Rising costs are only part of the story. Canadians are increasingly frustrated with tipping culture. A March 2025 survey by H&R Block Canada found 94% of respondents feel tipping has “gotten out of hand,” and 90% say gratuities are too high (2). The survey also revealed Canadians consider 9% the “appropriate” tip on average, far lower than the typical prompts displayed at restaurants or coffee shops. In fact, most Canadians will find they are prompted to tip at least twice that, with the default tip often starting at 18%.
Younger Canadians are especially vocal. Those aged 18 to 34 report feeling pressured to tip in situations where it was never expected, from fast-food orders to self-checkout kiosks. Many feel the practice has shifted from a reward for good service to an obligation that adds stress and guilt.
The impact is clear: high menu prices combined with rising living costs and pervasive tipping expectations are leading some Canadians to cut back on dining out. One survey participant captured the frustration: “It’s ridiculous to have to tip up to 20 percent; if I opt out, I feel terrible for it.”
Balancing budgets and dining out
With menu prices climbing and tipping expectations adding extra strain, many Canadian families are rethinking how often they go out to eat. Younger diners, in particular, are focusing more on price, value and convenience when deciding where and when to dine.
Some families are adjusting by choosing lunch or brunch over dinner, since breakfast and midday meals tend to be more affordable. Quick-service restaurants are another option, offering lower prices without compromising convenience. Others rely on loyalty programs, coupons, or special promotions to stretch their dining budget.
Snacking trends are also helping Canadians adapt. Restaurants report growing demand for evening snacks and smaller meal replacements, a trend particularly popular among younger diners. By taking advantage of these lower-cost options, families can still enjoy eating out while managing their finances.
Ultimately, for many Canadians, dining out has shifted from a regular habit to an occasional treat. Understanding the combined pressures of rising living costs, menu prices and tipping expectations can help families make informed choices and plan outings that fit their budgets.
Article sources
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Restaurants Canada: Canadians are snacking more, drinking less and looking for more value for their shrinking dollar: 2025 Foodservice Facts report (1); H&R Block: Canadians Reach Tipping Point with Tips; 94% Feel Tipping Has Gotten Out-of-Hand; 90% Feel Gratuities Are Too High and Consider 9% As the Appropriate Average Gratuity (2)
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