B.C. restaurants rethink their business models with closures in the forecast

A new study from Dalhousie University finds that Canada’s restaurant industry is under stress. Inflation and rising food prices have contributed to the closure of 7,000 restaurants last year. The study estimates another 4,000 will go out of business in 2026.

“The supply side, you have to look at input costs and labour costs. Changes to the temporary workers program are obviously an issue for many operators,” said Sylvain Charlebois, director of Dalhousie University Agri-Food Analytics Lab.

“On the demand side, people are more careful with their money.”

UBC restaurants feel impact of falling student numbers

Restaurant operators at the University of British Columbia are feeling the challenges. With the federal government slashing the number of international student visas issued by more than half, some restaurants are now seeing fewer customers.

“There are fewer international students coming to Canada, less population in the UBC community,” said Candy Zhang, manager of Beyond BBQ.

“And because we are a Chinese restaurant, we’re seeing fewer customers.”

Zhang and her family previously ran a Chinese restaurant in Richmond for three years before closing it at the end of 2024 due to declining revenue. She says conditions were difficult then, but the current environment is even more challenging.

Operators still expanding

Despite the economic pressures and tighter immigration policies, some restaurant owners are choosing to grow.

“This location is smaller than our Richmond one, but the revenue is higher because there are more customers here,” said Alber Zhang, Manager of The Meat Up BBQ.

He says competition among Chinese restaurants in Richmond is intense, prompting the business to open a second location in Burnaby last summer to reach a more diverse customer base.

Consultants: business models must evolve

Restaurant consultants say operators need to update their business models more frequently than in the past — roughly every three to five years — as consumers become increasingly price-conscious.

Ruskin Chiang, consulting director at Dr. Restaurant Hospitality Consulting Group says, for restaurants, change is a matter of do or die.

“I think some restaurants have to change their business model, otherwise, they don’t have new customers,” said Chiang.

“Every three years, you need to rethink the model. Like the BBQ store, they changed to all-you-can-eat style.”

Chiang notes that while about 30 per cent of restaurants have closed in recent years, new openings continue to enter the market at a similar pace. As a result, he says the outlook for the restaurant industry in 2026 remains stable.