More of us are spending money at restaurants, but the dining scene is surviving on crumbs

Khazana. Zymo. Rhubarb. Greta YEG. PlayWright. Kommune. Bundok. Wilfred’s. KB&CO’s Downtown location. The Alley’s Unity Square spot. The Lunchbox Sandwich Shop. Don’ya Ukraine’s Kitchen Downtown. The Moth Cafe. Little Bon Bon Ice Cream. A rash of restaurant closures, many near or in the Downtown core, has made headlines through the summer.

Zymo, on Rice Howard Way, closed less than a year after it opened its doors. Menus being made in Ukraine especially for the restaurant were still on order, that’s how fresh this closure was. The restaurant is advertised for sale as a “turnkey operation.”

Khazana’s had been a Downtown mainstay for three decades, but the owners claimed they could no longer make it work as they were caught between a series of city construction projects that cut off access to the restaurant on all sides.

For close to a decade, Bundok had been revered as one of the best fine-dining experiences in the city, with a number of culinary awards to its name. PlayWright was launched by Steve Brochu, a chef whose reputation had grown in his time with Beaumont’s famed French eatery, Chartier.

Some of the restaurants were new. Some were established. There were fancy spots, and takeaway joints  The only obvious common thread among them is that they were all affected by city construction projects. Access to streets was cut off.  Pedestrian routes changed on a regular basis.

Construction is a factor, there’s no doubt. But there are many more reasons why restaurants are closing. It is a brutal business at the best of times. And in an era of high inflation and high rents, it is almost near impossible. Blocked-off streets and sidewalks added fuel to the flame, but the matches had already been lit.

At the outset of the year, a Dalhousie University study predicted that Canada would experience a net loss of 4,000 restaurants in 2026. Restaurant Canada’s July report warned that profitability was down for 64 per cent of Canadian food-service operators over the same time in 2025. It stated that 41 per cent of Canadian restaurants were operating in the red.

Sylvain Charlebois, who directs Dalhousie’s Agri-Food Analytics Lab, has recently revised that number to a net loss of 2,500. 

That’s still… bad.

So a rash of Edmonton restaurant closures isn’t a bubble. It’s part of a national trend.

At the same time, restaurant sales are spiking, especially in Alberta. The province’s economic dashboard showed that in May, the most recent month counted to date, Alberta eateries took in nearly $1.14 billion in sales. That is up 5.7 per cent over May of 2025, and is the best month of recorded restaurant receipts since the COVID epidemic.

Out of those May sales figures, $576 million went to “limited service” (fast food) joints. So full-fledged restaurants aren’t seeing the same spike as the folks at Tim Hortons or McDonald’s. Still, even with the fast-food share taken out of the mix, these are seemingly healthy sales numbers.

With all this cash coming in, why are restaurant ledgers soaked in red ink?

Despite the rise in sales, inflation has pushed costs — from rent to maintenance to food to stocking bathrooms — into uncharted waters. Even the Computer from the famed food-porn series The Bear would have a hard time reconciling the numbers. Restaurants can’t raise prices at the pace that food costs are going up, so margins are shrinking. Even record sales can’t keep up with what inflation is doing to the back end.

As well, even though receipts are up, high-markup bar offerings are down. In its 2025 year-end report, Restaurants Canada reported that 41 per cent of Canadians have reduced their alcohol intake. A third of those who cut their intake said that they were doing it to protect their pocketbooks. But half said social or lifestyle reasons were the reasons they were cutting back. Drinking for drinking’s sake is losing its social cachet.

The fastest growing drinking trend in restaurants? Fruit juice popularity tripled in a year.

Statistics Canada reported that 2024-25, the most recent period on record, the amount of revenue that governments earned from alcohol dropped 4.2 per cent. That’s the largest drop since StatsCan began tracking liquor sales two decades ago. But alcohol sales have been steadily falling since 2020.

Wine sales have declined across Canada for four straight years.

Blair Lebsack, chef and co-owner of the much-loved RGE RD and its neighbouring deli, the Butchery, said profit margins are down to two per cent. They used to be at 10. Still, he and his partner, Caitlin Fulton, are moving ahead with a new speakeasy themed cocktail bar next to their other two spots at 107 Avenue and 123 Street.

But Lebsack knows that running a restaurant — especially one that emphasizes meat and produce from local farms — is more difficult now than it’s ever been. Supporting local may decrease shipping costs, but restaurants who go to major wholesale suppliers like Sysco will get to take advantage of buying in bulk.

“I think the things that have changed over the past 10 years is how fast prices change for us,” said Lebsack. “We can look at our labour and our rent and stuff like that, and you can build that into the budget because you kind of know what’s happening. But there are things that are changing really quickly, like everyone now has a service charge on their bill. Everyone has a truck charge. Everyone has a gas charge.

“These things add up, even with our linen company. We sign deals for how much our linen is going to be. But that doesn’t change the fact that they add on a service fee and a truck fee. These fees are always changing, and they can add up to lots.”

The move to a cashless society is also hurting bottom lines. We all know about the massive interest rates we face if we don’t pay off our credit-card balances on time. But the credit card companies also add to their profits by hitting merchants with transaction fees. A restaurant doesn’t want to have a menu with prices for those who pay cash and those who use credit cards, so they just eat the fees.

“Credit card is the number one way to make transactions, and those transaction fees are massive at the end of the year,” said Lebsack. “If I only made what the credit card companies make, I would be a thriving business — that’s how much credit card fees are right now. Well, how do we adjust while still being very hospitable to people?”

Then there’s the skyrocketing costs of not only high-end ingredients, but kitchen basics. Add to that rising costs of soap and toilet paper for the washrooms. Add to that rising rents and maintenance costs.

An example: grease traps. Epcor requires all restaurants to have them. Grease, if it gets into the pipes, can cause serious blockages. But Lebsack said the frequency at which grease traps have to be cleaned out has changed. What used to cost RGE RD about $40 a month now carries charges of about $450 per month. EPCOR’s current standard requires all restaurants to clear grease traps once a month, or when they get to 25 per cent capacity. Grease-trap cleaning companies recommend weekly cleaning for larger kitchens. Cleaning and inspections have to be logged.

We haven’t even gotten to the grocery bills yet. Whether you’re going to supermarkets or farmers’ markets, there’s no doubt you’ve had sticker shock when you see what it costs to fill your refrigerator. Restaurants are no different, and it’s even costlier for those who skip the big national providers and buy local.

As a proponent of whole-animal butchery, Lebsack goes through a lot of beef. And beef has become the new gold. Or bitcoin.

“I have so much beef here, and the price has doubled in the last five years,” said Lebsack. “And our prices have not doubled, but our costs have doubled on that. And we don’t see the those prices going down. We also realize there is a ceiling for these sort of things, like, what can people afford?”

And he’s hopeful that if beef demand slips because of the prices, market forces will take over and it won’t cost as much to get steaks in the future. But, as of right now, it’s a challenge.

“The cost of everything has gone up so dramatically,” said Ed Donszelmann, the proprietor of Otto Food and Drink, near the corner of 95 Street and 115 Avenue.

“Our canola oil prices have gone up 100 per cent. Our french fries have gone up close to 100 per cent. But we can’t increase our prices by 100 per cent, right? It’s just not realistic in the restaurant business. So, you inch things up where you can. You cut back where you can.”

Canola was selling for about $430 US a tonne in April 2019. Then COVID added a match to an already overheated global market, sending the price to a peak of $1,226 in April of 2022. Prices have since backed off, but it’s still at around $800 US a tonne as of today.

Coffee futures traded for less than a dollar US per pound in 2019. It now trades for about $3.40 US per pound.

One of Otto’s most popular dishes was the brussels sprouts, combined with apples, onions and sweet mustard. It was an addictive pub snack.

It is now off the regular menu because the price of brussels sprouts shot up so much. And when Donszelmann does bring them back here and there, they are listed at “market price,” like you’d see for lobster.

For both Lebsack and Donszelmann, there’s an emphasis on careful kitchen management. Waste is bad enough when food was more affordable, but now it’s unconscionable.

For Donszelmann, it’s making sure he gets the numbers right, and there isn’t a lot left over. For Lebsack, it’s about “being part of the solution.” The top-grade beef is still there, but maybe a six-ounce steak will suffice rather than the slab of beef that would make Ron Swanson proud.

Lebsack and Donszelmann both spoke of the need to not only make careful plans, but to expect the unexpected when it comes to cost hikes.

They’re professionals, veterans of the food service business. But that isn’t the case with many new restaurateurs. They have dreams and favourite recipes passed down to them by their grandparents. Many don’t have practical experience. And too many of them, says Shane Chartrand, don’t seek out the professional advice they need before they lay out thousands for equipment and start making lease payments.

Chartrand is chef and curator at Paperbirch in the Old Strathcona Farmers’ Market, and travels the world cooking at major events. He was on Top Chef Canada and is considered one of the country’s pre-eminent practitioners of Indigenous cuisine.

Said Chartrand: “I hate to say it — because I do think the city should give some kind of leniency regarding certain situations where they’ve impacted a restaurant’s location. But, at the same time, you’re the one signing that dotted line, saying, ‘You know what? I want to open a restaurant right here.’ Well, did you not do your research prior? Like, is that a bad location?”

He said professionals with experience in the industry will know that they need to pivot if a concept isn’t working or if certain dishes don’t sell. When those without experience move into the restaurant space, they can quickly fall into the trap of putting their hands on the hot element over and over.

“Let’s say you and me open a bistro,” said Chartrand. “We’re walking to the dining room and looking at the kind of people who are drinking wine on certain days of the week. We look at patterns, and we get our data from the people who come in on date night or oyster night or f—-g movie night Fridays.

“Being a chef right now is really hard because everybody wants to be cheap about it. Nobody wants to spend the money on a real chef, but then they’re struggling. But then they think they have all the answers and they can do it on their own.”

Chartrand said Edmonton is filled with “restaurant tourists,” people who launch eateries despite having no background in the food and beverage business.

Lebsack has advice for new restaurateurs. Plan, and then plan some more.

“More than ever, you have to be able to do it on paper before you start it,” he said. “So if you think that you can run a business, do it on paper first and take a look at all of these things. And that’s where you need to have some experience. And then plug in everything from advertising to repair costs. Plug those in, and then see where your numbers are going to be because it is really, really hard.”

And even when you think it’s all going to come together, it doesn’t. Steven Brochu had plenty of experience with the much-renowned Chartier in Beaumont before launching three downtown spots — MilkCrate in Epcor Tower, plus PlayWright and the coffee spot, Ghost Light, in the Citadel Theatre. By June of 2026, all of them had closed. Brochu pointed to ongoing construction on 99 Street that cut off access to PlayWright and delayed the opening of its patio. But he also signed the lease believing the location was going to work for him.

“The Citadel was a destination, so there was a captive audience, and we didn’t really have to rely on people specifically going to us,” he said. “It would be like, ‘Let’s go to a play and a dinner,’ right? So that was the incentive there, but unfortunately, operating costs got too high.”

In June, Alberta Employment Standards hit MilkCrate with two judgments, one for $3,629, the other for $6,699, for unpaid staff wages, overtime pay, termination pay and holiday pay. As of the first week of September, those judgments are still listed as “unsatisfied.” 

Brochu said that restaurants don’t operate like other businesses, but it’s not taken into account when streets are closed and sidewalks are diverted. If street access is removed, restaurants lose access to a massive income stream — delivery services. A lot of them depend on Skip the Dishes, Uber Eats and DoorDash. Brochu said he tried to use the delivery services, but construction prevented them from having convenient access to PlayWright.

And that’s the thing. Access isn’t just about parking. It’s about deliveries and couriers. It’s about being able to avoid muddy strips on the sidewalk when out on a date night.

“It definitely feels like hospitality is the afterthought for a lot of people, including government workers,” Brochu said.

Josh Wilhelm owns Birch and Bear Pizza, which has a location on Jasper Avenue and 120 Street. For nearly two years, road work on Jasper Avenue has cut off the front doors of the business from the street, and stripped away parking spots. Pizza is a business that depends on delivery services; and he’s feeling the impact of drivers not being able to simply park next to his shop.

“For us, with our business model, takeout is a necessarily evil using those third-party services of Skip and Uber Eats,” said Wilhelm. “And we are running into the scenario where drivers are picking up the orders in terms of accepting them on their system, having to spend 15 to 20 minutes to get to us, not being able to find us, and dropping the order. So, at the end of the day, we’re having to remake the food, the customers waiting longer, which inhibits them from wanting to order from us again. They know if they could order from another place that isn’t under construction, where they’re going to get their food in a timely manner, they will.”

Construction is an obvious — and easy — villain to choose. It raises public sympathy. Ward O-Day’min Coun. Anne Stevenson said she’d entertain the idea of some sort of tax relief for businesses impacted by construction projects.

The majority of restaurant pay for tax increases through their leases. When taxes rise, leases rise.

The question of providing tax relief for businesses impacted by prolonged construction projects was posed a couple of times during the previous city council’s term. Its champion? Then-Ward Nakota Isga Coun. Andrew Knack. But these motions were narrowly defeated.

Now that Knack is mayor, would Stevenson’s push find traction?

Remember that nine of the 13 votes on council will come from those who sat during the previous term. And, consider administration’s opposition to the plan. When the motions were defeated, councillors said that they worried the city simply couldn’t afford tax relief, wondered if landlords would pass on tax-relief savings to their tenants and what would be the reaction from business owners who might want retroactive compensation for past construction obstructions, such as the Valley Line LRT expansion.

Mehaik Bhasin’s family owned Khazana. She was the operations manager, and said that construction of O-Day’min Park to the south and the LRT on 102 Avenue cut off the restaurant on all sides. Even now, the vacant spot is surrounded by orange construction barriers.

“Let’s say we had a delivery driver to drop off groceries or linen or produce,” she said. “He doesn’t have anywhere to park, and then if he parks in the front, that’s where all the parking is, it’s just chaotic.”

And, for customers, getting to Khazana was just too intimidating. O-Day’min Park, even after it opened, acted more as a barrier than an attractor.

“You’d have to walk across that mud. And imagine you’re bringing a date, or people are coming for a celebration, so imagine walking into that area.” Bhasin said. “Also, O-Day’min Park is now home to people who are in need, and it’s become a little outdoor shelter. So all those millions of dollars that are put into these projects, I really hope they’re contributing to the city, because I don’t see the positivity yet, right?”

Khazana’s Downtown location had been open for more than three decades. At the time, Indian cuisine was still something of a novelty in Edmonton, and that alone was a major calling card for the restaurant. Its success led to a location on the south side and a Khazana Express near Mark Messier Trail. All three closed in June, as the Downtown spot acted as a base kitchen for the others.

These days, Edmonton is filled with Indian restaurants. There has been a surge in Mexican spots, too. Bhasin said the saturation means that many restaurants are doomed to fail. And this goes back to having experienced people on board — if there are already two Indian restaurants in a strip mall, does it need a third?

“Developers are opening plazas and they’re allowing people with the same cuisine to open within metres of each other,” said Bhasin. “So with a growing city, we’re not quite there yet. We can’t just think that every restaurant will survive when there’s three in the same area with the same cuisine. We’re not Toronto yet or Vancouver, we don’t have that kind of population. I see a lot of restaurants opening and shutting down, so we need to be mindful.”

She said there was no real option for Khazana to relocate its Downtown base “because there’s already Indian restaurants flooded everywhere.”

So from costs to planning woes to construction, all to earn razor-thin margins… is it worth it?

Donszelmann thinks so. He said a restaurant is a meeting place, a spot to celebrate over food, a place where love is nurtured, a destination where broken hearts are mended. The restaurant is a spot for families to gather and for strangers to become friends. It is a linchpin in a neighbourhood.

“Overall, we’re hanging in. I joke around that it’s a really nice volunteer job that I have. I could probably go out and make minimum wage somewhere and make more in a month. But I wouldn’t be nearly as happy as I am now.”

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