Across North America, family-owned and operated businesses are facing challenges unlike any others in recent history. Recessions are not new, with companies experiencing the aftershock from the dot-com bubble collapse of the early 2000s and the Great Recession of 2008. Even the most established businesses could not have predicted the long-lasting economic damage caused by COVID-19.
In a three-week period in April 2020, 24 million people lost their jobs in the United States. And in Canada, no single province or territory remained unaffected by massive cuts. Many of these positions were in the service sector. With lockdown restrictions, supply chain slowdowns, mask and distancing requirements, and people afraid to leave their homes, businesses dependent on in-person customers, like bars, restaurants, and hotels, remained shuttered or operating far below capacity.
Even though the pandemic ushered in new ways of working, including remote and hybrid jobs and so-called “side hustles,” many service positions still required staff to be on site, not working from a home computer. Needing money to survive, even the most dedicated employees found work elsewhere, many of them never returning to service-oriented roles. And while this affected many industries, family-run businesses were especially hard-hit.
Empty seats, rising costs
Fast-forward to 2026 and the current state of North America’s service industry. Dr. Sylvain Charlebois, in a January 2026 article for Retail Insider, claims 4,000 restaurants across Canada will probably close this year. While that figure is down from an estimated 7,000 closures in 2025, it is not encouraging. Factors range from the high cost of dining out to tipping fatigue and shrinkflation. (If you think the burger at your favourite diner seems smaller, it’s not your imagination.)
The biggest hurdle of all remains inflation. Everything from groceries to gasoline is more expensive. Late last year, Restaurants Canada released its Foodservice Facts report, revealing that three in four Canadians “are eating out less often due to the rising cost of living.” The numbers are even higher for those aged 18 to 34, at 81 percent.
“While conditions have improved somewhat over the past year, this is still a very challenging market, as Canadians continue to face an affordability crisis and rising operational costs are squeezing operators’ margins,” said Restaurants Canada President and CEO Kelly Higginson in a media release. “To stay competitive and optimize limited revenues, restaurant operators need to understand current Canadian dining trends.”
Tightening our financial belts means fewer of us are eating out as often. And when we do dine out, many are opting for fewer drinks, or having a glass or two of wine at home first to save on costs. In fact, owing to recent research on the negative health effects of alcohol, some are giving up drinking altogether. The result: 41 percent of Canadian restaurants are operating at a loss or barely breaking even.
A reduction in customers is especially devastating for family-run establishments, which not only face high prices for meat and produce but also ever-increasing minimum wages, rent or mortgage payments, insurance, maintenance, and utilities. The Cost of Goods Sold (COGS) is greater than ever. Depending on the type of restaurant, many operate with a net profit margin of just three to nine percent.
Like restaurants, many other service industry businesses have seen a drop in activity, including hotels. Even with a decline in bookings from U.S.-based business travellers, Canadian total booking volume is up, increasing 6.14 percent year-on-year. In the United States, however, bookings continue to take a significant hit, dropping 9.73 percent in 2025. Contributing factors include heightened border security, economic uncertainty, businesses cutting non-essential travel due to budgetary constraints, heightened visa requirements, the weak Canadian dollar, and anti-American sentiment over trade restrictions and tariffs.
Even Airbnb properties, many of them family-owned and managed, are feeling the economic pinch. Some former Airbnb patrons say they get greater value and more consistent service from large chain hotels. Once considered budget-friendly alternatives, some Airbnb rentals now rival the cost of high-end hotels when fees for cleaning, cancellation, and extra guests are added in. And unlike most hotels, Airbnb properties lack security and amenities, including front desk staff, pools, gyms, vending machines, and designated work areas.
Youth taking charge
Although the current economic climate is challenging for businesses, especially smaller family-owned enterprises, there are bright spots. Tough times have forced many service sector companies to challenge the norms within their own operations. This includes thinking differently about business strategy, being more receptive to bold and sometimes unconventional ideas, pursuing technological improvements, crafting unique promotions, and finding ways to connect with customers that have never been tried before.
Many family-led businesses, such as restaurants, remain stuck in the past—leaving décor and menu items unchanged for years, even decades. Recognizing that this approach fails to attract new customers, younger family members are often more innovative, suggesting plant-based options and menu items that blend different culinary traditions. While some older relatives may be reluctant to change, saying things like “that’s the way it’s always been done,” the next generation rarely carries those hangups because they aren’t as attached to the past.
One of the biggest advantages younger people bring to family-owned businesses is their fluency in the digital world. For them, traditional forms of advertising, such as newspapers and TV commercials, are obsolete, ineffective, and expensive. With a deep understanding of social media platforms like TikTok and Instagram, they regularly post photos and videos that reach thousands of potential customers, not handfuls.
Family members who grew up with computers, the internet, texting, and instant messaging understand the speed, effectiveness, and cost savings that come from embracing digital tools. This includes websites featuring everything from product listings to location and driving directions; the ability for customers to place orders and bookings online; e-commerce capabilities; and data analytics to uncover trends, improve decisions, and accelerate business growth. Raised in a world of branded products, younger family members are quick to spot emerging trends, more willing to test new markets, and adept at creating readily recognizable imagery.
Past meets present
Blending years of business experience with youthful enthusiasm and technological awareness has its advantages. When more than one generation is involved, both the company and its customers benefit from the wisdom gained through decades of failures and successes combined with the adaptability and energy of younger people.
When the time comes for the older generation to step aside, succession planning becomes essential. A gradual transfer of responsibilities—and often ownership—requires identifying leaders well in advance. One of the biggest mistakes made by family-run enterprises is waiting until the founders are too old, physically or mentally diminished, or mere weeks from retirement before addressing the question of who comes next. For companies to continue without interruption, succession planning needs to begin years before the original owners depart.
Open and honest discussions are critical. One mistake founders often make is assuming that the younger generation—usually their children—wants to take over the business. Working alongside mom and dad is one thing; being responsible for the day-to-day operations of a company is quite another. That requires not only maturity but proven capability.
Although owning and operating a family-run business is a challenge in today’s tough economic climate, the right planning can create a legacy that lasts for many lifetimes.
