TORONTO — Canada’s foodservice industry is pleased that Parliament has approved the temporary GST cut on holiday essentials, including all restaurant meals, wine, beer, cider and coolers. Restaurant’s Canada’s chief economist estimates this move could boost foodservice sales by nearly $1 billion over the two-month tax break.
The timing of this initiative is especially important as it aligns with a typically challenging time for restaurants. January and February sales are on average more than 10-per-cent lower than other times of year, so giving Canadians a reason to go out during winter is a great support to our industry.
This is a conservative estimate that only takes into account the tax consumers will save on restaurant meals. When GST was first introduced in 1991, it led to an immediate decrease in restaurant sales proportional to the new tax. Even if Canadians don’t increase their restaurant spending, the five per cent that would have gone to the government through GST will now remain in the business, increasing profits.
Restaurants Canada has already reached out to the major POS providers and been assured that the changes will not be onerous or costly to implement for restaurant businesses.
While the timeline for implementation is short, it’s important to remember that the industry is in worse condition now than at any point in recent history, including the pandemic. More than half of restaurant companies (53 per cent) are operating at a loss or just breaking even, compared to just 12 per cent pre-pandemic. A five-per-cent increase in sales is a lifeline that will save many from the brink of closure and carry them through the typical January and February slump in our industry. It will also protect jobs and increase hours for hourly employees, who typically face reduced hours during this season.
“Restaurants Canada is calling on provincial governments to follow the federal lead and cut PST on the same list of items,” says Kelly Higginson, president & CEO, Restaurants Canada. “We commend the governments of Newfoundland and Labrador and Ontario for their leadership in matching the federal cut.”
