The numbers show dining reservations are way up in Ontario, thanks to the federal government’s GST/HST tax holiday, but some restaurant owners are reporting the holiday boom was more hassle than it was worth.
Arron Barberian, owner of Barberian’s Steak House in Toronto, said the tax holiday was a “bookkeeping headache.” He called the move “haphazard” and “obviously done for some political advantage.”
He said his restaurant didn’t see much of an uptick in business, other than the standard increase normally seen around Christmastime.
“If you’re a dine-out kind of person, you’re a dine-out kind of person,” he said, and you’re probably unlikely to change your habits due to the temporary GST holiday.
Still, Ontario dining reservations booked through OpenTable were up by 23 per cent between Dec. 14 and 27, compared to the same period last year, the online restaurant reservation service said.
And data recently released by Restaurants Canada shows the number of times per month customers have purchased takeout or dined in has increased by 8.2 per cent, according to the organization’s Consumer Dining Index.
Economists are “confident” the increase is due to the federal Liberal government’s two-month GST/HST tax holiday, said Kelly Higginson, president of Restaurants Canada, a national non-profit representing the food service industry.
The increase in dining “shows that removing sales tax on food is a measure that supports Canadians, businesses and workers. We urge the federal government to make the GST and HST tax break on prepared food permanent,” said Higginson.
The tax holiday, which removes the federal and provincial tax from some items from Dec. 14 to Feb. 15, is aimed at helping Canadians “buy the things they need and save for the things they want,” according to the government’s website.
It covers groceries, restaurant meals, children’s clothing, toys, diapers, beer and wine, among other items, and will provide an estimated $1.6 billion in federal tax relief to consumers, the government says.
Specifically, “prepared meals and food, as well as all non-alcoholic beverages and eligible alcoholic beverages qualify … when they are provided at restaurants, pubs, bars, food trucks, and other establishments that serve food and/or beverages,” notes the website.
Among the provinces, Ontario saw the greatest increase in dining reservations, according to OpenTable, while Manitoba and Quebec came in second and third, with a 22 and 18 per cent increase respectively.
But the experience is far different on the ground, at least for two local restaurateurs.
The tax holiday “may have given people a little bit of a kick … in that first week leading up to Christmas,” said Erik Joyal, who heads the Ascari Group, a restaurant, event, retail and catering business based in Toronto. But it was “certainly not reflected in my sales.”
Restaurateurs might not be seeing the bump because they may not have done the accounting for the specific period in question yet, said Milena Stanoeva, spokesperson for Restaurants Canada. The increase might become more obvious as time goes on, now that restaurants are entering a typically slow period of the year, she added.
The numbers could mark a turning point for restaurants, said Higginson. Last year was tough for restaurateurs — as the cost of living rose, customers ate out less. Meanwhile, operating costs for restaurants, including for food, insurance and utilities skyrocketed.
“We have seen a decline in foot traffic and spending in restaurants,” said Higginson. “Discretionary spending has been being pulled back by Canadians over the last year … Canadians were really struggling with this affordability crisis.”
It’s harder than ever to operate a restaurant, agreed Joyal. High interest rates mean that customers have fewer disposable dollars on average, he added. He estimates that it is 30 to 40 per cent more expensive to eat out now than pre-COVID. “It makes a difference on spending habits.”
But he maintains that the tax holiday wasn’t worth the hassle.
It created a great deal of uncertainty and extra work for restaurant managers, who had to adjust their point-of-sale systems on short notice. Plus, the government lost substantial revenue, Joyal said.
“Somebody is going to have to pay that bill eventually,” he said. “I think it was a very silly and unwise political move.”
The federal government, however, has argued the tax will provide “real relief” at the cash register to put more money in Canadians’ pockets.
The two restaurateurs agreed the tax holiday is unlikely to have a lasting effect on restaurants.
Barbarian said since many Canadians will need to renew their mortgages this year (more than 1.2 million mortgages are set to renew in 2025, according to the Canada Mortgage and Housing Corp.), they may not have enough discretionary income to go out to eat. “I think in general we’re going to see a tightening of the belt. I don’t think it’s over yet.”
Joyal is more optimistic about the coming year. He suspects the plummeting value of the Canadian dollar might encourage an increase in tourism — and restaurant dining, by extension, from the U.S. and Europe.
“The restaurant business is a challenging business. It always has been,” said Joyal. “The last five years have created unforeseen challenges in the restaurant business, like many other businesses. But (we) continue to endure.”
