The federal GST holiday should remain in place for restaurants to help drive sales at a time when the sector is facing serious challenges, says the managing partner of the Fireside Grill.
“Although the initial rollout felt somewhat rushed and the guidelines were quite complex, this initiative could provide a much-needed boost for an industry that’s been struggling,” Tim Petropoulos said Monday.
Petropoulos said staff at the West Saanich Road eatery noticed an increase in both general traffic and sales in December and parts of January.
“Surprisingly, even beverage sales have seen a slight uptick in January, which is noteworthy considering many people choose to abstain from alcohol during this time,” Petropoulos said.
Amid high labour costs, stricter immigration policies affecting staffing, rising prices for goods, and higher property taxes and insurance rates, the GST holiday is a “necessary step” to help stimulate sales, he said.
Petropoulos is urging the federal government to rework the goods and services tax rules to exclude prepared food, which he says would help support the industry as it continues to recover from the long-lasting impacts of the COVID pandemic, as well as helping consumers struggling with high living costs.
“It’s a great opportunity for the government to allow more money to remain in the hands of consumers rather than directing it toward various tax initiatives and programs where the effects may not be seen.”
Not everyone in the restaurant industry agrees that the GST holiday was valuable, but Restaurants Canada and OpenTable, which collects data, are reporting an uptick in sales during the five per cent GST holiday.
In B.C., the sector found sales rose by 12 per cent year-over-year last month when the two-month tax break was imposed. The move came into effect to make dining out more affordable for Canadians.
Extending the GST break is “very necessary,” Mark von Schellwitz, Restaurants Canada’s vice-president for Western Canada, said in an interview Monday.
“We certainly need this shot in the arm right now with the uncertain economic climate. It has been a very challenging 2024 with operating costs up over 20 per cent.”
The sector lost 11,000 employees in one year, he said.
Restaurant bankruptcies, closures, accumulated debt and high operating costs have all affected the industry, he said.
“Now we’re finding that a lot of restaurants are having to close, not because they’ve gone bankrupt, but when it comes to renegotiating their leases, the landlords are just asking for way too much money to make the restaurants viable.”
Von Schellwitz is aiming to work with all levels of government to ensure that no additional costs are imposed on the industry.
He said the impact of the GST holiday seems to have been the greatest on family-style restaurants and coffee shops, although that’s based only on anecdotal information.
He said those types of outlets are the ones that would see the “biggest bang for their buck” from any reduction in costs.
Even in good times, it’s a low-margin, highly labour-intensive sector, he said.
At Spinnakers Gastro Brewpub and Guesthouses on Catherine Street, owner Paul Hadfield is not convinced the GST break helped the sector, although he said it’s difficult to isolate the impact of the GST break from other factors.
December is typically always a better month than November, January and February, he said.
Ian Tostenson, president of the B.C. Restaurant and Food Services Association, agreed that the effect of the GST holiday is unclear.
The sector was boosted by lowering of interest rates and bookings that were made prior to the GST announcement, he said. Some people said it helped them while others did not experience an impact.
Tostenson said while the association doesn’t necessarily see a correlation between higher sales and the tax holiday, removing the five per cent tax is a good thing. “We absolutely support that,” he said, adding reducing regulations and unnecessary red tape would help as well.
