The Rush is Over—Now What?

Jay Ashton, Canada's Restaurant Guy

Today marks the end of the GST/HST tax holiday. For two months, the Canadian restaurant industry experienced a fleeting reprieve—consumers paid a little less, and operators saw a modest boost in traffic. But now, the bills are still due, costs haven’t disappeared, and tomorrow, the reality of running a business resumes. So, what have we truly gained from this initiative?

Assessing the Tax Holiday's Impact

Restaurants Canada projected that the tax holiday would inject approximately $1.5 billion into the foodservice sector over 60 days, expecting a 5% to 7% increase in sales. Early data from OpenTable indicated an 18% rise in seated diners during the first two weeks compared to the previous year, with Ontario seeing a notable 23% increase. Additionally, restaurant transactions increased by 7.6%, and the average bill size at table-service restaurants rose by 5.4% year-over-year.

However, a survey by the Canadian Federation of Independent Business (CFIB) found that many small businesses saw little meaningful change, suggesting that the tax holiday's benefits were not evenly distributed. Moreover, per capita restaurant spending in 2024 still declined by 1.8% when adjusted for inflation and population growth. While the numbers may suggest success at a glance, they fail to tell a story of long-term sustainability. The tax holiday was like a sugar rush—momentarily satisfying but ultimately leaving the industry craving something more substantial.

Alternative Strategy: Investing in Marketing and Operator Training

Rather than relying on short-term fixes, what if the same energy and effort were put into marketing the restaurant industry? Instead of waiting for another temporary tax relief, investing in strategies that build customer loyalty, increase foot traffic, and empower operators to run more profitable businesses could create lasting benefits.

Canada has already demonstrated the power of such efforts. Take "Takeout Wednesday," a pandemic-era initiative that encouraged Canadians to support local restaurants midweek. This simple campaign created a shift in behavior and led to measurable sales increases. Imagine a national movement that promotes the value of dining out, supports local restaurants, and showcases Canada's diverse culinary landscape—not just for two months, but as a continuous, long-term initiative.

Comparative Analysis: Tax Holiday vs. Marketing Investment

While the tax holiday provided immediate, short-lived relief, a sustained marketing strategy could generate compounded benefits over time. The numbers tell a compelling story:

• The tax holiday provided a $1.5 billion temporary boost over 60 days.
• A well-executed national marketing campaign could generate a 3% to 5% annual sales increase.
• At 3%, this would translate to an additional $3.6 billion in revenue every year—not just once, but compounding annually.
• At 5%, the revenue boost could reach $6 billion annually, far exceeding the tax holiday’s temporary gains.
• Industry revenue could grow to $123.6 billion (3% growth) or $126 billion (5% growth) in the first year alone, with further increases in subsequent years.

Unlike the tax holiday, which expired today with no lasting impact, a national marketing and education strategy would provide continued returns. It would help operators refine business practices, improve profitability, and create long-term customer engagement that doesn’t disappear when a government incentive runs out.

A Vision for the Future

With tariffs increasing costs on imported goods, a robust "Buy Canada" marketing campaign could strengthen domestic supply chains. Promoting restaurants that source Canadian ingredients could become a national priority, enhancing consumer awareness and encouraging local spending. Additionally, positioning Canada as a premier food destination could attract international tourists, particularly from the United States, further boosting the hospitality sector.

The tax holiday ends today, and with it, its impact vanishes. But this doesn’t have to be the end of the conversation. If Canada redirected its focus toward a lasting strategy—one that promotes restaurants, trains operators, and builds a culture around supporting local dining—the industry could experience real, compounding benefits.

A tax break fades. A strong business strategy grows.

It's time to invest in the latter.