GST-HST holiday in Canada leads to 7.6% increase in restaurant sales

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Canadian restaurants benefitted from the two-month GST-HST holiday, which wraps up this weekend, with a 7.6% increase in transactions on average, according to Restaurants Canada.

Employment in the hospitality sector also increased in January to its highest level since the pandemic, according to Statistics Canada’s latest Labour Force Survey.

“The data is in: restaurant visits, employment levels and transaction sizes were all up during the GST and HST holiday,” Restaurants Canada President and CEO Kelly Higginson said in a statement.

“Anecdotally, restaurant operators have been raving about the impact this has had on their businesses. We call on the federal government to extend the tax holiday.”

Restaurants Canada wants Ottawa to extend the tax holiday until the tariff dispute with the United States is resolved and pass legislation to make prepared food permanently tax-free once Parliament is back in session.

Other data shows the average transaction size at table-service restaurants rose by 5.4% year-over-year in the first six weeks of the GST and HST holiday, based on transaction data from Moneris and applying Restaurant Canada methodology.

This represents a 7.6% swing compared to the three weeks before the tax holiday, when transactions were on average 2.2% lower year-over-year.

Quick service restaurants saw an 8.3% increase in transaction sizes and drinking places saw a 7.5% point boost.

“Restaurants Canada’s early estimate was that the tax holiday would lead to a 5% to 7% increase in restaurant sales, the equivalent of an additional $1.5 billion during the two-month period,” Restaurants Canada Chief Economist and Vice-President of Research Chris Elliott said.

“This has been a lifeline for an industry that is in worse shape now than it was during the pandemic. More than half of restaurants are operating at a loss of just breaking even, compared to just 12% pre-pandemic.”

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Last week, Stats Can job numbers showed employment in the restaurant industry was also up by 6%, creating 34,600 new jobs.

“Canada is facing potentially one the biggest economic threat in its history,” Higginson said.

“When we have something like the GST/HST holiday stimulating job growth across the country now is not the time to disrupt that momentum. Now is the time to make bold moves to bolster our local economies, protect Canadian jobs and help Canadians bridge to better times.”