Canada’s Holiday Tax Break: A Gift for Restaurants and Their Customers
With the holiday season upon us, the Canadian government has announced a temporary holiday tax break, serving up some serious savings. For two months, the government will waive GST/HST on holiday essentials, including restaurant meals, drinks, and snacks, providing an estimated $1.6 billion in tax relief. For restaurants, this is the perfect chance to draw in more guests and boost sales.
In this article, we’ll explore how restaurants can incorporate these tax savings into their marketing strategies and operations for the holiday season.
How Will Canada’s Holiday Tax Break Work?
The holiday tax break is a temporary federal initiative designed to provide financial relief to Canadians during the holiday season. From December 14, 2024 to February 15, 2025, the Goods and Services Tax (GST) and Harmonized Sales Tax (HST) will be fully removed from a wide range of goods and holiday essentials, including restaurant meals, prepared food, snacks, and beverages. This means dining out will be tax-free, offering significant savings for customers.
This federal program aims to boost customer spending and help families afford more during the holidays. For restaurants, this tax break creates a unique opportunity to highlight the added value of dining out during this period and boosting customer traffic during the post-holiday slow down in the new year.
How Will Canada’s Holiday Tax Break Affect Restaurants?
Canada's holiday tax break can help restaurants attract more customers and increase sales, especially during the typically quiet months of January and February. With GST/HST removed from meals, drinks, and snacks, restaurants can market this tax relief to encourage budget-conscious diners looking for affordable options.
Is Alcohol Included in the Tax Break?
Alcoholic beverages under 7% ABV, along with wine, beer, ciders, and coolers are included in the GST and HST tax break. House-made cocktails with spirits above 7% are not included, but a mimosa made from sparkling wine and orange juice is exempt from tax during the holidays. However, a sangria that is made with wine and rum would not be exempt. Some additional examples include:
- Beer, cider, and wine are all exempt
- Alcohol-free versions of cocktails, or mocktails, are exempt
- Coolers and pre-mixed cocktails that contain less than 7% ABV are tax-free
- Drinks that contain a combination of wine or beer and spirits are not exempt
- Cannabis-infused products and beverages are not included in the tax exemption
What Types of Restaurants Will Benefit from the Federal Tax Break?
All restaurants and bars across Canada will benefit from the temporary GST and HST tax break. The exception is hard liquor at bars and restaurants, as alcohol above 7% is not included. Here is a breakdown of the various restaurant types and eateries that will benefit from tax-free food and beverages:
- Fine dining
- Full service
- Fast casual
- Quick service
- Cafes and coffee shops
- Pizzerias and take-out restaurants
- Breweries and wineries
- Bars, with the exception of alcohol above 7%
- Restaurants within hotels
- Convenience stores with prepared food
- Grocery stores, fresh and prepared food
How Will Canada’s Holiday Tax Break Affect Consumers?
For consumers, Canada’s holiday tax break means more money in their pockets when dining out. Diners will enjoy the benefit of seeing immediate savings on their bills, making dining out more affordable. Overall, this temporary relief encourages Canadians to spend more without worrying about the added tax burden during this period.
Restaurant Tips for Leveraging the Holiday Tax Break
With the tax break starting soon, now is the perfect time to start preparing for the holiday rush. Here are some key tips to help you make the most of this seasonal relief and drive success for your restaurant business.
1. Highly Recommend Reservations
During the busy holiday season, reservations can help you provide a smooth and enjoyable dining experience for customers. Encouraging guests to book their tables in advance ensures that your restaurant can manage capacity efficiently and minimize long wait times. Use reservation platforms to make the process seamless and easy for both customers and staff. Promoting reservations also gives you the opportunity to plan staffing levels in advance, reducing stress during peak hours.
2. Integrate Scheduling With POS for Real-Time Insights
Connecting your scheduling system with your POS provides powerful real-time insights into labor costs and sales. With Push, you can enjoy the benefits of POS integration, so you can fine-tune staffing throughout the day. This integration allows managers to monitor labor vs sales data in real time, which allows them to adjust staffing levels as needed. This means you can ensure you’re properly staffed during busy rushes, while scaling back when traffic slows down, finding the optimal balance between service quality and labor costs.
3. Connect Scheduler and Reservation Platforms
Managing both staffing and reservations efficiently puts you in a better position to handle the holiday rush without compromising service quality. Integrating your scheduling and reservation platforms ensures you’re fully staffed for busier nights. Push’s new integration with Libro makes this process seamless, by showing you directly in the scheduler how many reservations you have for each time slot throughout the night. You can see the total number of reservations and the amount of people at each table, providing the data you need to schedule efficiently. This allows you to align staffing with reservation demand, reduce wait times, and provide an improved customer experience. Using this integration helps you avoid understaffing or overstaffing, all while maintaining top-notch service throughout the season.
4. Encourage Servers to Upsell
With customers spending more during the holidays, it's the perfect time to encourage upselling – especially on drinks, desserts, and premium items. Servers should be trained to suggest well-matched menu items and highlight that customers are getting more for their money due to the tax savings. For example, a simple upsell might be: "Would you like to add a tax-free holiday dessert to your meal?" or "Enjoy a tax-free festive mocktail or cider with your dinner." By training staff to promote high-margin items like these, restaurants can capitalize on customers' willingness to treat themselves, especially when they feel they're getting extra value.
5. Use Promotional Ideas to Maintain Post-Holiday Customer Interest
After the holidays, customer interest often dips, so it's important to draw customers in with creative promotions. Consider extending the excitement of the tax savings with post-holiday offers like “Start the New Year Tax-Free” promotions, encouraging people to dine out in January and February when traffic typically slows down. You can also offer special discounts for those who made reservations during the holidays or provide loyalty points for future visits. Additionally, promoting limited-time off-peak specials or gift card bonuses in January can keep momentum going, so customers return after the holiday rush. Keeping your restaurant on their radar during the slower months will help ensure a steady stream of revenue during the tax-free period.
Wrapping Up Canada’s Holiday Tax Break
All in all, Canada’s holiday tax break provides restaurants with a unique opportunity to increase foot traffic and sales beyond just the holiday season. By implementing the tips and marketing strategies outlined in this article, restaurants can make the most of this temporary relief while also setting themselves up for success in the new year.
To make managing operations even easier this holiday season, Push has the tools you need to effortlessly run your business. Ready to take your restaurant to the next level? Book a demo with Push today and see how we can help you make the most of the holiday season and beyond!
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