Ottawa restaurateurs hope tax holiday will boost January business

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When Nara Sok recently treated himself to a dinner out at a Chinese restaurant on Merivale Road, the bill pleasantly surprised him.

“My typical $100 bill was only $80-something,” Sok says. “That felt nice.”

He and other restaurant-goers have caught a break since Dec. 14, when, as a result of the federal government’s Tax Break for All Canadians Act, Ontario’s 13-per-cent HST was removed from restaurant meals (including wine and beer, but not spirits).

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In effect for two months and meant to assist people struggling with the rising cost of living, the law also applies to qualifying items such as groceries, children’s clothing and selected children’s toys.

The law was roundly criticized in some quarters, with the Fraser Institute, regarded as a conservative think-tank, contending that the measure was “a mistake given that the GST is one of the least economically harmful components of the tax mix.”

But Sok was glad for the relief as a consumer, and he’s also an Ottawa restaurateur with his fingers crossed that ByWard Market eateries Tomo and Parle by Viet Fresh will increase business as a result of the tax holiday.

“It seems like it’s making a difference,” Sok says. “It’s a bit early to gauge, but I think it will cause more of a snowball effect and create a general feeling for people (that) it’s OK to eat out again.”

Restaurants Canada, the national trade association, says the restaurant industry is doing worse today than at any time in recent history, including during the COVID-19 pandemic. A little more than half of Canada’s restaurant companies are operating at a loss or just breaking even, up 40 per cent from the pre-pandemic figure of 12 per cent, the association says.

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People with less money for discretionary spending have eschewed going out for dinner. Meanwhile, restaurant operating costs and debt loads have ballooned.

Not all Ottawa restaurateurs are cheering.

Patrick Garland, chef-owner of Absinthe Cafe in Hintonburg, says the threat of American tariffs on Canada might squelch any enthusiasm for fresh spending. “My thought is that Canadian citizens will benefit in the short term, but they will be paying for it for a long time,” Garland adds.

But Ottawa restaurateurs Joe Thottungal and Stephen Beckta are more optimistic.

“For many, a discount, no matter how small, can make a significant difference in their ability to enjoy a meal out,” says Thottungal, the chef who also owns Coconut Lagoon on St. Laurent Boulevard and Thali on O’Connor Street.

He says he anticipates the tax holiday will prompt many people to “seize the opportunity to celebrate special occasions, especially with Winterlude and Valentine’s Day coming up.

“Overall, this initiative is a win-win, promoting both family engagement and robust support for the restaurant industry,” Thottungal says.

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Beckta, owner of the downtown restaurants Beckta Dining & Wine and Play Food & Wine as well as Gezellig in Westboro, says reservations and spending per customer are up quite a bit over last year. He’s excited “by what January is looking like” and feels that the combination of lower interest rates and the tax holiday will prompt customers to treat themselves more than they have over the past two years.

Also, his Curated By Beckta side-business, which includes deliveries of meal kits and cases of wine, has enjoyed increased sales as people stock up their wine cellars at a big discount that came into effect with the new law, he says.

Michael Blackie, the chef-owner of NeXT in Stittsville, says sales of his celebrate-at-home packages were up 36 per cent over the recent holiday break.

“I can’t really say if that’s related to the tax break. It probably has a lot more to do with the fact that people are changing what they want to do during the holidays,” he says. Still, Blackie has solid hopes for the sales of NeXT’s at-home packages for Valentine’s Day.

Justin Champagne-Lagarde, chef-owner of Perch on Preston Street, says his sales in early December slowed a bit as diners waited for the tax savings to start. But, once the law kicked in, Perch was full almost every day after the middle of December, and January reservations are filling up faster than in previous years.

“Hopefully the slower first half of December will even out or we’ll even come out ahead,” Champagne-Lagarde says.

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