By Tyrone Ho
Canadian restaurants have been absorbing one shock after another since 2020. COVID-19 came first, then tariffs, and this year, food and fuel prices surged. Throughout all these years, diners have been watching every dollar they spend a lot closer. Most operators have spent that stretch in survival mode, but now it’s time to examine what it would take for them to do more than just keeping their doors open and get some much-needed relief. Nobody opens a restaurant hoping to break even; they open one to build something that lasts, and maybe something they can pass on.
The proposed Productivity Mega Deduction is a federal tax measure introduced by the Government of Canada, which would let businesses write off the full cost of new equipment in the year it goes into use – and it is a notable step forward. The catch, however, is that a write-off only helps once you’ve bought the equipment, and many restaurants can’t even get that far. Over a quarter (29 per cent) of Canadian operators have equipment they’d like to upgrade but can’t afford to right now.
Even for those who can make the stretch to purchase equipment now, the tax savings come in later at filing time – but there are other ways to take advantage of this program now without draining cash flow right away. Flexible financing through programs can help operators get the equipment they need immediately, pay over time with manageable weekly payments, and still potentially claim the Productivity Mega Deduction on eligible products. It’s an example of how operators can make the investment possible before needing to pay the full cost up front.
Restaurants rarely get discussed as an economic sector the way manufacturing does. They employ more than a million Canadians, provide a place for communities to gather and enjoy food together, and create demand for farms and suppliers. In fact, the restaurant industry purchases roughly $30 billion from Canadian suppliers, making it the largest purchaser of Canadian agricultural products. When a restaurant closes, the loss reaches beyond its owners and into everything else they’re connected within the economy.
More loans aren’t the answer either. The Canada Emergency Business Account (CEBA) program went to nearly 900,000 small businesses during the pandemic, and many owners are still paying that back today, with the final deadline for repayment on December 31 of this year.
Loans and write-offs share the same flaw: the operator still has to find the cash, either up front to qualify for the deduction, or later to pay back the government. The budget can’t fix that overnight, but other governments have found ways to put money in operators’ hands without asking them to front it first.
Take the U.K. as an example, which launched a £10-million Hospitality Grant Scheme for independent pubs, restaurants, and cafés in September to fund projects that launch new venues, bring empty premises back into use or train people for hospitality work.
And with operators bracing for higher utility bills, the U.K.’s Department for Energy Security and Net Zero put £350,000 toward a free energy-saving tool for more than 500 small and medium-sized pubs, restaurants, and hotels in England. In a year-long trial with 90 hospitality businesses, the tool cut energy bills by almost £2,500 (about $4,650 CAD) a year on average. For a small restaurant, that covers extra shifts or a repair that keeps getting put off.
Canada shouldn’t exactly replicate these programs, but what these examples show is that a government can give restaurants relief right away without asking them to spend cash they don’t have.
Restaurant owners have gotten very good at getting by, but that same ingenuity could be going into a second location, or into the chef they’ve wanted to hire for years. These are entrepreneurs, and they deserve the chance to plan years ahead instead of month to month. Restaurant operators will be waiting for November 5, when a new budget is tabled, with the hope that it gives them a reason to dream bigger again.
Tyrone Ho is the President of Econolease, a Canadian foodservice and hospitality equipment financing company. At the core of Econolease’s offering is Rent-Try -Buy, a financing solution that helps the entire sector grow by giving operators flexible access to the equipment they need, while enabling dealers to close more sales at the point of purchase.
