The pandemic has brought difficulties to all sectors in Ontario, but especially the hospitality industry, as they have faced significant burdens throughout the COVID-19 pandemic. Businesses have faced a perfect storm of catastrophic reductions in revenues, increasing costs for supplies and new costs to adapt their businesses to implement health and safety protocols and proof of immunisation checks where necessary.
In TIAO’s 2020 and 2021 pre-budget submissions, we supported our colleagues at ORHMA and other stakeholders to call for a 20% reduction in wholesale alcohol pricing to support the province’s food and beverage operators. As noted by ORHMA at the time, “licensees 2019 LCBO Purchases represented $577,465,000 which is 9% of LCBO’s total revenues beverage alcohol purchased by licensed establishments, such as bars and restaurants, make up the second-largest LCBO sales channel following consumer direct purchases.”
In a win for ORHMA, TIAO, and colleagues that have campaigned for cuts to wholesale pricing, the Ontario government has answered that call today with a permanent additional 5% wholesale discount on LCBO sales to licensees, bringing the total discount rate to 10% and eliminating the 6% markup on LCBO wine and spirit charges. When combined with HST recovery and container deposit fees, these licensees will effectively pay 20% less than retail prices for alcohol purchased wholesale from the LCBO
Over three quarters of Ontario’s hospitality operators will benefit from this support which will aid in their tough recovery.
At this crucial time, it is imperative that the hospitality industry can maximize profits. In addition to supporting cash flow with the increased uncertainty caused by the Omicron variant, beverage alcohol price reductions will directly flow to a hospitality business’ bottom line, giving the business an opportunity to re-hire staff and expand operations.
We congratulate the government on this important step that will deliver tangible support to the front-line.
Please see here for more information.