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Canada Restaurant Cash Flow and Tax Math (2026): Avoid Margin Confusion

A practical Canada-focused workflow to separate real operating margin from GST/HST pass-through so weekly cash decisions are cleaner.

Published Feb 14, 2026
canada restaurant pricingcash flowgst hstfood costsmall business
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If your POS total looks fine but your cash still feels tight, tax handling is often part of the confusion.

In Canada, you need clean separation between tax pass-through and operating margin.

Quick Summary

  • Statistics Canada reported all-items CPI at 2.4% in December 2025.
  • StatCan also reported food purchased from restaurants up 8.5% YoY in December 2025.
  • StatCan flagged that temporary GST/HST break base effects influenced annual comparisons.
  • Weekly decisions should use pre-tax sales, not gross till totals.

What the Data Is Telling You

From Statistics Canada’s January 19, 2026 release for December 2025:

  • All-items CPI: +2.4% YoY
  • Food purchased from restaurants: +8.5% YoY
  • The release explicitly notes annual-comparison effects linked to the temporary GST/HST break period.

The lesson:

  • Do not reprice from headline numbers alone.
  • Reprice from your real pre-tax contribution and cash position.

Tax Math First, Margin Math Second

Use two separate views:

  1. Customer bill view (includes GST/HST)
  2. Operator margin view (excludes GST/HST)

Core formula:

grossCollected = netSalesPreTax + GST_HST_Collected
marginModelSales = netSalesPreTax

If you use grossCollected as denominator, your food cost and labour ratios look artificially better.

CRA Rule Reminder (Practical)

CRA guidance explains:

  • GST/HST registrants collect the applicable tax.
  • Registrants generally collect 5% GST on taxable supplies in non-participating provinces.
  • Participating provinces use HST with province-specific rates.

Treat tax as pass-through, not operating revenue.

One-Week Example

Assume:

  • Gross collected from POS: CAD 31,640
  • GST/HST collected: CAD 3,640
  • Net sales (pre-tax): CAD 28,000
  • COGS + packaging: CAD 9,520
  • Labour (loaded): CAD 9,240
  • Channel + payment fees: CAD 2,240
  • Fixed costs + debt: CAD 6,050

Cash result:

weeklyCash = 28,000 - 9,520 - 9,240 - 2,240 - 6,050
           = CAD 950

If you had used gross collected as your main denominator, the business would look healthier than it really is.

20-Minute Weekly Workflow

  1. Export pre-tax net sales by day and channel.
  2. Export COGS, labour, and channel fees.
  3. Log fixed cost and debt run rate weekly.
  4. Calculate cash result and prime cost.
  5. Reprice only where contribution is weak.

Owner Checklist

  • Confirm your internal report starts with pre-tax sales.
  • Keep GST/HST remittance tracked separately.
  • Review top 15 SKUs by contribution, not by revenue only.
  • Recheck low-ticket delivery orders each week.
  • Run one pricing correction every two weeks if cash slips.

KitchenCost helps you keep recipe cost, tax-aware pricing, and weekly cash checks in one workflow.

Sources (checked on 2026-02-14)

Frequently Asked Questions

Should I include GST/HST in restaurant revenue for margin calculations?

No. Use net sales before GST/HST when calculating food cost, labour %, and prime cost.

Why did restaurant inflation look high in late 2025 data?

Statistics Canada noted temporary tax-holiday base effects in annual comparisons, which can distort interpretation if you do not check context.

Is one tax rule enough for all provinces?

No. GST/HST treatment varies by province. Use the applicable provincial setup and keep your internal margin model on pre-tax sales.

What is the quickest weekly cash check?

Track net sales (pre-tax), COGS, labour, fees, fixed costs, and debt in one weekly sheet.

Can I keep menu prices unchanged if covers are stable?

Only if contribution per order stays healthy. Stable volume with weaker contribution still erodes cash.

How often should I run this check?

Weekly is the safest cadence for independent operators.

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