From this January onwards, sales tax of 19 instead of seven percent will apply to food in restaurants. picture alliance/dpa | Sina Schuldt
With the turn of the year, restaurant visitors have to prepare for rising prices for food, other products and opening times.
The reason: Since January 1st, restaurateurs have had to pay the regular VAT rate of 19 percent on food instead of the reduced rate of seven percent as before.
The landlords therefore react very differently to the increased costs. Business Insider spoke to various people from all over Germany and the German Hotel and Restaurant Association.
The reduced VAT will come to an end for the catering industry from this year: from January 1st, innkeepers will again have to pay the regular 19 percent VAT instead of the previous reduced rate of seven percent, which has been in effect since mid-2020 during the Corona pandemic.
The German Hotel and Restaurant Association (Dehoga) has already announced that many innkeepers will pass the increase on to their guests. “The catering industry no longer has any financial leeway. According to our most recent survey, around 90 percent of companies stated that they had to increase prices,” Dehoga President Guido Zöllick told Business Insider.
But some innkeepers are also afraid to pass on the entire increase to their guests. There is obviously too much concern about having fewer guests. They are therefore also taking other approaches to offset their increasing costs. In an interview with Business Insider, they revealed what solutions they found.
Cheaper, regionally produced products instead of organic vegetables?
A restaurateur from southern Germany, who prefers to remain anonymous, says that he adjusted the prices of some dishes last November in order to get by until mid-March this year. Compared to the same period last year, he still made six to eight percent less profit. He believes that many are now advertising that they will not raise their prices and instead lower the quality of the food, for example by changing suppliers.
Dehoga President Guido Zöllick also believes that something could change in the product selection: “This cost pressure also means that restaurateurs have to check whether they still buy organic vegetables or save money by using cheaper, regionally produced products. The more companies change, the more Cem Özdemir counteracts the fact that we eat more sustainably with a higher organic quota.”
The Munich restaurant Augustiner am Dom increased the price of beer by 30 cents
But not all restaurateurs rely on other products or suppliers: Peter Fehler, who runs the Munich restaurant Augustiner am Dom, told Business Insider: “We would rather swallow less profit than alienate the guests and go bankrupt.” That’s why they would only have a few prices of dishes and drinks slightly increased. The beer from 4.30 to 4.60 euros. But also game and beef dishes or duck. The innkeeper makes exceptions for the classic dishes: “Cheese sparrows and roast pork remain the same,” explains Fehler.
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Christiane Wotzka, who runs the Berlin Café cinnamon and sugar, also wants to limit herself to a few increases in food prices: “Everyone should be able to afford to go to a restaurant. “We will only increase the luxury breakfast by 50 cents and generally add a little more in the higher price segment,” she tells Business Insider. In the end, this reduces the company’s profits, but a healthy company can cope with it, says the cinnamon and sugar managing director.
Restaurateurs are also trying to save costs through shorter opening hours
Axel Klein, general manager of Dehoga Sachsen, is observing a different development in discussions with member companies. Because in addition to the VAT increase, the purchase prices for food have exploded, many restaurateurs are also trying to save costs by reducing opening times or idle times, he explains. The profit margins on food are often only between four and eight percent. “Another option,” says the Dehoga Saxony boss, “is to streamline work processes through digitalization.” Reducing bureaucracy would be a major contribution to cost savings. Politics is in question here.
Regardless of the options for reducing expenses, Klein believes the consequences of higher costs are drastic. According to him, this can also be seen in comparison with the sales figures from the pre-Corona period. Because loud Federal Statistical Office Sales in the catering industry in September 2023 were more than twelve percent lower than in the same period before the pandemic. “Personnel costs have increased by 20 to 30 percent. Energy costs by 20 to 25 percent. Added to this is the twelve percent more VAT. This will drive the undersupply of the population in Saxony. There are already no restaurants left in 40 communities alone,” he tells Business Insider.
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with material from the dpa