Gastronomy under pressure: Why there are no price reductions despite tax relief!

Gastronomy under pressure: Why there are no price reductions despite tax relief!

From January 1, 2026, catering establishments can look forward to a permanent reduction in VAT for food from 19 to 7 percent. This long-demanded relief was vehemently demanded by associations and restaurateurs. But what does this actually mean for prices in restaurants? Many insiders, such as Magdalena Krüger from the Food-Pleasure-Gaststätten union (NGG), agree: “No innkeeper will lower prices.” ZVW reported.

Although a dish that currently costs 20 euros could theoretically only cost 17.98 euros in the spring, many restaurateurs do not believe that customer pricing concepts will change significantly. The NGG also emphasizes that the catering industry can adapt well to the situation - the real challenges lie elsewhere. “Rising costs for personnel, food and energy are affecting companies,” explains DEHOGA President Guido Zöllick. He points to the drastic increases in spending in the industry, which have been between 27 and 35 percent since 2022 - there is something there.

Rising costs as an argument

The rising prices are already noticeable; Guests often opt for cheaper meals and go out less often. According to Zöllick, hardly anyone wants to take the risk of lowering prices in a difficult market environment. Over 70 percent of companies are prepared to invest in their own future; 71.5 percent plan to increase the pay of their employees, and more than 50 percent of companies want to create new jobs. Nevertheless, it remains to be seen whether the long-term reduction in VAT will actually lead to lower prices or whether it will remain in the pockets of restaurateurs. Gastivo reports that neither new menus are coming nor prices will be significantly reduced, as many innkeepers are already using flimsy arguments to stick to the previous 12 percent.

But the discussion continues. With the falling VAT rate, operating costs could also be reduced, which should lead to a better offer for guests. At the same time, the industry expects restaurateurs to communicate more transparently about price adjustments and the new tax conditions. Restaurant blog explains that the new adjustment of the VAT rate will also have consequences for the competitiveness of restaurants, especially in times of inflation.

Outlook for the catering industry

While some are hoping for cheaper food, restaurants face a number of challenges. From rising costs to more regulations – the catering industry is being challenged like never before. Hygiene regulations and allergen labeling are just the tip of the iceberg. Restaurateurs will have to adapt to many new legislations in order to remain in business after January 1, 2024. VAT increases could force up to 12,000 businesses to close, posing a persistent challenge for the industry.

In general, the future of the catering industry remains an exciting question, whether with or without tax advantages. The industry must look boldly into the future in order to operate sustainably and adapt to changing conditions. Time will tell how the announced measures develop and whether they actually have the desired effect.