Chef Björn Freitag Sounds Alarm Over Catering Industry Woes
Celebrity chef Björn Freitag is voicing concerns about the future of the catering industry, primarily due to the growing Value-Added Tax (VAT) on food. "I wish VAT had remained at the lower rate for another year," Freitag told the German Press Agency. "Now, I see a severe risk to numerous enterprises." He also pointed out that high-quality, seasonal, and regional produce might not be as prevalent in the industry if it becomes too expensive for businesses to use.
The German culinary scene has been on an upward trend for decades, with Michelin-starred restaurants enjoying popularity even among the youth. Freitag expressed his worry about this progress being jeopardized by unfortunate circumstances. He also noted that it is nearly impossible to pass the increased costs straight to the guests. Recently, various establishments have recorded a decline in guests due to changing consumer behaviors related to new crisis hotspots.
Staff shortages have been an issue for the hospitality sector for quite some time. If the shortage persists, Freitag anticipates "our industry to be fundamentally in danger, with more and more restaurateurs switching to convenience products." Adequate pay for staff members and adjusting to rising energy and food costs are necessary to keep the industry afloat.
Freitag modified his restaurant's operation in Dorsten by reducing the weekly opening hours. According to him, implementing a 4-day workweek was essential to motivate employees and encourage guests to visit on weekdays, rather than weekend evenings.
The proposal to retain the lower VAT rate in the catering sector, put forth by Bavaria, was rejected in the Bundesrat. The federal government now insists on the VAT rate returning to 19% at the beginning of 2024.
The burgeoning taxes on food within the hospitality sector, such as VAT, worry Freitag. These tax increases might result in inflated prices and a decline in the use of high-quality food items, leading some restaurateurs to opt for convenience products or curtail operation hours.
The food tariffs imposed by previous administrations, especially that of President Trump, have significantly affected the hospitality industry. The key impacts include increased prices, supply chain disruptions, consumer behavior shifts, and potential decline in the use of high-quality products.
Tools like Tastewise can help F&B brands analyze consumer data and optimize their offerings, maintaining customer loyalty and protecting margins. Other potential solutions include highlighting local sources, menu adjustments, consumer education, and government support.
An appropriate mix of these strategies can help the hospitality industry navigate through the challenges posed by rising food taxes and continue thriving in the market.
