Last year, one in ten companies in the catering industry went out of business. According to experts, the death of restaurants has only just begun. The bankruptcies particularly affect small and young companies.
Times have already been easier for restaurateurs: since 2020, around 48,000 businesses nationwide have closed and 6,100 have filed for bankruptcy. This is shown by a study by the credit agency Creditreform. According to this, one in ten companies in the catering industry will have given up in 2023 alone. At 14,000, the number of closures was higher than in the previous three years, but still below the pre-Corona level. The same applies to the number of insolvency cases.
Patrik-Ludwig Hantzsch, head of Creditreform economic research, sees one reason for this in the state aid during the lockdowns. These would have ensured the survival of many companies and initially prevented closures. The expert expects the industry to thin out even further. The wave has just begun.
First came Corona, then inflation
But what are the reasons for the industry’s difficulties? “The catering industry is one of the main losers in the succession of crises of the last few years. The hospitality industry had not yet recovered from the corona crisis when the next blow came with inflation,” says Hantzsch.
The industry is at the mercy of the increased costs, and the necessary price increases would drive away customers. As a result, price-adjusted sales and earnings would be below the level before the pandemic. According to the Federal Statistical Office, the price-adjusted sales of restaurants in 2023 were almost 13 percent lower than in 2019.
Higher VAT exacerbates gastronomy crisis
“The overall economic conditions are currently anything but favorable for the hospitality industry,” emphasizes Creditreform expert Hantzsch. The increase in sales tax on food at the beginning of the year certainly did not help ease the situation.
Since January, restaurateurs have had to pay 19 percent instead of seven percent VAT on every dish sold. The federal government temporarily reduced the tax rate during the corona pandemic to relieve the burden on restaurants. The old, higher tax rates have applied again since January 1, 2024. The cash-strapped coalition is speculating on 3.4 billion euros in additional revenue.
Small and young companies are particularly at risk
The managing director of the German Hotel and Restaurant Association (DEHOGA), Ingrid Hartges, describes the development as “bitter”. The industry is suffering from higher personnel costs, increased food prices, a shortage of staff and the VAT increase. “This is causing a lot of problems for the companies. Most of the guests remain loyal to us, but unfortunately there have been fewer of them.”
According to Creditreform, the number of bankruptcies in the catering industry rose by 27 percent last year, more than in the economy as a whole. Caterers and food service providers were particularly hard hit (plus 67 percent). 88 percent of all insolvencies are due to small companies with up to ten employees. 49 percent met young companies that were five years old or less.
For 2024, Creditreform predicts an increase in insolvency cases to pre-pandemic levels. The financial information service Crif also expects this. At the end of the year, experts estimated the number of restaurants, pubs, snack bars and cafés in Germany at risk of insolvency at more than 15,000.