Calculations are not easy to do: you add up costs and subtract profits. The calculator has been one of the main tools in the kitchens of Portuguese restaurants for several months now. Food prices have skyrocketed since the start of the war in Ukraine, and shrapnel is flying at the plates. Filling them up is a challenge for restaurants that are struggling with ever-increasing bills.
“A veal loin cost 11.90 euros over the past six months, and today it costs an average of 26 euros. Cereals as a whole grew by 45%, while our profits decreased,” says Vitor Sobral. The chef, who manages more than a dozen restaurant spaces, believes that unless support measures are put in place for the sector, some establishments will be forced to close their doors.
Mathematics is also the dish of the day in the Olivier group. “The crab leg, one of the bookplates of Japanese yakuza restaurants, has nearly tripled in price in less than a year. But even the most common raw materials in restaurants have become very expensive,” says Joel Pires, director of marketing and group. sales.
Restaurateur Olivier adds 20 spaces with different concepts. The need to use different raw materials allowed us to confirm the increase in prices for all products. “Fish, which is the backbone of Yakuza and Classic Beach Bar, has risen by double digits. Salmon, for example, jumped 50%. For example, it has already risen in price more this year alone,” the source adds. Sales Manager.
The President of Promover e Inovar a Restauração Nacional (PRO.VAR) ensures that the consequential price increase “leaves entrepreneurs in a real nervous breakdown”.
The official says that traditional Portuguese cuisine restaurants face the greatest difficulties. “Restaurants that rely on traditional gastronomy, especially single-food concepts and the most noble products such as cod or goat specialties, are currently experiencing great difficulties, because, reflecting rising prices, they offer exorbitant prices,” — Daniel says. Serra.
Although the increase in spending is behind us, the armed conflict in Eastern Europe is fueling the escalation of inflation. In April, the consumer price index (CPI) hit 7.2%, the highest reading since March 1993, the National Institute of Statistics (INE) said this week.
According to the latest analysis made by Deco, published yesterday 13, a basket of essentials now costs 207.21 euros, that is, 23.58 euros more than it cost at the end of February, at the beginning of the war. Deco monitoring shows that prices increase every week without exception. From May 4 to May 11, frozen peas (+14.89), tuna in vegetable oil (+12.16%), cereals and honey flakes (+9.35%) were the products with the largest price increase.
Decreased purchasing power of consumers is another log burning in the fire of restaurant problems. As Dinheiro Vivo progresses this week, two-thirds of the employees (TCOs) in Portugal are already losing purchasing power on wages.
For Associação da Hotelaria, Restauração e Similares de Portugal (AHRESP), this situation will have a “very negative effect and will be unsustainable” and inflation is considered the biggest problem in the sector at the moment. The association explains that due to rising costs, companies are seeing “declining profits” at the same time that they are struggling to keep prices from rising to consumers.
Food prices are the most important factor in running a restaurant, but energy costs are also a thorn in the side. “Inevitably, the increase in fuel will affect our suppliers, both their fleet and the transport of raw materials from more distant destinations. On the other hand, there is a high energy consumption in this activity, which is a very important variable. at the end of the month,” recalls Group Marketing and Sales Director Olivier.
AHRESP’s general secretary fears that summer recovery forecasts will not materialize. “Many companies are in a situation of financial instability, and we are not yet in a phase of sustainable recovery. Despite indicators showing us that a recovery in tourism is expected in the summer, as early as Easter, we fear that in the short/medium term, inflation and a predictable increase in interest rates lead to a reduction in demand and private consumption, with serious consequences for the economic recovery of tourism,” notes Ana Jacinto.
The coming months are uncertain for restaurants that are sure of one thing: support is needed. Reducing the tax burden is the unanimous request of both associations and entrepreneurs.
“The state budget for 2022 is not true, as it does not provide compensatory mechanisms to cover these price increases. As has been repeatedly suggested, lowering VAT on catering is a key measure in the face of soaring input costs,” said PRO.VAR President Daniel Serra.
Chef Victor Sobral asks that overtime is not taxed. “In terms of overtime, until October, this was the time of the heaviest workload, which allowed teams to be compensated for great efforts and not suffer from taxes. In most cases, an increase in income does not lead to an increase in wages. increases due to taxation, so it is no longer profitable to work,” he laments.
AHRESP argues that action needs to be taken to encourage recapitalization, “especially in micro and small companies, and to increase investment and consumption.”
PRO.VAR also points to the need to extend the maturity of loans issued to companies during the pandemic.
“Until now, the vast majority of companies in this sector have worked through continuous financing, the maintenance of employees is due to the obligations assumed, in obtaining support and loans. The state needs to support mechanisms to support these companies so that they can withstand this disaster,” asks Daniel Serra.