The calculations are not easy to do: you add up the costs and subtract the profit margins. The calculator has been one of the main tools in Portuguese restaurant kitchens for months. Food prices soared with the outbreak of war in Ukraine and shrapnel were thrown onto plates. Refueling is a challenge for restaurants struggling with an ever-rising bill.
“Loin of veal cost € 11.90 in the last six months and today costs an average of € 26. Overall cereals have increased by 45% and our profit margin has shrunk,” says Vítor Sobral. The chef, who manages more than a dozen restaurant spaces, believes that if measures to support the sector are not created, some places will be forced to close their doors.
Mathematics is also a dish of the day in the Olivier group. “The leg of crab, one of the ex libris of the Japanese restaurants of the Yakuza, has practically tripled in price in less than a year. But even the most common raw material in restaurants has undergone strong increases,” says Joel Pires, director of marketing and group sales.
The restaurateur Olivier adds 20 spaces with different concepts. The need to use different raw materials has allowed us to confirm the price increase in all products. “The fish, which is the basis of the Yakuza and the Classic Beach Bar, has seen high double-digit increases. Salmon, for example, has risen by 50%. For example, it has already grown more this year alone,” adds the sales manager.
The president of Promover and Inovar in Restauração Nacional (PRO.VAR) guarantees that subsequent price increases “are leaving entrepreneurs in a real nervous breakdown”.
The official assures that the restaurants with traditional Portuguese cuisine are the ones facing the greatest difficulties. “Restaurants that bet on traditional gastronomy, especially on single-product concepts and on the most noble products, such as cod or goat specialties, are currently in great difficulty, because reflecting the increase in prices, they assume prohibitive”, says Daniel Serra. .
Although rising costs are already behind us, the armed conflict in Eastern Europe has fueled the escalation of inflation. In April, the consumer price index (CPI) hit 7.2%, its highest since March 1993, the National Statistics Institute (INE) revealed this week.
According to Deco’s latest analysis, released yesterday 13, a basket of basic necessities now costs 207.21 euros, or 23.58 euros more than at the end of February, at the beginning of the war. Deco’s monitoring reveals that price hikes occur every week, without exception. Between 4 and 11 May, frozen peas (+14.89), tuna in oil (+ 12.16%) and cereal and honey flakes (+ 9.35%) were the foods with the greater price increase.
Dwindling consumer purchasing power is another burning in the fire of restaurant problems. As Dinheiro Vivo teased this week, two-thirds of employees (TCOs) in Portugal will already lose wage purchasing power.
For the Associação da Hotelaria, Restauração and Similares de Portugal (AHRESP), this situation will have “a very negative effect and will be unsustainable” and it is assumed that inflation is currently the main concern of the sector. The association explains that as costs rise, companies see their “profit margins squeezed” as they struggle not to raise consumer prices.
Food prices are the most important factor in restaurant operations, but energy costs are also a thorn in the side. “It is inevitable that the increase in fuel affects our suppliers, both for their fleet and for the transport of raw materials from more distant destinations. In this activity, however, there is a high consumption of energy, a very relevant variable. at the end of the month “, remembers the group’s marketing and sales director Olivier.
The secretary general of AHRESP fears that the recovery forecasts for the summer are falling apart. “Many companies are in a situation of financial fragility and we are not yet in a phase of sustained recovery. Although the indicators show us that a recovery in tourism is expected for the summer, starting from Easter, we fear that in the short term / medium-term inflation and the foreseeable increase in interest rates translate into a reduction in demand and private consumption, with serious consequences for the economic recovery of tourism “, underlines Ana Jacinto.
Supports are essential
The next few months are uncertain for restaurants sure of one thing: they need support. The reduction of the tax burden is a request made in unison by both associations and entrepreneurs.
“The State Budget for 2022 is not in step with reality, as it does not provide for compensation mechanisms to deal with these price increases. As has been proposed several times, the decrease in VAT on catering is a fundamental measure. to cope with the sudden increase in the costs of production factors “, underlines the president of PRO.VAR, Daniel Serra.
Chef Vítor Sobral asks that overtime work is not taxed. “As far as overtime is concerned, this being the period of greatest workload until October, it made it possible to compensate the teams for the increased work effort and not to be harmed by taxes. Most of the time, the increase in income it does not translate into salary increases due to taxation, so working more does not pay, “he complains.
AHRSP argues that measures still need to be taken to encourage recapitalization “especially in micro and small enterprises, and to increase investment and consumption”.
PRO.VAR also stresses the need to extend the deadlines for repaying loans to businesses in the context of the pandemic.
“So far the vast majority of companies in the sector have operated at the expense of ongoing financing, the maintenance of workers is due to the commitments made, in obtaining support and loans. The government needs to maintain mechanisms to support these companies so that they can withstand this catastrophe, “asks Daniel Serra.