Berlin Restaurants Hold Off on Price Increases Despite Higher VAT

Fri 12th Jan, 2024

Image by Karolina Grabowska from PixabayAs of January 1st, the Value Added Tax (VAT) in Germany reverted to 19%. Despite this, numerous renowned restaurants in Berlin have refrained from adjusting their prices upwards. Jörn Brinkmann, the CEO of the Permanent Representative (StäV), a popular eatery specializing in Rhenish cuisine near Friedrichstrasse station, highlighted that their menu prices remain unchanged.

Similarly, the iconic revolving restaurant located within the Berlin television tower hasn't altered its pricing strategy. Addressing this decision, the restaurant mentioned that they have factored in the VAT hike within their financial planning. They aim to offset the added expenses by diversifying their offerings, especially with the introduction of the new Sphere Bar.

Burgermeister, a well-known Berlin burger chain, has also managed to maintain its pricing stability. Leander Brune, the operations manager, attributed this to their significant delivery and take-away business model. Brune further elaborated that the chain's continuous efforts in expansion, favorable purchasing deals, and operational enhancements have shielded them from the full impact of the VAT rise.

Brinkmann of StäV shed light on the substantial expenses associated with updating the restaurant's intricate menus, estimating potential costs up to EUR5,000. As a result, they are contemplating delaying any menu modifications until February or March, potentially leading to subsequent price adjustments.

Brinkmann emphasized that upscale establishments catering to tourists might be better positioned to navigate these changes. He noted, "For visitors from countries like England, Spain, or France, our prices are already perceived as reasonable. Tourists, being on vacation, often have a more relaxed spending attitude."

However, Brinkmann cautioned that such insights might not represent the broader Berlin restaurant landscape. He expressed concerns for smaller local eateries heavily reliant on neighborhood patrons. A surge in prices at such establishments might deter regular clientele.

It's worth recalling that in mid-2020, in a bid to support the hospitality sector amidst the pandemic, the German government had slashed the VAT on restaurant meals to 7%. This reduction was extended multiple times, partly in response to challenges posed by the energy crisis and surging inflation rates. However, the full 19% rate has been reinstated since the turn of the year. Notably, delivery services and take-away offerings still enjoy the reduced 7% VAT rate.

The Dehoga hotel and restaurant association, having vehemently opposed the VAT hike for months, continues to voice concerns. They foresee dire ramifications for an industry already grappling with economic challenges. In a recent statement, the association conveyed, "The industry's shock and dismay over this 12-percentage-point hike is palpable. Such a drastic tax alteration hardly aligns with principles of fairness."

Image by Karolina Grabowska from Pixabay


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