Germany: 10% of Gastronomy Sector Companies Closed Last Year

Since 2020, about 48,000 restaurants across Germany have closed, with over 6,100 restaurateurs filing for bankruptcy, as reported by credit reporting agency Creditreform. Insolvencies in the gastronomy sector surged by 27 percent last year, surpassing the overall economy. Caterers and food service providers bore the brunt with a 67 percent increase in insolvencies. Micro-enterprises with up to ten employees accounted for 88 percent of all insolvencies, with 49 percent affecting young companies under five years old.

In the past year alone, one in ten companies in the gastronomy sector shuttered. Although 2023 saw 14,000 closures—higher than the past three years—it remained below pre-Corona levels. Creditreform's Patrik-Ludwig Hantzsch attributes this to government aid during lockdowns, initially delaying closures and ensuring survival.

In mid-2020, the German government temporarily reduced the tax rate on restaurant food from 19 to 7 percent during the Corona pandemic. However, this ended in December, reverting to 19 percent in January. Despite the tax cut, gastronomy businesses' turnover in 2023 was nearly 13 percent lower than in 2019, according to the Federal Statistical Office.

Ingrid Hartges, from the German Hotel and Restaurant Association (DEHOGA), describes the situation as "bitter." Lockdowns and ongoing regulations until spring 2022 led to significant revenue losses. Higher personnel costs, increased food prices, staff shortages, and the VAT hike exacerbated challenges. Hantzsch emphasizes that rising costs and necessary price hikes could deter customers, resulting in lower revenues and profits.

Experts anticipate further industry contraction. "The wave has only just begun," says Hantzsch.

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