Germany’s hospitality sector is grappling with its worst downturn in years, as businesses report dramatic drops in revenue, rising operating costs, and a surge in insolvencies. According to Statistisches Bundesamt, sales in May 2025 declined by 2.2% compared to the previous month, with inflation-adjusted figures showing a sharper fall of 4.6%. The industry has not seen such a steep monthly decline since the economic shock of December 2021.
Accommodation services were particularly affected, with real income falling by 7.0%, while foodservice outlets, including restaurants and pubs, registered a 3.9% decrease. The numbers highlight a wider trend of shrinking consumer spending, as dining out has become increasingly unaffordable for many. Over the past five years, food and drink prices in the hospitality sector have climbed by about one-third—far outpacing general inflation, which was approximately 20% in the same period.
Industry association DEHOGA reports that two-thirds of food-focused establishments are struggling with falling profits, declining guest numbers, and shrinking turnover. President Guido Zöllick warns that countless businesses are at breaking point. Recent findings show that more than 60% of operators report financial setbacks since the beginning of 2024, when the government reinstated the full 19% VAT on food and beverages in restaurants.
In addition to tax burdens and declining demand, the sector faces another looming challenge: rising wages. The statutory minimum wage is set to increase to EUR 13.90 per hour in January 2026 and to EUR 14.60 in 2027. While the industry supports fair wages, Zöllick cautions that without support measures, many establishments will not be able to absorb the additional costs.
Compounding the pressure, new data from Creditreform reveals that bankruptcies in the hospitality sector rose by 27% last year—well above the national average. Caterers and meal service providers were hit especially hard, with insolvency figures up 67%. These alarming figures suggest a structural crisis is unfolding across the sector.
To stabilize the situation, the coalition government has pledged to reduce VAT on restaurant meals from 19% to 7% starting January 2026. While this initiative aims to provide financial relief, some economists at ZEW question its broader economic impact, arguing that it may not significantly benefit lower-income groups, who are less likely to dine out due to rising prices.
The downturn in the hospitality sector is also rippling through the German brewing industry, which relies heavily on on-trade sales in restaurants, pubs, and hotels. As consumer visits to these establishments decline, breweries are facing reduced demand, particularly from smaller and regional operators whose distribution depends on direct partnerships with gastronomy venues. With fewer keg orders and shrinking beer menus, many brewers report stagnating or falling volumes, despite stable demand in retail channels. Industry insiders warn that continued financial strain in the hospitality trade could lead to further consolidation among brewers, as only those with diversified sales channels or strong export markets will be able to cushion the domestic losses. The combined pressure of falling consumption, higher input costs, and wage inflation is putting even established breweries in a defensive position.
With hopes resting on a potential summer rebound and long-term political support, the future of Germany’s hospitality and brewing landscape remains uncertain. The second half of 2025 could prove decisive for thousands of businesses on the edge.
