Raising prices: A matter of survival for restaurant owners?

The hotel and catering industry is in the red. This is reflected in the economic indicator for the first quarter of 2022. According to this data, 55% of companies in the sector are forced to reduce their profit margins to compensate for rising costs.

According to François Koepp, Secretary General of the Horesca, this crisis is not only a consequence of the war in Ukraine, but also a consequence of the health crisis: "Production and demand have fallen sharply. Since then, production is still low, but demand is rising again. As a result, prices are also rising."

And the consequences are overwhelming. Today, 38% of business owners in the hotel and catering sector say they have little or no confidence in their future.

Average increase of 20%

This is due to the current geopolitical context as well as the explosion in the price of petroleum products, which is reflected in the price of foodstuffs.

"The average increase in the cost of goods in the sector is more than 20%," Koepp explains. These figures, which vary from 18 to 40% depending on the restaurant, are significant. "Beef fillet has become a luxury item, with a price increase of at least 30%," the Horesca Secretary General laments.

The same is true for Brasserie Guillaume, which reports that the price of fish has gone up by 30%. Some champagnes have gone up 40%. The Bel Air café states that it mainly notices the increase in oil, but also in products such as sauces, cheeses, and breadcrumbs, which have doubled in price.

A sector that is becoming less and less appealing for workers

Koepp recalls that before the crisis, 300 trainees from the hotel school entered the sector. Now there are only 140. For Koepp, this is a clear sign that there is much less interest in the profession. According to the Horesca Secretary General, about 2,000 people have left the sector since the health crisis. Most of them have found other jobs and have adjusted to new working hours that are better suited to family life.

And this labour shortage also has a direct impact on the costs of the restaurant owners: "It's very difficult to find staff, so to keep my employees who do a good job, I pay them higher salaries than the general average," explains the owner of Café Bel Air.

© Brasserie Guillaume

The impact on the menu

Faced with this avalanche of costs, some are forced to adjust their prices: "It is inevitable to have to raise prices, otherwise the businesses cannot survive," the secretary general of Horesca regrets. Some restaurant owners even decide to remove dishes from their menu when the margin is no longer assured.

Brasserie Guillaume, located in the heart of the capital, is doing its utmost not to enter into this dynamic: "We don't want to change anything, because it is our menu that makes our brasserie successful. In order not to have to remove dishes or increase prices, we have to adapt and change our organisation."

The restaurant, which specialises in seafood, therefore favours local products, for instance for their wine menu.

But for some products, a slight increase is unavoidable. While Brasserie Guillaume would normally sell a €130 bottle of champagne for €175, they currently sell it for €150. "We're cutting our margins as much as possible, but if this continues, we won't be able to do it anymore," the owners acknowledge.

The same is true of Café Bel Air, where the owner also has to make some concessions: "As the owner-manager, I've lowered my salary so that I don't have to pass on the increases to the dishes." The restaurant used to offer brownies to customers at the end of a meal. "We stopped offering them. Incidentally, these brownies were costing me between €300 and €400 a month," the owner explains.

For François Koepp, "new challenges will come our way and we will have to keep reinventing ourselves. Any business that offers a good experience in terms of atmosphere and quality will be able to attract customers. The most important thing is friendliness and hospitality. People come as strangers, and they need to feel like they are going as friends."