Restaurants will get pricier in 2023, and more will go bust anyway, says ING
The hospitality sector will continue to suffer from high purchasing costs, rising wages, and surging energy prices. Because companies partly pass these costs on to customers, the costs for a restaurant or cafe visit will likely increase, researchers at ING said. As a result of these problems, more hospitality companies will also close their doors for good in 2023, the bank said in its analysis of the sector for the upcoming year.
Prices in restaurants and cafes are expected to wind up 8 percent higher by the end of this year, which in large part is due to the increasing purchasing costs, the bank said. The price of beer rose by 12 percent alone, while the costs for coffee, bread and butter are also higher. On top of this are the increased costs for energy and personnel costs. Next year, prices will rise by another 3 percent, ING predicted.
ING also noted that customers are spending less based on the total value of debit card transactions. This is possibly a result of high inflation and low consumer confidence. For example, the value of debit card payments in hotels, restaurants and cafes dipped by 1 percent in the third quarter versus the second quarter of this year, ING reported. This happened despite the increase in prices at restaurants and cafes, indicating that overall volumes in the catering industry have decreased. Customers are more likely to skip an extra beer, or are eating out less in general, the analysts speculated.
Moreover, the hospitality industry cannot pass on all costs to the consumer for the simple reason that customers will not drop in for a visit. Hotels are in a relatively better position in that regard, ING said. For example, prices in hotels rose by a fourth in the third quarter compared to the end of 2019.
The high costs are expected to have an impact on the hospitality sector next year. ING believes that the number of bankruptcies and business closures will increase in 2023 compared to this year.
Some of these companies only just started to repay coronavirus loans and subsidies last month. This will likely add to the financial problems for some entrepreneurs.
Reporting by ANP