The return to normal VAT and the increase in the minimum wage could have a significant impact on the restaurant sector in Germany.

Again ” Business Insider Billy Wagner, the owner of the star Berlin restaurant Nobelhart & Dirty, explained in one Instagram video How these changes will affect prices at your restaurant.

The restaurateur expects additional costs of 188,000 euros in 2024

The boss of the star restaurant reports in his video that he expects additional costs of at least 188,000 euros by 2024. This sum includes additional expenses due to the increase in VAT in restaurants to 19 percent and the increase in the minimum wage.

Wagner emphasizes in his video: “As a restorer, I don't have many adjustment screws that I can adjust.” Therefore, he feels obligated to raise the prices at his restaurant accordingly.”

In the video, the restaurant owner calculates that with a VAT of 19 percent his income would only be about 200 euros per diner, compared to 214 euros at the previous rate. He clarified: “Although 14 euros may not seem like a lot, it adds up quickly.” He estimates that the restaurant would have to pay an additional 152,000 euros in taxes annually if prices were not adjusted.

Additional costs for restaurateurs due to the increase in the minimum wage

According to Wagner, the increase in the minimum wage to 12.41 euros from 2024 will also entail additional costs of around 36,000 euros. He stresses that raising the minimum wage would have an impact on all salary levels, not just interns and apprentices.

Faced with this circumstance, Wagner only sees one way out: to increase the prices of his dishes. A dinner that previously cost between 175 and 200 euros will cost between 195 and 225 euros starting in January. What he particularly draws attention to is the increase in the price of the “Nobelhart & Dirty” schnitzel: from 30 to 43 euros, a price increase of 43 percent.

Gastronomy association fears for 12,000 companies

The general director of the Dehoga hospitality association, Ingrid Hartges, thinks the same. She predicted that these changes would inevitably lead to fewer guests, fewer sales and operational closures, with potentially 12,000 businesses closing.

Creative solutions: how restaurateurs react to VAT increases

But not all restaurateurs are willing to pass the increase entirely on to their customers. The concern about having fewer guests seems too great for some. Therefore, they are looking for alternative ways to offset the increased costs.

A restaurateur from southern Germany, who wanted to remain anonymous, said: “ Business Insider ” which adjusted the prices of some dishes in November to be able to last until mid-March.

It also reports a six to eight percent drop in profits compared to the previous year. Some restaurant owners may now try to reduce costs by reducing food quality and choosing other suppliers.

Restaurateurs only increase prices on selected dishes

A different approach can be seen at the Munich restaurant Augustiner am Dom, where the prices of beer and some dishes have increased slightly, while other traditional dishes are offered at the same price. Christiane Wotzka, owner of the Berlin cafe Cinnamon and Sugar, follows a similar strategy: she increases the prices of some more expensive dishes and leaves the prices of other dishes unchanged.

Cost savings thanks to shorter opening times

A third strategy that restaurateurs are considering to reduce costs is to reduce opening hours, as Axel Klein, general director of Dehoga Sachsen, explains in an interview with “Business Insider.” This measure could help restaurateurs cover their costs and maximize their profits.