Fearing for the future, people cook more at home; caterers are hoping for several tax cuts
Seven “Can Can” pizzerias and three “Caif Cafe” cafes will be closed from next February. The manager of this business, Andrjus Vasiļusks, explained that it was difficult to make the decision, but it was inevitable, because the Lithuanian company has not been able to bounce back in the Latvian market. Even after the restrictions of the pandemic, life in restaurants and cafes has returned slowly, so the company has decided to at least publicly leave with honor, promising to settle properly with the dismissed and the state.
The past few years have not been easy for caterers. This is the conclusion of Aigars Kaugars, the head of the Latvian Catering Association.
He pointed out: “There have always been concepts that close. Concepts also have different life cycles. During this year, product prices, wages and utility payments have increased significantly, high inflation has negatively affected people’s purchasing power, changing eating habits as well. This is probably was also the main reason for the closure of Can Can. As for the market as a whole, caterers cannot raise prices to cover the rising costs, as purchasing power is limited, so it is very important to look for ways to work more efficiently. It would also be important that the new government would continue to work on reducing payroll taxes.”
This would make it possible to pay better salaries to caterers, as well as leave more money in the wallets of the rest of the public, who would then perhaps choose to have an extra meal outside their home. However, ignorance in this hope is fueled by the war started by Russia in Ukraine, as the geopolitical situation and the dramatic jump in prices have created a double fear of the future in people.
“There are fewer visitors this year than before covid. With the onset of the heating season, it has become even fewer. Sociological studies show that only one in five working-age residents visit canteens and restaurants regularly – once or twice a week. If you look over the years, then these data have never been higher than… I think the maximum was 25-27%. (..) The number of those eating has remained a little more from year to year, after the previous economic crisis ended,” noted Kaugar.
The situation is quite complicated. Santa Graikste, executive director of the Association of Latvian Hotels and Restaurants, assessed this. Caterers have not been able to incorporate the entire price increase into the prices of final products.
Graikste explained: “It is very hopeful that in the month of December, which we see, such a positive trend that municipalities also organize festive dinners, and collectively want to organize again [vakariņas] to their employees. (..) In general, of course, the situation is difficult.”
Entrepreneurs are now reminding the political parties about this, which before the 14th Saeima elections promised to reduce the value added tax (VAT) for food products and public catering companies.
Graikste said: “We hope that politicians will understand and apply to catering companies as well [PVN likmes samazināšanu], it would help to survive, it would also help to attract additional workers. (..) Otherwise, it can be the biggest disaster for the industry. The lack of workers for the industry is another issue that is still very relevant.”
There is no news in the industry that another chain company is going to leave the catering business in the near future. And the association did not hide that for a society like ours, where it is difficult for most people to eat outside their homes and where businessmen have so far relied on the generosity of tourists, the departure of one giant from the market can also be an opportunity for the remaining ones to survive.
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