Luxury restaurants in Berlin have not yet recovered from the effects of the pandemic and, with it, the economic precautions of consumers who previously allocated their money to haute cuisine. The negative response is driving many Michelin-starred Berlin restaurants into bankruptcy.
In just over two months, Berlin’s fifth Michelin-starred restaurant will serve its last dish. Ernst has been praised by connoisseurs as one of the most interesting restaurants in Europe, but it joins four other fine dining restaurants that have left Berliners yearning for better days.
Kin Dee It already closed in May of this year, following in the footsteps of Cordo, NoName, Lode & Stijn (which had a green Michelin star) at the end of last year. But what exactly is causing this crisis?
The head chef of the restaurant Horváthwith two Michelin stars, Sebastian Frank, says that the situation is really serious, and that “this is just the beginning.”
The Horváth team starts work at 1:00 p.m. from Monday to Sunday. Celery, aubergines and other vegetables are lovingly prepared under Frank’s vision and direction in the impressive glass-enclosed kitchen before a team meeting at 6pm and the doors opening to customers half an hour later. Vegetables are the main star of Horváth’s menu.
“In 2010, when I started here, there were only seven Michelin-starred restaurants, and 10 years later, we had 20,” Frank tells Euronews.
He says that the situation has changed drastically compared to before the pandemic. “Back then, people were willing to spend their money, but that has changed significantly now, and the market is shrinking again. This little bubble, as we might call it, is starting to deflate, and the business, whether the haute cuisine or catering in general, will begin to self-regulate. Many restaurants will close, supply will decrease and the market will adjust.
According to a recent study, around one in 10 restaurants will close throughout Germany in 2023 alone. Experts warn that many more bankruptcies and closures could occur after restaurants are hit by runaway inflation before they can fully recover from pandemic closures.
The German hospitality association, DEHOGAalready raised the alarm in January that restaurants would have to close after the government reintroduced the VAT for restaurants from 7 to 19% after the pandemic.
DEHOGA Berlin CEO Gerrit Buchhorn says: “Fundamentally, it must be recognized that in recent years, due to COVID, wars, etc., operating costs have changed significantly, which is especially felt by restaurants or investors. This, in turn, affects prices and, ultimately, one has to be willing to pay. Or rather, the customer has to be willing to pay.
Buchhorn also points to the decline in tourism, and says that attracting more wealthy tourists could especially help fine dining: “reservation books used to be full, and now you can get a table relatively quickly in these types of restaurants.”
What can be done to save Berlin’s luxury restaurants?
Horváth has introduced a smaller seven-course menu at 145 euroswhich Frank says has been very popular as an entry point to get familiar with the restaurant, especially for other customer demographics who may not typically frequent the fine dining circuit.
Other Berlin fine-dining restaurants are also trying similar approaches, offering reduced menus at cheaper prices, in a bid to keep bookings flowing.
But Frank also says that the fact that restaurants are closing or having problems “cannot be attributed to a single cause“.
“It is usually due to an expansionary financial policy in which more and more money is created and, in the end, it is those at the bottom of the chain who suffer from inflation. That is a much bigger problem, because people can no longer afford to go out to restaurants or treat yourself, because this increase in money, this printing of money, this inflation does not reach the lower classes,” he adds.
Both Frank and Buchhorn are critical of the Government and urge the new Executive, who will be elected at the end of 2025to do more. Buchhorn suggests a new reduction in VAT for restaurants.
ADVERTISINGFrank suggests that Germany should adopt a restrictive financial policy: “We have to make big cuts and save. We have to cut the national budget and save everyone. This will become a bigger problem because these cuts are inevitable. Politicians think in short cycles term because they want to be re-elected every four years. He warns that it is clear that Germany is “heading for bankruptcy.”
Inflation, rising costs and VAT adjustments
Frank also believes that the Government should have left restaurant VAT at 19%. “Personally, I think it was total nonsense on the part of the Government. We had to deal with it twice. First the VAT was reduced, and we were criticized for not passing it on to our customers. Suddenly, it seemed like we were making a fortune, despite of the enormous losses we suffered due to the closures caused by Corona,” he adds. Frank says that when VAT rose again in January, restaurants had no choice but to pass the costs on to customers. “And we faced the problem with customers that we were becoming more expensive due to the increase in VAT. This simply shed a bad light on the gastronomic sector, although, and I have to say it clearly, the flawed financial policy of the Government. They should have left it at 19%. And I don’t even want to think about the additional costs that all the accounting, tax advisors and accounting entailed for the State.”
Is the haute cuisine crisis an indication of a deeper problem in Germany?
Many other restaurants are unable to keep their doors open due to rising rents and costs in the German capital.
For many of Berlin’s fine dining restaurants, 2023 brought few benefits, and it seems that despite the European football championship, which Germany hosted, 2024 could also leave the same bitter aftertaste.
ADVERTISING“The situation is bad this year,” says Buchhorn.
“We will have to accept very important cuts, and I think this is just the beginning. I think something much bigger is coming and, in the end, we will have bigger problems than whether or not tomorrow we can go to a restaurant,” he concludes. Frank.
