In slightly more than two months, the fifth Michelin-starred eatery in Berlin will be serving its last meal.
Ernst has been praised by industry experts as one of the most thrilling culinary destinations in Europe, yet it is now part of a group of five well-known high-end eateries that have disappointed food-seeking Berlin residents during tough times.
Kin Dee has already shut down earlier this May, joining Cordo, NoName, Lode & Stijn—who were recognized with a green Michelin star for their commitment to sustainability—at the close of last year. However, what precisely is causing this crisis?
Sebastian Frank, who leads the kitchen at the two-Michelin-starred restaurant Horváth, stated that the circumstances are indeed critical and that "we have only just begun."
The crew at Horváth starts their day at 1:00 pm every Monday through Sunday. Under Frank’s direction and inspiration, they process celery, eggplants, and various veggies in a striking glass-enclosed kitchen prior to convening for a team discussion at 6:00 pm.
The doors open for customers at 6:30 pm, where vegetables take center stage in the menu at Horváth.
"When I began working here in 2010, there were just seven Michelin-starred restaurants, and ten years later, that number increased to 20," Frank stated to Euronews.
He stated that the circumstances have significantly transformed since pre-pandemic times.
“People used to be more inclined to spend their money back then, but this trend has dramatically shifted, causing the market to contract once again,” he stated. “We can refer to this minor economic upsurge as a temporary bubble which is now beginning to lose air. The sector—be it high-end dining or the broader food service industry—is poised for self-regulation. Numerous eateries will shut down, menu options will diminish, and the overall market dynamics will recalibrate.”
Significant global occurrences have hit the industry hard.
A recent study indicates that approximately one out of every ten eateries shut down in Germany throughout 2023.
Specialists are cautioning that numerous additional business failures and shutdowns might be imminent as eateries face escalating inflation just when they were starting to bounce back from pandemic-related closings.
The German Hotel and Catering Association, DEHOGA, raised concerns as early as January that eateries would be forced to shut down once the government reinstated the restaurant VAT rate from 7% to 19% post-pandemic.
Gerrit Buchhorn, who leads DEHOGA Berlin, pointed out that individuals must recognize how dramatically operating expenses have shifted because ofCOVID-19, Russia’s comprehensive assault on Ukraine, and various significant worldwide occurrences; these changes primarily impact eateries and those investing in them.
"In turn, this influences pricing, and eventually, one must be ready to make a payment. In other words, the customer needs to be prepared to pay," he stated.
Buchhorn additionally highlighted the decline in tourist figures and mentioned that drawing in more affluent visitors might benefit high-end dining establishments specifically.
"They used to be packed, but nowadays you can secure a table quite easily at these restaurants," he mentioned.
Ways to Save Berlin's High-End Dining Establishments
Horváth has launched a more compact seven-course meal priced at €145, which Frank noted has become quite popular among diners looking to sample the restaurant’s offerings. This option is particularly appealing to guests who may not typically frequent upscale dining establishments.
He mentioned, 'Naturally, we aspire to welcome back customers after their initial visit so that they can enjoy the full range of dishes available on our extensive menu.'
Several upscale eateries in Berlin are likewise adopting comparable strategies by providing scaled-down menu options at lower costs to maintain a steady stream of bookings.
However, Frank mentioned that the issue of restaurants shutting down or encountering difficulties "cannot be attributed to just one reason."
Typically, this issue arises from expansionary monetary policies where vast amounts of money are generated, ultimately leading to inflation which disproportionately affects those at the lower rungs of society," he explained. "This poses a significant challenge as individuals find they can no longer afford outings to restaurants or indulgences since these increases in currency supply and subsequent inflation do not benefit the poorer segments of the population.
Frank and Buchhorn both criticized the government and called for the upcoming administration, set to be elected in late 2025, to take stronger action.
Buchhorn proposed a fresh decrease in the value-added tax for restaurants.
He emphasized that this is an aspect the upcoming federal administration must certainly remember. Alternatively, we trust that over time, expenses will normalize, preventing prices from staying at such elevated levels.
Meanwhile, Frank proposed that Germany implement a stringent fiscal strategy.
He stated, 'We must implement significant reductions and start saving.' The national budget requires downsizing, and everyone should contribute to savings efforts. This matter will escalate as these cutbacks are unavoidable.Politicians operate within brief electoral cycles since their aim is to secure re-election every four years.'
He cautioned that Germany is clearly "on track for a collision," yet also mentioned that he believes the administration should have maintained the restaurant VAT rate at 19%, instead of lowering it.
"I personally believe this whole thing from the government was complete rubbish,” he explained to Euronews. “We faced this issue twice: initially, when VAT was cut, and we received criticism for not lowering prices for our customers. It gave people the false idea that we were raking in profits, despite suffering significant financial losses because of the business closures triggered by the pandemic.”
Frank mentioned that when the VAT was raised once more in January, restaurants were left with no option but to transfer these additional costs to their patrons.
We encountered the problem that our prices had risen because of the increased VAT," he explained. "This has cast an unfavorable shadow over the hospitality industry, although, and I must emphasize this point, the responsibility lies with the government’s poor fiscal strategy.
"I'd rather not consider the extra expenses incurred by the state due to all the record-keeping, tax advisors, and accountants," he stated.
A look into Germany's more profound issues?
The struggle isn’t limited to high-end eateries; numerous other establishments across Berlin’s restaurant sector are finding it difficult to remain operational due to increasing rent and expenses.
In 2023, numerous high-end eateries in Berlin experienced modest profits, and even with Germany hosting the UEFA European Championship in 2024, these establishments might continue to face similar financial challenges.
Buchhorn stated that the circumstances are poor this year.
"We will need to embrace substantial reductions, and I am convinced this is merely the start. I anticipate that an even larger challenge is heading towards us, and ultimately, we'll face more pressing issues than simply deciding if we can dine out tomorrow or not," Frank stated.
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