Have you felt the Pinch?
You may all felt the recent price increases in the country’s restaurants and cafes! Expect them to go higher if you have not noticed yet. Well, it’s not the owners' fault, but there is no other way left for them to absorb the current inflation.
Georgia’s unstable political and economic climate directly reflects on the food sector also. One may think that the hospitality business is not a serious enough field to worry about, compared to the economic indicators and you may question the connection between the two. So why has your favourite dessert become so expensive lately?
We must understand that the hospitality business is no different from any other business. And yes, we must face the challenges we are facing right now and talk about them.
The latest events that took place in Georgia’s economy have created product shortages; unfortunately, causing prices to go up further. We see an average 20-25% price rise, which is a tremendous figure, especially apart from the leading 5/6 suppliers, the owners of the restaurants and cafes are also buying products from the small farmers. The prices in the villages are rising too. The exchange rate, as well as a price hike on other products, contributed to the overall change.
It is true some of the cafes and restaurants refrain from such drastic measures, but we can see the changes gradually. What can we do? Is it to either close down the place or increase the price. I believe the state can contribute to help and adjust to the situation and here is how!
One of the important problems in this direction has to be VAT payment. When the owners of the restaurants pay when buying the product when the farmers themselves don’t. Therefore the restaurant owners prefer to purchase their products from the hypermarkets, where there is less burden.
I believe it’s time to think about it. The crisis is here and both the state and the gastronomic sphere to find the optimal solution. In France, for example, the VAT is somewhere at 5.5 %, and this is the country which is the leading in hefty tax payments.
It’s noticeable how the visitors are now ordering a glass of wine instead of a whole bottle; it’s noticeable that menus are now reviewed for the price before ordering. Yes, the threat is here, and many restaurants are worried about losing customers and not raising prices and therefore are not breaking even. Sooner or later the breaking point will come, the prices will go up even higher unless something is done!
No business will thrive, eventually, they will stop operating. Sadly Georgia is not the place where prices plummet at the restaurants; it is the other way round; they creep up. The customer must understand that just because he or she feels the pinch of higher prices it’s not directly the fault of the owner.
And by saying that we are fully aware that the customer, who allocates a certain budget for their daily coffee and dessert suddenly is left disappointed.
As for the restaurants, they are finding ways and methods to overcome the problem. By replacing the ingredients, shrinking the portions, omitting one ingredient that cost the most. These are not the methods to fool the customer; these are the ways out.
One more thing. We don’t have enough places to go to eat. The competition is not that high since the price of the products alters. It’s hard to get the same quality cheese three days running, or a stable supplier, nor the supplier is on the same wave as the buyer. They use the product deficit as their advantage and play with the prices. The cycle is endless.
Today we either have the restaurants that have already raised their prices or the ones that kept the same and prices and are bravely facing the challenge. I salute such places, and there is no guarantee that the exchange rate will ease up any time soon. I don’t even know how strong they will stand or how long. It’s a challenge!
And the final word from me would be a gentle reminder that with increased price, why don’t they increase the level of service subsequently? I am sure it would be a bonus for our customers, despite the high price. If the customer chose you and spent 50 lari, why not make it worthwhile and money well spent.
By Levan Qoqiashvili, Founder and co-owner at Gastronaut.
Read original blogpost in Georgian.