**Cost of Eating Out Soars 26% in 2023**
Eating out in Cyprus has seen a significant price increase, with the cost of a typical meal rising from €100 in 2020 to an average of €126 in 2023. This represents a notable 26% increase over the three-year period. The latest data released on Friday highlights the growing financial burden on diners and the hospitality sector.
Fanos Leventis, Secretary General of the hospitality venues association (Pasika), attributed this surge in costs primarily to rising energy prices and the increased cost of alcoholic beverages. He emphasized that the justification for these price hikes is evident, citing the impact of the pandemic on raw material prices and ongoing geopolitical tensions that have further exacerbated energy costs.
Leventis remarked, “The fact that there are increases is indisputable. The fact that the increases are justified is also indisputable.” He noted that the zero VAT measure on certain products has not provided the expected relief to the business sector, leaving many establishments grappling with higher operational costs.
The hospitality sector has been particularly affected by the soaring prices of alcoholic beverages, which contribute significantly to the overall spending of customers dining out. Leventis pointed out that the cost of energy has become a critical factor in pricing strategies for food and beverage businesses. “In the actions that a business took in the past, energy was not taken into account in the costing of food and beverages, because it was taken for granted. Today, however, if someone does not take it into account, they will have a very serious deviation,” he explained.
Despite the rising costs, Leventis acknowledged that not all price increases may be justified, indicating that some businesses have implemented price reductions and promotional offers in response to market conditions. He stressed the importance of finding a balance between setting viable prices and considering the purchasing power of consumers. “It’s a difficult equation, I would say, it’s a choice that not many have the luxury of managing in the right way,” he stated.
When discussing the profitability of food businesses, Leventis indicated that a healthy net profit margin for such establishments should be around 10%. However, he expressed concern that many businesses are currently struggling to achieve this benchmark, despite having a steady flow of customers. “Several businesses are certainly not reaching that and a significant number of businesses, despite the fact that they have traffic, are struggling for sustainability,” he noted.
The harmonized index of consumer prices reveals that the overall prices in the catering and accommodation sector have increased by 45.6% since 2020, with a 26% rise since 2023 and a 13% increase compared to the previous year. While the operating costs for catering businesses have surged, the increases in food and beverage prices, as well as utilities like electricity, fuel, rent, and water, have been comparatively smaller. For instance, food and beverage prices rose by 29% from 2020 to 2026, but only by 4.7% from 2023 to the present.
In contrast, the housing, water, electricity, natural gas, and other fuels category has seen a more pronounced increase, with a 36% rise compared to 2020 and a 2.7% increase since 2023. This disparity highlights the unique challenges faced by the hospitality industry as it navigates the complexities of rising operational costs while striving to maintain customer patronage.
As the cost of dining out continues to climb, both consumers and business owners in Cyprus are left to grapple with the implications of these changes. The ongoing dialogue about pricing strategies and consumer spending power will likely play a crucial role in shaping the future of the hospitality sector in the region.