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MT 18 September 2016

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maltatoday, SUNDAY, 18 SEPTEMBER 2016 18 News The rising cost of eating out F ood is a wonderful thing. It brings people together, for some it stands as an emblem of identity, and most of all, it just tastes good (except where it does not, of course). But stepping out for a bite to eat, whether due to lack of time or as a social event, has recently become much more costly here. Lisa Grech, managing director for The Definitive(ly) Good Guide to Restaurants in Malta & Gozo told MaltaToday that based on the guide's annual questionnaire, there has been a marked increase in restaurant prices over the past five years. "Based on a study over the past five years, the average price increase is of 17%, with price increases varying from 2% to 36% in some cases," she said. The rises in prices have led the guide to shift its price brackets, yet the biggest fluc- tuations have been in the mid-range restau- rants. "Since 2013 we have found it necessary to add a price category of €50+ in addition to the previous categories of €42-€50, €35-€42, €30-€35 and €23-€30. The most notable increases seem to be in the mid- to higher brackets." This increase in price seems to correlate with the rising standards in the hospitality industry. "Restaurants have upped their game and are giving a much better all round service, offering a better quality of food, ambience and service," Grech explained. "All this does affect the price – good quality products and staff and regular refurbishments do not come cheap. Restaurant owners cannot af- ford to rest on their laurels anymore and are investing more in their business." The president of the tourism, hospital- ity and leisure section of the GRTU, Philip Fenech also confirms that prices have been going up lately. "Cost of sales, meaning the cost of the food, is going up in various ways. Droughts in countries which produce meat cause higher food prices due to the increased costs in production," Fenech said. Rising standards But it is not just the cost of the food alone, which is carried down to the cheque. "As demand increases, restaurants cannot keep their stock as much as they like," Fene- ch said, adding that the quality of the stock also plays a role. "Because standards for ser- vices are going up, quality obviously follows. This means the final price has to reflect this shift in quality." However, the cost of labour is also shift- ing the balance. Fenech explained that the well-known struggle to find and keep good staff in the catering business results in high- er running costs, which ultimately trickles down to pricing. "The element of not being able to find staff easily means that when you do, competitors attempt to poach them with higher wages. This would mean that employers would have to either increase wages or lose their staff." Fenech's statement is supported by a sur- vey carried out by Deloitte during the winter months of 2015/16 which identified an aver- age 1% increase in payroll costs. Nonetheless, restaurant rivalry is seen to level out pricing. "Restaurant competition is steep, and in certain areas more than others. Places in high demand are normally able to keep an element of stability in their prices, but even then others may try to compete by lowering their prices," he said, adding that compared to other countries, economy of scale in Mal- ta is limited. "In Malta our turnovers are not that big because we do not turn the tables as much as other bigger structures. In other coun- tries, restaurants turn tables three or four times a sitting," Fenech said, explaining how this is reflected in price. The clientele ultimately funds the restau- rant itself and all the equipment and furni- ture required by the establishment. Real estate cost The CEO of the Malta Hotels and Restau- rants Association, Andrew Aguis Muscat explained that real estate is one of the most influential factors affecting restaurant pric- ing, and that in Malta this is quite high. "Over recent years, we have witnessed a significant rise in real estate, in fact Malta ranks very high in this regard when com- pared to similar competing Mediterranean destinations," he said. "The cost related with real estate represents a major cost in the running of the business, which no doubt is reflected in the pricing." Agius Muscat indicated that newer estab- lishments tend to have higher prices due to the recent changes in real estate cost. "It is more prevalent with new businesses that have opened shop over recent years. These find themselves in a position of hav- ing to put prices up to cover their costs against other established competitors that would have acquired their properties in ear- lier years," he said, adding that this is more widespread in areas such as St Julian's where many new establishments have been open- ing. "This may explain why some prices ap- pear to be more on the high side." Furnishing and keeping a restaurant pre- sentable can run up quite a bill as well, and little can be done to go around these costs. "Nowadays when you invest in a restau- rant there are no half measures," Fenech said. "The investments are substantial and they need to be passed on in the price." On the other hand, there have been some stabilising factors, though not enough. "It is fair to say that water, electricity and gas rates have gone down, and these are nat- urally of major use to restaurants," Fenech said. His argument is supported by the De- loitte survey which found an average 3% de- crease in operational costs. "While this has had a stabilising effect, it does not, however, cover the costs of those elements which have become more costly," Fenech added. He concedes though that there can be con- sequences of going too far. "Restaurants need to be extremely careful because if they out-price themselves it will not make Malta competitive with other des- tinations," Fenech warned. "When tourists come they compare prices with other des- tinations, especially in the euro zone, when it's just a question of comparing like with like." Yet, Lisa Grech does not seem to share this concern. "Without a doubt the increase in price has made clients more discerning. They expect value for money. They want good food, am- bience and service and are ready to pay for it," she said. According to the guide's survey, Grech points out that people are still dining out regularly despite the hike in prices. "On average people are eating out once or twice a week. The price has not reflected a decrease in dining out, just an increase in expectations," she said. Such a view is supported by the Deloitte survey, which has shown the majority of res- taurants are increasing their profits. "55% of restaurants reported revenue growth with 37% reporting decreases and 8% reporting consistent revenue, when compared with the same period last year," the study reads. Furthermore, the increasing number of restaurants is also testimony to the fact that rising prices are not serving as a deterrent to diners. "The number of catering establishments has continued to rise over the years, from 1,705 in 2012 to 2,442 last year, and this number excludes catering establishments within hotels," Agius Muscat said, adding that restaurant revenue in 2015 reached €600 million – an increase of 30% over a pe- riod of three years. "What is interesting is that overall domes- tic spend has also increased by 25% over the same period. This indicates that any rises in prices have not prohibited higher spend- ing," Muscat said. Restaurant Locality Price Pizza Solo Ta' Xbiex €4.50 Pizza Planet Naxxar €4.90 Pizz…e Mosta €5 Pizza4U Hamrun €5 Dee's Zurrieq €5.50 Eat Me I'm Famous San Gwann €5.50 Don Bertu Birgu €5.95 The Oven Mosta €6 Tal-Kaptan Valletta Waterfron/St Julian's €6.75 Pizza by Luca San Gwann €7 Trattoria AD 1530 Mdina €7.25 Mamma Mia Ta' Xbiex €7.50 Margo's Mistra Bay/Valletta/St Julian's €7.85 Pizza Hut Valletta/Bugibba €7.90 Vecchia Napoli SkyParks/Salini/Sliema €7.95 Marina Terrace St Julian's €8.85 Piccolo Padre St Julian's €8.50 Chateau Buskett Buskett €9 La Cucina del Sole Tigne Point €9.65 Fratelli la Bufala Tigne Point €9.75 The Margherita index All prices sourced from restaurant menus on websites and Facebook; prices were correct by the time of going to print How prices change from one restaurant to the other for a Pizza Margherita "Nowadays when you invest in a restaurant there are no half measures. The investments are substantial and they need to be passed on in the price." Philip Fenech "Restaurants have upped their game and are giving a much better all round service, offering a better quality of food, ambience and service" Lisa Grech Restaurants are becoming more expensive, but are they also becoming better? JEANELLE MIFSUD asks

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