Increased costs are having an impact on restaurants’ profits (Image: Getty)
A restaurant boss has revealed a key concern in his industry ahead of the 2025 tourist season in . Juanmi Ferrer, President of the Confederation of Business Associations of the Balearic Islands (CAEB), warned increased costs are still having an impact on restaurants’ profits amid “out of control” .
He told the that last year eateries had to absorb price increases to keep customers, but that led to a loss of competitiveness. Mr Ferrer said the aim is still to limit costs and offer a “quality” product to customers while not passing on all the increases. The CAEB president added: “We do not want a repeat of the 2024 scenario.” He added forecasts had suggested last summer would be an exceptional one, but in reality turnover was lower than anticipated and there was a drop in productivity.
‘We do not want a repeat of the 2024 scenario’, an industry leader says (Image: Getty)
Food outlets on the islands have been working with increasingly tight margins and seen stagnant profits, according to Mr Ferrer.
He said the restaurant sector is still finding it difficult to transfer the cost increases to prices at the till, adding the sector will be closely watching tourist spending this summer as well as profits and how costs will “evolve” in the coming months.
Added pressure is coming from unions, which are calling for pay increases for members and for hours to be cut from 40 to 35 hours per week.
Pepe Álvarez, General Secretary of Unión General de Trabajadores (UGT), is quoted by Majorca Daily Bulletin as saying salaries in Spain are “very low” while companies’ profits are “high”, highlighting the hospitality industry in particular.
Across the 20 countries that use the euro currency, domestic consumers burned by an earlier outbreak of inflation remain cautious.
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Restaurant owners in Majorca are seeing tight margins (Image: Getty)
The annual inflation rate in the Euro Area eased to 2.4% in February, down from a six-month high of 2.5% in January. The rate is four percentage points above the European Central Bank’s target.
This was slightly above market expectations of 2.3%, according to a preliminary estimate cited by Trading Economics. Price growth picked up for unprocessed food, 3.1% for February against 1.4% in January.
Spain’s inflation rate was 3% last month, marking its highest level since June 2024 and its fifth consecutive monthly increase, according to early estimates.
UK figures this week showed food prices rising at their third fastest monthly rate in a year amid hikes in the cost of butter, cheese, eggs and bread.
Fresh food prices are now 1.5% higher than a year ago while ambient food inflation increased to 2.8% from 2.5% in January, according to the British Retail Consortium (BRC)-NIQ Shop Price Index.