The Association of Catering Establishments is concerned by the sector’s outlook for the festive season, calling the feedback from its members “worrying”.

Blaming inflation for a slowdown in business, which it said had led to establishments reporting a reduction of a fifth in sales, the association said that despite restaurants still being busy, diners were spending less.

“We are concerned as the general feedback from our members is rather worrying. Many of our members have reported a decrease in sales of around 20 per cent so far in comparison to last year,” said ACE secretary Matthew Pace.

Those concerns were not echoed by the Malta Hotel and Restaurant Association (MHRA), however, which said its members were forecasting an "excellent" holiday season. 

The MHRA however cautioned that that outlook was based on samples, rather than a full survey.

Higher footfall, lower average spend

For the ACE, the glass was definitely looking half-empty.  

“Where usually customers would opt for a bottle of wine, they are now ordering by the glass, Pace said.

He added that even businesses in Sliema and St Julian’s had reported a slowdown due to reduced spending and increased competition from establishments “mushrooming all over the island”.

“Most have told us they are experiencing higher footfall, but with a much lower average spend. This is the result of an impacting inflation scenario that is depleting the average consumers’ disposable income,” he said.

Even the two recent public holidays had not performed as well as the norm, he said, noting that while restaurants usually reported the season starting with the feast of the Immaculate Conception, this year they said it had begun on Republic Day.

And highlighting the industry’s slim profit margins – which a recent ACE survey of 400 catering establishments found stood at around six per cent – Pace called the decrease in business coupled with rising purchasing costs a “massive cause for concern”.

Without government energy subsidies such costs would be “very damaging,” he said, but argued that further government action was needed.

Where usually customers would opt for a bottle of wine, they are now ordering by the glass

Describing an ACE pre-budget proposal for reductions to VAT as fast becoming an “outright necessity”, Pace said cost of living allowance rises in January and a “surge” in freight costs could spell doom for the industry.

“Our marginal profits will be wiped out completely and will seriously make our industry unsustainable,” he said.

Stressing the sector employed around 30,000 people, or one-tenth of the country’s working population, Pace said it was “imperative” the industry be safeguarded.

MHRA more optimistic

The MHRA sounded a more positive tone, saying their members had reported strong results, with hotel bookings in some quarters showing very high levels of occupancy.

“Both restaurants and hotels are forecasting an excellent season. Various establishments are reporting being fully booked for the festivities, with New Year busier than Christmas,” said the association’s CEO Andrew Agius Muscat.

Noting the importance of hotel bookings in driving restaurant numbers, Agius Muscat said some hotels had reported particularly strong results, with one four-star hotel reporting an occupancy rate above 90 per cent.

Stressing the observations were based on limited feedback, however, Agius Muscat said a clearer picture would emerge following the association’s quarterly report early next year.