The catering industry is facing problems of “enormous oversaturation” together with issues with the skills pass, licensing problems and the BCRS system, a survey commissioned by the Association of Catering Establishments and shared on Tuesday showed.
The survey shed light on the current state of play of the catering industry as a whole, from fine-dining restaurants to kiosks.
In response to the results, the ACE said that though an increase in demand requires an increase in supply, the sector faces serious challenges spanning from harsh competition due to “enormous oversaturation”, the BCRS system and legislation issues.
Matthew Pace, ACE Secretary, said that the survey highlights the fact that the catering industry is facing “enormous oversaturation”, something not helped by the excessive issuing of licenses by the Malta Tourism Authority.
The authority has a flawed approach, Pace said, of even placing five restaurants in a hotel under a single umbrella licence.
Pace added that the sector also faces the problem of having many employees who lack the necessary skills due to previously unregulated temping agencies.
He said that while the Skills Pass Initiative had a “spot-on” agenda, its implementation has “excessively burdened the industry.”
He explained that due to the poor income of the workers requiring the pass, in order to retain employees, business owners have ended up paying for Skills Passes themselves since the employees couldn’t afford it. He added that the cost of the Skills Pass will show its effect in the next survey of this kind.
Pace also aired his grievance with BCRS Malta which he said also burdened the catering industry despite many consultations.
He described the “laughable scenario” which meant that stores that are meant for raw materials and stock are now being used to house and sort the different types of waste that goes to BCRS and that which goes to WasteServ.
He emphasised on how fragmented waste collection is currently and said that it is both logistically and financially “not doable.” He added that recently BCRS sent an email to all its business customers to inform them that should recyclables beyond the scope of BCRS be sent the will not be refunded and will furthermore face a fine.
Statistician Vincent Marmara, who carried out the survey, said that it was interview-based with a sample of 200 people in the catering/restaurant sector, owning 338 establishments in total, using the year 2020 as a baseline.
Marmara said the study found that revenue remained generally stable, with 27.8% saying there was no change in it, but there was a slight average decrease of 1.1%. This was attributed to inflation and the increased Cost of Living Allowance (COLA).
Marmara added that when forecasting revenue between July 2024 and December 2024, 39% of respondents expected to make less revenue though 60% expected an increase.
He continued that respondents saw a 3% decrease in profits with the customers spending an average of €25.89. That said, he said that this varies according to the establishment: in fine dining establishments, the average customer spends €55 whilst in others, such as kiosks, that figure stands at €10.
The survey found that 56% of respondents made an investment in their business between July 2023 and June 2024, and 20% are willing to invest in the next 12 months. The survey showed that 21.5% of respondents undertook new ventures within the same 12 months of the calendar year.
Marmara concluded by saying that this study was the first of its kind and with future, regular surveys planned more information and even trends can be gathered for better forecasts and a better indication of the industry’s progress.
Alan Abela, a Partner at Crowe Howarth Malta, said that with an increasing demand in the catering industry the supply should increase with it. Having said that though, he pointed out that this is not easy due to the steep competition in the industry. He added that the figure showing investment into present catering establishments, as opposed to new ventures, is partially due to fine dining restaurants having to keep up their standard.
Abela pointed out that the sector faces other challenges such as issues with cash flow, ever-tightening legislation and question marks surrounding employment. He said that he wonders whether the step forward is de-legislation.
Abela suggested that the sector should regulate itself and not have the government regulate it. This is because, he continued, owners know what is best for their business and governmental regulations are proving to be a burden on the industry. As things stand, “legislation is strangling the business”, he concluded.
Abela concluded by saying that though quality tourism is on the national agenda, for it to be realized professional restaurateurs must invest more and a dialogue with the authorities must be opened for high quality that is sustainable.