Portugal’s restaurant association boss said today that "Obviously that prices in restaurants will drop," referring to the July 1st drop in VAT on food from 23% to 13%.
José Manuel Esteves said that his conclusion is categorical with customers soon to enjoy cheaper meals, even though the VAT on most drinks will remain at the higher rate.
"When the VAT rate drops, immediately there is room for lower prices to customers. So when asked if prices will drop in, and contrary to what has been stated in the media, the response of the Association is, obviously prices will be lower."
According to Esteves, some restaurants will lower prices immediately and other "as soon as possible" as more established restaurants may well have financial difficulties from which they are keen to recover.
Those companies that have built up borrowings will use the drop in VAT "to recapitalise and will avoid lower prices on day one as the first imperative is to replace jobs," said Esteves, with the second priority being the re-equipping of restaurant facilities and equipment.
"If a restaurant opens with lower prices, the one next door will quickly follow. It is with this fair competition that prices will fall. We are in a market which already has the lowest prices in Europe," said Esteves.
The restaurateurs association leader said that another goal is to restore those jobs that were destroyed between 2008 and 2015, official there have been 60,700 jobs lost in the catering and hospitality industry.
