The situation in the Latvian restaurant business is critical, and some catering establishments have raised prices to adapt to the situation, Janis Enzis, head of the Latvian Restaurant Society, told LETA. He noted that in a survey of organization members, 20% said they had increased prices by 10%, another 22% increased prices by up to 10%, and 58% recently did not change prices or even reduced them. “Restaurants cite the high tax burden as the main reason for price increases,” Enzis said, adding that Latvia still has one of the highest VAT rates among EU member states in the catering sector, as well as the highest tax burden on labor in Baltic. Prices in the catering industry are also affected by a shortage of labor and the resulting increase in wages, as well as a lack of customers, especially tourists. "The situation is very sad. The situation with tourism in Latvia and Riga can be observed with the naked eye – a short walk through the Old Town will quickly reveal many closed restaurants and entertainment venues," Jenzis said. According to him, the decline in the number of tourists was also affected by Russia’s war in Ukraine, but neighboring countries – Estonia and Lithuania – are recovering from the pandemic much better. "Usually summer is a time when businesses can create a cushion for the off-season. This did not happen this year," Enzis said. “The situation in the sector is critical, and entrepreneurs really hope for a reduced VAT rate on public catering services,” Enzis emphasized. This would help the industry out of a critical situation by reducing the share of the shadow economy, increasing social guarantees for workers and the competitiveness of the companies themselves.
