Is Portugal facing a restaurant crisis and are restaurants operating a two-tier menu system?

The boom in dining may be waning for Portugal’s restaurants sector, particularly in Lisbon and other large cities, according to the business daily Negócios.

Over the past 10 years, and even more so over the past five years, concept restaurants have sprung up all over Lisbon and Porto like mushrooms.

Yet two famous Lisbon restaurants recently announced they were closing their doors – Izcalli, a contemporary Mexican restaurant on the city’s Avenida Infante Santo run by Ivo Tavares, and the contemporary experimental cuisine Boi-Cavalo in Lisbon’s traditional Alfama neighbourhood.

This is according to a report on the local restaurant scene in business daily Negócios. But surely two examples hardly spells crisis.

There has certainly been a widespread debate on social networks, in culinary circles and the media in Portugal that the era of “wine and roses” for eateries may be over.

But this begs the question ‘how is it possible?’ as Lisbon airport recorded a record number of flights coming into the country for the first six months of 2024.

Last year, Portugal received 26.5 million overseas tourists, an increase of 19.2% compared to 2022 and 7.7% above the pre-pandemic year of 2019 which had set the previous record.

Tourism revenues were up 20.1% on 2022 and 40.2% on 2019 with the result that last year was the best year ever for Portugal tourism.

And last year was a record year for hotels in Portugal’s main two cities with €4.6Bn raked in from hotels alone, an increase of 21.3% on 2022.

And according to statistics collected in July, hotel room take-up rates in Lisbon were very much in line with those of last year, as opposed to a fall off in hotel room occupancy rates in the rest of Portugal, and even in the Algarve.

Overall, hotel bed occupancy in Portugal reached 30 million or 48% in 2023 (+13.3%) with 77.2 million overnight stays after having dropped to 24.1% in 2020 due to the Covid-19 pandemic.

So with hotels apparently at least half full, record number of tourists disembarking from Portugal’s main airports (Lisbon alone processed 7.5 million passengers from January-March), and a capital city packed with tourists who represent 20% of Lisbon’s economy according to its Mayor Carlos Moedas, what is going on?

The business daily spoke to several restaurant chefs who explained that the crisis actually began around a year ago and is down to a number of causal facts and not just one.

The restaurant trade is notoriously faddy and goes in trends with public tastes being notoriously fickle and capricious. What’s in today is already old hat tomorrow.

And the sudden mushrooming of eateries all over Portugal’s metropolitan areas inevitably leads to the law of the market and survival of the fittest to come into play in a sector that has always been notoriously competitive.

According to the restaurant owners the newspaper spoke to there are too many restaurants offering similar fare. According to Hugo Brito, the founder of Boi-Cavalo “it’s easier to open a restaurant than an estate agency, there are simply too many, and there must be 500,000 reasons to open one, and you don’t even need particularly qualified staff.”

As the chef at restaurant Plano Vítor Adão says: “Until we start regulating the opening of restaurants in Portugal where there is no regulation at all, hundreds of restaurants will continue to open and close run by people who don’t really know what they are doing and just say they have a passion for cooking.

“The problem is that they don’t really have a passion for cooking, they just want to be part of that world; a world where they end up coming and going all too easily, damaging the landscape for other more established restauranteurs who do know what they are doing.”

Another problem is the high amount of taxes catering establishments have to pay. The Portuguese restaurants association AHRESP have been calling on the government to slash VAT to 10% in line with Portugal’s main competing markets Spain, France and Italy.

Locals too are the lifeblood of restaurants, particularly in the off-season months, but in 2023 poverty has grown by around 42% in Greater Lisbon – up by 150,000 to 450,000 from the 300,000 registered in 2022.

Price inflation at Lisbon restaurants is more than evident. Ten years ago you could eat out in a good restaurant for around €30 per head (excluding wine and alcoholic drinks). Today, you are lucky to get a bill for under €50 per head.

And according to weekend newspaper Expresso, repeated by the UK’s Daily Telegraph over the weekend, there are now revelations of an alleged two-tier pricing practice on the back of a backlash against the impact of mass tourism in parts of Portugal and Spain.

Industry insiders told Expresso that restaurants were charging different prices for food based on nationality (something that is done in Japan), a practice which is completely illegal.

Portugal’s restaurant association AHRESP told Expresso it was not aware of restaurants practicing discriminatory prices for tourists. It states that rates must be equal for all customers and displayed in a totally transparent manner.

But when the local economy stagnates, and people have less disposable income in their pockets, luxuries like eating out in restaurants are the first to go and local restaurants suffer, which may go some way to explaining why some establishments might be hiding alternative menus under the counter for locals “in the know”.