Restaurant and café prices in Bulgaria have increased sharply over the past decade, rising by close to 110%, according to analysis by the Institute for Market Economics. Economist Adrian Nikolov pointed out that this growth significantly outpaces the rise in key cost components such as labor, electricity and raw materials, based on official data compiled for the National Statistical Institute.

He noted that whenever the sector calls for preferential tax treatment, it raises questions about why an industry with such a substantial price increase continues to seek different conditions compared to the rest of the economy. Data from the consumer price index show that hotels and restaurants lead all sectors in price growth, with dining establishments registering even steeper increases than accommodation services.

Nikolov highlighted discrepancies between the rise in menu prices and the cost of inputs. Food prices, which represent a major share of expenses for the sector, have climbed by about 85% over the same period. This leaves a gap of roughly 30% when compared to the overall increase in restaurant prices, a difference he described as difficult to explain. Growth in wages and electricity costs, he added, has been more moderate, suggesting that part of the increase may have been absorbed elsewhere, potentially in profit margins, although he noted that only businesses themselves can confirm this.

Despite the lack of comprehensive official comparisons, the general perception is that prices in Sofia’s hospitality sector have reached levels similar to those in cities such as Prague, Warsaw and Bucharest. Nikolov stressed that this observation is not based on formal statistics but reflects broader market impressions.

Commenting on calls for tax relief, he outlined two possible interpretations: either the sector is considered strategically important and thus merits preferential treatment, or it is facing structural difficulties that justify state support. At the same time, he warned that the broader economic outlook remains uncertain, making precise forecasts difficult. Still, he expects inflation to persist over the longer term, though at more moderate levels of around 4%, well below the double-digit rates recorded in 2022 and 2023.