ERR recently published an extensive overview of the state of Estonia's foodservice industry. Nearly every month, if not every week, brings news of restaurants closing. The reasons are always the same: costs exceed revenue. Estonia has the highest VAT on food and dining out in Europe after Denmark — roughly twice the EU average.

What makes me especially disheartened about the arguments coming from leading politicians is the claim that "the strongest will survive," or that eating out is a luxury. Even worse is the suggestion that the sector is not a significant part of Estonia's economy, so why worry about it. In reality, the entire sector is speeding toward a crisis — if it isn't already there.

The tourism sector is one of the most beneficial for the state. A functioning tourism industry brings in foreign money through visitors, who also pay taxes on everything they consume here (VAT, labor taxes, alcohol excise, fuel excise).

Thanks to tourism, many other businesses get work: laundries, courier companies, security firms, cleaning companies, farmers, manufacturers. The list is long, because the economy is a system of connected vessels. Tourists also take taxis, rent cars, and so on. All these companies provide jobs and pay taxes.

Eating out should not be a luxury, as some politicians imagine. In a normal society that aims to grow a healthy middle class, eating out should be the rule, not the exception. Dining out offers people culinary experiences, healthier eating options, and a way to relieve stress.

It is certainly healthier for an office worker to eat at least one warm meal a day rather than snack on store‑bought ready food. Stepping out of the office during a stressful day is already beneficial, and going out in the evenings is good for mental health. We talk about Estonia's mental‑health problems, yet we prevent people from improving their well‑being in a natural way. Eating out is also a social activity — in the internet age, meeting people face‑to‑face and feeling happy is irreplaceable. That's how we climb higher on happiness indexes.

The sector employs professionals trained in Estonia's public education system — funded by taxpayers. They work with passion to create something exciting. The fact that people can work with heart and offer something good to others is a value worth preserving. And there are many more reasons.

But the situation is serious: no business is a social project — it must be profitable. Unless we want to return to Soviet‑era canteens. Too often, foodservice business owners work 24/7, and their health and well‑being matter too. Doing this work at zero profit — or even at a loss — is not sustainable. And so doors close. It's nice to provide jobs and pay taxes, but the owner must also receive some benefit.

Profit margins in the foodservice sector have collapsed to near zero. According to the Estonian Hotel and Restaurant Association's 2026 data, average profitability has fallen from four percent to about one percent.

Politicians' counterarguments against lowering VAT have been predictable. They claim that a VAT reduction would not reach consumers, and that restaurateurs would pocket the difference as huge profits. Let's break that claim down.

The sector's annual turnover is under one billion euros (it fell 1.6 percent last year). Estonia has roughly 2,500–3,000 active food‑and‑drink establishments. That means an average annual turnover of €300,000–€400,000 per business (about €25,000–€33,000 per month). With a one‑percent profit margin, the average annual profit is €3,000–€4,000 euros — about €300 per month.

Even if we optimistically use the former four‑percent margin, the situation is still bleak. A four‑percent margin means €14,000 profit per year — €1,166 per month. In many establishments, the owner works behind the stove or counter, meaning this is essentially their monthly income.

Compare that to Estonia's average salary, which is over €2,000. The imbalance and unsustainability are obvious. And if the owner wanted to pay themselves a salary, social tax and unemployment insurance would reduce it further — leaving around €600.

Show me a government official willing to work around the clock for that amount. The owner must take full financial responsibility, pay all employees on time, and transfer all state taxes down to the second.

Even if part of the VAT reduction stayed with the business, it would not be a crime if the owner could earn €1,000 instead of €600. The business could regain investment capacity, improving working conditions for employees. If the business does better, wages rise — which benefits the entire economy. And when Estonia's economy improves, tax revenue increases.

Let's not kill off a sector that provides so much value we often don't notice at first glance. Only the "crazy ones," the devoted die-hards, remain in the catering sector — everyone else has already given up. Let's support our people and our businesses.

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