A total of 1,102 days have passed since October 7, 2023, but companies continue to avoid committing to events, costs are climbing, and banks are blocking access to credit. In the event catering industry, profit margins are described as having eroded to such an extent that keeping the kitchen closed is sometimes the better option.
"A few days ago, it was reported that Iran might fire missiles to disrupt the elections, and two of my events were cancelled immediately," said a senior industry source. "Every headline like that paralyzes the phones for a week. Even when it turns out to be a false alarm, nobody is willing to take the risk."
statistics show the industry was fragile even before the war.
The catering and restaurant sector is ranked at a peak risk level, according to CofaceBDi and Dun's 100 indices, and its survival rate is the lowest in the economy: According to the Central Bureau of Statistics, only 8.7% of hospitality businesses survive for 20 years. However, since October 7, 2023, a new factor has joined the familiar risks: Continuous security uncertainty, which commercial catering has absorbed especially hard.
Even the ceasefire did not change the picture, given that companies planning an event a month or two in advance still refrain from signing contracts. "The missiles stopped, but the chatter continues. It has been like this for three years now. These were difficult years, and many businesses simply did not survive."
Why is catering particularly sensitive to uncertainty? Shahar Keren, a business consultant for restaurants, explained that the work begins long before the event itself. "A food business involves a lot of logistics and operations days in advance, involving inventory and preparations," he said. When the situation reverses all at once, these preparations turn into a loss: "If there is suddenly a coronavirus lockdown, or those 12 days that happened here a little over a year ago, all that money sitting on the shelves or in the refrigerator goes into the trash." According to him, even when an event takes place, it is usually on a reduced scale, as some employees are afraid to come and others are simply unavailable. "Not everyone is at work; there is reserve duty, a million and one things. Half the country is in mourning."
'There is nothing that hasn't gone up'
Despite the decrease in the volume of activity, estimated at tens of percent, prices have not dropped. Instead, they continue to climb at a steady rate of about 6% a year against the backdrop of the high cost of living and rising raw material prices. An average portion, which cost NIS 80 to NIS 90 about five years ago, costs NIS 120 including VAT today, a surge of 33% to 50%. A menu offering greater abundance and variety costs around NIS 170 per person, while at the high end, a premium menu based on select cuts such as entrecote, ribs, and picanha reaches NIS 230 to NIS 250 per person.
The price increase for the customer is supported by a parallel surge on the cost side. Kitchen staff, prep workers, and waitstaff, ranging from military age to 35, previously earned NIS 35 an hour. Today, those who remain available to work ask for, and receive, NIS 55 to NIS 65 an hour, an increase of 43% to 57%. "The same employee who earned minimum wage now gets NIS 50 an hour," Keren said. "Otherwise, you have no workers."
It is important to remember that this core cadre of workers is drafted into reserve duty or is between endless rounds of service. The salary of a kashrut supervisor also jumped from NIS 35 to NIS 55 an hour, and the level of kashrut itself dictates a sharp cost gap: A kilogram of meat with standard kashrut costs NIS 42, while under strict kashrut supervision (such as Mahpud, Atara, or Badatz), the price reaches NIS 80, nearly double.
The bottom line is eroding
When these costs meet the event budgets allocated by companies, which have also decreased, profits are eroded. The owner of a catering company recounted that a shawarma stand for an event of 100 people is priced at NIS 4,200, leaving about NIS 1,500 in net profit. "The problem is that companies are investing less money. For example, I received a call from the human resources department of a certain company that allocated NIS 3,000 for 100 employees, NIS 30 per employee, which leaves me with a profit of only NIS 300 to NIS 400. Under such conditions, it is better not to operate the kitchen." According to him, the competitors' alternative of hosting trays is no longer profitable either: "20 trays at NIS 3,000 yield about NIS 400 in profit for seven hours of work, and for that to be worthwhile, you need a significant number of events per day."
To make matters worse, those seeking financing often run into a wall. Banks classify catering as a very high-risk sector, which is evident in access to credit. The catering company owner shared that a request for a NIS 100,000 loan to finance a vehicle for work purposes, submitted under the business name, was rejected. The same business owner was approved for a loan of NIS 300,000, but only through a private track.
However, not all businesses in the sector are equally exposed. According to Keren, those managing to hold on are mainly the more professional catering companies, especially those enjoying steady cash flow. "The large companies are also suffering from the crisis, but they have sufficient financial reserves to absorb the losses and continue operating."