ACE Survey: Investment Appetite Holds Firm Even As Restaurant Profits Dip

Cautious optimism marks Malta’s restaurant sector as investment appetite strengthens despite profit pressures.

Ramona Depares reports.

For Malta’s restaurateurs, the first half of 2025 brought tighter margins and higher costs. Still, the drive to improve and expand hasn’t stalled - if anything, it’s becoming more focused, particularly among smaller, chef-led establishments.

These insights come from the latest survey conducted by Profs Vincent Marmara and commissioned by the Association of Catering Establishments (ACE), covering the period from January to June 2025.

A total of 250 respondents representing 405 catering establishments took part in the study, offering a clear snapshot of how the sector is performing in a period marked by inflationary pressure and shifting customer habits.

Revenues and profits under slight strain

Average revenues fell by 1% between January and June 2025, compared to a 0.6% decline in the latter half of 2024. Profitability followed a similar trend, with an average 2.4% decrease - double the previous period’s contraction. While the drop in revenue may appear small, it remains significant given the ongoing rise in operating costs, particularly in food imports, wages and utilities.

The share of operators maintaining stable profits dropped from 33% to 28.1%, while those experiencing a profit fall of more than 25% rose sharply from 1.1% to 4.3%. Although the figures point to tighter margins, they also suggest a market that is stabilising, even if under continued pressure. Most establishments still reported modest fluctuations rather than steep declines.

Investment remains steady

Despite these challenges, investment activity held firm. Around 60.9% of respondents said they had reinvested in their current operations during the previous 12 months. This rate is almost identical to that of the year before. This steady commitment to maintenance and upgrades points to a sector intent on sustaining quality and competitiveness.

There was also a visible increase in new restaurant ventures. Some 21.9% of respondents reported opening or investing in new establishments in early 2025, up from 17% in late 2024. The growth in willingness to invest was most evident among upmarket dining establishments and smaller, chef-patron-led eateries, which continue to fare better than larger operations.

Businesses with 25 to 50 covers recorded stronger results across profitability and confidence indicators, a pattern consistent throughout previous ACE surveys.

Complementing the above, the share of respondents unwilling to invest dropped from 61.9% in late 2024 to 54.5% in the first half of 2025. Meanwhile, those expressing a clear willingness to invest rose from 23% to 30.3%. Roughly 15% remained undecided, indicating that while confidence is improving, caution persists among a minority of operators.

Local patrons drive stability

Despite the huge influx of tourists Malta experienced during this past year, the customer mix continues to lean toward locals. These make up 55.1% of the average clientele, compared to 44.9% tourists. This balance provides some protection from seasonal tourism swings, giving the industry a relatively stable base to build on.

Taken together, the findings reflect a cautiously optimistic outlook. Revenue and profit pressures remain, yet restaurateurs - particularly smaller, quality-driven setups - are still reinvesting and looking ahead.