Restaurant meals have become noticeably more expensive for many people. Prices have steadily increased recently, leading to fewer visits to restaurants.
Government Action and Industry Response
In response, the German government has decided to permanently lower the value-added tax on food consumed on-site to 7 percent, effective January 1, 2026. This aims to provide relief to the hospitality industry. The reduced tax rate was previously in effect during the Corona pandemic and was initially announced as a long-term solution.
McDonald’s Germany is reacting to the change by lowering recommended prices on select menu items. The company states it is reducing prices, effective immediately, for Happy Meals, three McSmart Menus, and the Big Mac McMenu, with some reductions exceeding 15 percent.
Price Adjustments Across Channels
According to the company, the price reductions apply to all sales channels – dining in, take-away orders, and the McDrive. This is described as “remarkable” because the reduced VAT rate of 7 percent already applied to food for take-away.
This action comes as the hospitality industry continues to face challenges. Many businesses, primarily small and medium-sized enterprises, have been struggling with rising costs for years. More expensive raw materials, higher energy prices, and increasing personnel and social costs are impacting profitability. These increased costs are difficult to fully pass on to customers, resulting in declining restaurant visits.
The more than 200 McDonald’s Germany franchisees are also affected by these developments. As a major player in the industry, the company is responding to the tax relief with an adjustment of its price recommendations.
Frequently Asked Questions
What is the German government doing to help restaurants?
The German government has decided to permanently lower the value-added tax on food consumed on-site to 7 percent, starting January 1, 2026.
Which McDonald’s menu items are seeing price reductions?
McDonald’s Germany is lowering prices on Happy Meals, three McSmart Menus, and the Big Mac McMenu.
Do the price reductions at McDonald’s apply to all ordering methods?
Yes, the price reductions apply to dining in, take-away orders, and the McDrive.
Will other restaurants follow suit with price reductions in response to the tax change remains to be seen.