370 businesses closed in 2024 and a worse forecast for 2025

Palm2024 wasn't a great year for the bar, café, and restaurant association, with the closure of 370 establishments in Mallorca. "But we've never experienced the decline seen this year," remarks Juanmi Ferrer of CAEB Mallorca. "Many factors come into play: the retirement of small businesses that no one wants to continue, rising costs, and lease renewals that force you to rethink the future. All of this shows that margins are ridiculous for most. Otherwise, so many companies wouldn't close," he points out.

The forecasts for 2025 are no better. "We'll be approaching 500 closures," confirms Ferrer. The sector had grown exponentially, with nearly 14,000 establishments open in Mallorca. "It's clear that the market is correcting the excess supply somewhat. But we mustn't lose sight of the fact that we're talking about micro-businesses, often consisting of a family and two employees who stoically and heroically endure rising costs, hellish hours, and a lack of profitability," Ferrer says.

In Ibiza and Formentera—according to data presented at the time by the Pimeef—a 20% drop in turnover was also recorded in 2024 compared to 2023. According to this year's forecasts, the situation will not improve. AMenorca, the president of the Menorcan Association of Cafeterias, Bars, and Restaurants, Antoni Sansaloni, also describes the season as very negative. According to Sansaloni, "tourists arriving on the island have lower purchasing power, spend less, and eat out less this summer compared to previous years."

According to the Menorcan employers' association, the problem also dates back to the past. In the summer of 2024, more than half of the bars, cafes, and restaurants in Menorca had experienced a drop in turnover. One of the reasons was a short season, "with fewer overnight stays and lower average spending, despite the abundance of visitors."

Lack of staff and a new agreement

In Menorca and the Pitiusas, the problem of the lack of qualified personnel that exists in Mallorca is repeated. Employers' associations agree in pointing to this as a limiting factor, since in some cases it prevents the extension of midday and evening services, and reduces revenue.

For all these reasons, restaurant owners have united in their rejection of the hotel and catering agreement. "It forces us to raise wages beyond our means—13.5% in three years. We don't have the revenue or the resources of hotel companies, which can play more with staff, move them around, and implement other strategies to incorporate costs," laments Juanmi Ferrer.

In many cases, the employers' associations of Menorca and the Pitiusas assert, staff will have to be reduced or activity limited if the agreement is implemented. In this sense, Ferrer believes that "at a time when we must face greater specialization and increased quality, a new additional cost is falling on us. We cannot keep up with that pace," he concludes.