What happens to restaurants if the food consumption tax is 0%? Explaining the impact on dining out, practical burdens, and measures to take now
An analytical report explaining that reducing the food consumption tax to 0% will likely shift consumer demand away from restaurants and towards food retail and takeout, driven by domestic demographic changes and overseas case studies.
📋 Article Processing Timeline
- 📰 Published: April 8, 2026 at 19:00
- 🔍 Collected: April 8, 2026 at 10:30
- 🤖 AI Analyzed: April 20, 2026 at 20:29 (297h 58m after Collected)
Here is the executive summary of this report.
- A 0% consumption tax on food is likely to act not so much as a policy that significantly boosts total consumption, but rather as one that directly reduces the household burden of food expenses and rearranges the relative prices of eating at home, prepared food, and dining out. Especially under the assumption that dining out remains at 10%, the recipient of demand will shift mainly to food retail, prepared food, and takeout rather than dining out.
- In Spain, when the VAT on basic foods was lowered from 4% to 0% in 2023, the government estimated it would reduce household burdens by 1.32 billion euros. According to an analysis by Banco de España, price pass-through was about 70% in the initial stages of introduction, but reached almost complete pass-through in about two months.
- On the other hand, in Germany's 2020 VAT reduction, the reduced tax rate including food and beverages dropped from 7% to 5%, but the pass-through to supermarket prices remained at an average of about 70%. Even if price reductions occur, system changes do not always result in a 100% price decrease.
- Japan already has an institutional difference of '8% for food, 10% for dining out' since 2019. Therefore, if only food is set to 0%, supermarkets, deli items, bento boxes, and takeout are more likely to strengthen their relative advantage over in-store dining.
- In the Japanese market, as of 2020, 38.0% of private households were single-person households, and in 2024, the monthly consumption expenditure of a single-person household is 169,547 yen, of which food accounts for 25.9% at 43,941 yen. Due to structural factors such as an aging population, single-person households, food inflation, and EC penetration, the benefits of food tax reduction are likely to flow into channels such as prepared food, food retail, and bulk buying.
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- A 0% consumption tax on food is likely to act not so much as a policy that significantly boosts total consumption, but rather as one that directly reduces the household burden of food expenses and rearranges the relative prices of eating at home, prepared food, and dining out. Especially under the assumption that dining out remains at 10%, the recipient of demand will shift mainly to food retail, prepared food, and takeout rather than dining out.
- In Spain, when the VAT on basic foods was lowered from 4% to 0% in 2023, the government estimated it would reduce household burdens by 1.32 billion euros. According to an analysis by Banco de España, price pass-through was about 70% in the initial stages of introduction, but reached almost complete pass-through in about two months.
- On the other hand, in Germany's 2020 VAT reduction, the reduced tax rate including food and beverages dropped from 7% to 5%, but the pass-through to supermarket prices remained at an average of about 70%. Even if price reductions occur, system changes do not always result in a 100% price decrease.
- Japan already has an institutional difference of '8% for food, 10% for dining out' since 2019. Therefore, if only food is set to 0%, supermarkets, deli items, bento boxes, and takeout are more likely to strengthen their relative advantage over in-store dining.
- In the Japanese market, as of 2020, 38.0% of private households were single-person households, and in 2024, the monthly consumption expenditure of a single-person household is 169,547 yen, of which food accounts for 25.9% at 43,941 yen. Due to structural factors such as an aging population, single-person households, food inflation, and EC penetration, the benefits of food tax reduction are likely to flow into channels such as prepared food, food retail, and bulk buying.
View full report
View full report with images