Around two restaurant closures a month have taken place over the past year, including several mentioned in the Michelin Guide and many which have long been in business.

Estonian Hotel and Restaurant Association (Eesti hotellide ja restoranide liit) CEO Külli Kraner told ERR that while summer is the high season, when most eateries earn the bulk of their revenues, closures may temporarily slow, only to return in the fall.

"We often get calls from managers of long-established restaurants who say they cannot remember a time like this in their 30 years of operation."

Kraner said many restaurants cited the high rate of VAT as their main concern; in any case, turning a profit is not the rule.

A reported 25 restaurants have closed their doors over the past year, both major establishments and smaller ones, Kraner added, noting this will have a knock-on effect on gourmet tourism. The Michelin Guide, for instance, provides Estonia international visibility, but "those tourists are immediately lost to us if Michelin Guide restaurants close their doors."

In turn, local communities also suffer due to job losses and local providers losing custom from the closed restaurants which had sourced their ingredients from them.

The challenges are illustrated by the closure in late May of O₂ in central Tallinn. The restaurant operated for just 10 months. In a bittersweet irony, it received its Michelin recognition a few days before it was shuttered.

The restaurant's owner and head chef, Martin Meikas, said it became apparent fairly soon after opening that, in the present-day economic environment, fine dining had become a luxury for many and consumption habits had changed. Weak demand prevented the business from having the time to establish itself and build up the regular clientele base which all restaurants need.

By the time the Michelin recognition finally came, the restaurant was already in too weak a position to benefit much from it.

Reducing VAT would help, but would not be the only solution to resolve the situation, Meikas added. Despite the cost of ingredients and labor being the most talked-about variables in the restaurant business, in reality there is a long list of other overheads, meaning that breaking even at the end of the month is already a "win" in the current economic climate.

Despite the difficult conditions, there have been some positive signs. May this year saw a rise in tourism, driven by greater foreign tourist numbers.

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