Javier Milei’s economic wins come with a side of pain for Argentina’s restaurants

Ya Cabrón, a gourmet taco restaurant in Buenos Aires, had its best days during the worst of Argentina’s inflation crisis in late 2023.

With prices rising rapidly, locals rushed to spend fast-depreciating wages, while the weak peso attracted a record number of tourists. The small restaurant in the upscale Palermo neighbourhood was serving 60 customers a day in a citywide gastronomic boom.

But Ya Cabrón has since become an unlikely victim of President Javier Milei’s success in stabilising the economy.

As monthly inflation dropped from 25.5 per cent in December 2023 to roughly 2 per cent throughout this year, consumers cut back on short-term spending. In June, Ya Cabrón shut its doors because of plummeting demand, alongside a crowd of trendy eateries in the city.

“We tried everything but it was just unsustainable,” said manager Nicolás Molano. “In the last two months, we were serving maybe 15 people a day, sometimes a single table.”

The restaurant’s plight reflects the dramatic transformation of Argentina’s economy under Milei’s two-year austerity programme.

The inflation slowdown has allowed many to borrow and save for big purchases, with sales of electronic appliances soaring almost 400 per cent in the first half of 2025 compared to the first half of 2023, according to the national statistics agency.

But there has also been widespread pain. Millions have tightened spending as wages fell in real terms and energy and transport subsidies were cut. Three-quarters of Argentines told a survey in March they had curtailed eating out.

While GDP is on track to grow 4.5 per cent in 2025, according to the IMF, activity peaked in May and has shrunk since.

“People no longer feel their money is burning in their pocket . . . but they don’t feel they have more of it,” said Sebastián Menescaldi, director of EcoGo consultancy in Buenos Aires. 

Milei’s decision to dramatically strengthen the peso through various policy tools has hit another big source of restaurant revenue: tourists. Argentina is now one of Latin America’s most expensive destinations and many are staying away.

“The stabilisation was necessary for the country,” said Daniel Prieto, former president of Buenos Aires’ restaurant and hotel association. “But it has collateral damage, and our sector is one of the biggest.”

Buenos Aires restaurants served about 20 per cent fewer people from July to September, compared to the same period in 2023 — just before Milei took office — according to the city government. While that was “not a collapse”, Prieto said, the average customer’s spend had also likely fallen, putting margins under severe pressure.

In the wine region of Mendoza, Argentina’s other food and drink hub, vineyards have reported a sharp visitor decline as the cost of a long weekend surges into thousands of dollars. As the peso strengthened, nearly 62 per cent more Argentines holidayed abroad in the first half of this year than last, hurting domestic tourism.

Argentina’s chronic inflation worsened after the coronavirus pandemic, as the previous government printed trillions of pesos to fund spending. From about 2022, the capital’s mid-priced and high-end restaurant scene rapidly expanded as residents and tourists emerged from long lockdowns and the economy was flooded with cash.

Those restaurants have been hardest hit in recent months. “Margins have been annihilated,” said Marcelo Boer, who owns premium ceviche brands Barra Chalaca and La Mar and pizza chain Hells Pizza. 

“Many were not anticipating such a big change in the economy when they opened, so now we have a surplus of places,” he added. “A great number are preparing to shut down.”

Boer said he had found locations available for a third of their normal rental price because of the shutdowns.

Argentines are eating more affordable treats, meaning cheaper restaurants such as pizzerias and diners are relatively unscathed, industry leaders say.

But all restaurants have increased charges after the inflation crisis left labour, food and location costs extremely high even as price pressures began to ease this year.

Fidel Pérez, owner of bars BierHof and Casa Seis, said suppliers had raised charges for local beer Patagonia up to three times a month in 2024, pushing his menu price to almost 11,000 pesos (then $9.30) for a glass earlier this year.

“It gets to a point where the customer won’t accept it any more,” he said. Perez closed down Casa Seis in August.

The average price of a strip steak and side dish in Buenos Aires has climbed from 7,200 pesos in September 2023 (then $9.40) to 30,500 pesos this September ($21.90), according to city government data.

Inflation has been eroding Argentines’ purchasing power for a decade, and average incomes for public employees, informal workers and poorer pensioners remain well below early 2023 levels, says consultancy Equilibra.

Meanwhile, foreign tourist visits fell by one-fifth in the first half of 2025 compared with the same period last year, official data shows.

Fogón, a steak restaurant popular with foreigners, has suffered a roughly 30 per cent drop in customers in recent months compared with last year, said its owner Alex Pels.

“The last few years were historic for tourism and restaurants, but it was sort of artificial,” Pels said. “The party was always going to end some time.”