About 20% of Russian catering establishments were forced to close by the beginning of the third stage of lifting all restrictions related to the pandemic, Sergey Mironov, Vice-President of the Federation of Restaurateurs and Hoteliers of Russia (FRHR), public ombudsman in the restaurant business at the office of the Ombudsman for the Protection of the Rights of Entrepreneurs in Moscow, told TASS.
“Unfortunately, restaurants continue to close. About 20% are now closing. Either they have already closed, or they are trying to close, or the legal entity still exists, but the restaurant itself is not open,” he said, answering the question of how many restaurants have already left the Russian market.
The industry expert noted that the forecast about a 50% decline on restaurant market by the end of the year is still relevant.
In turn, Margarita Kosteyeva President of Rosinter Restaurants Holding PJSC (develops the IL Patio, Planeta Sushi, Shikari, American Bar and Grill brands) told TASS she fears that in the next six months or a year, the restaurants’ revenue will remain below the pre-crisis level. Overall, restaurant traffic remains well below last year’s levels, she said.
“Fears still persist. First, the consumer has not yet fully gone. There is still a shortage of revenue in restaurants compared to last year. Today, it is small, at the level of 35-40%, but for many it is still beyond the margin of profitability. Some of the restaurants are still working without making a profit and accumulating losses. In addition, there are fears among the population, pessimistic forecasts about the second wave [of the pandemic] in September. Unfortunately, restaurateurs and investors are afraid to invest,” Mironov said.
According to the expert, restaurateurs do not rule out a second wave of COVID-19 incidence by the new year, and in the fall a new outflow of companies that will have to pay deferrals for rent and taxes.
The Shokoladnitsa Group of Companies, which manages the chain of coffee houses of the same name, as well as the Coffee House and Wabi Sabi chains, confirmed that the attendance of restaurants decreased by an average of 25-30%. If in 2019 the company had 300 of its own establishments, then by now, including through the transfer to franchising, the network has reduced to 250.
“Now we are negotiating with landlords for several dozen coffee houses, for which there is still no final understanding of opening,” the company noted.
On the other hand, fast food restaurants McDonald’s and KFC told TASS that they did not revise their plans due to the pandemic. For example, KFC began to open restaurants immediately after the restrictions were lifted, and McDonald’s plans to surpass the number of 800 restaurants in Russia by the end of the year.
“The restaurants have actually earned better than we thought. There are also positive aspects. We were afraid of a 50% drop in revenue, but we don’t see it,” the expert said.
The Shokoladnitsa confirmed that the worst forecasts did not come true, and the restaurants “got out of the crisis with dignity.” Nevertheless, the company expects consumer demand to recover only by the end of this year.
“At the moment, our revenue is in the range of 70-75% of the pre-crisis, while we observe a permanent growth of 1-3%,” the company told TASS. McDonald’s also noted that restaurant sales are growing and demand is gradually recovering.
According to Mironov, of course, there are restaurants that practically did not suffer – these are catering establishments that were located at checkpoints and in “promoted” places, for example, in the Moscow district of Patriarch’s Ponds. According to Rosinter Restaurants Holding, such restaurants located in successful urban spaces have restored the attendance rate to 70-80% compared to the same period last year.
On the one hand, restaurants have benefited from border closures, the expert adds, but on the other hand, they have suffered “heavy losses” if they relied on foreign tourists in their business model. Establishments focused on office workers and located in business and shopping centers were also much less fortunate than others, Vice-President of FRHR noted.
The pandemic seriously affected both large chains and small restaurants.
“Both small and chain restaurants are vulnerable. We cannot say that the chain restaurants will carry on and the small ones will not. But we see that Goodman restaurants have closed, (at the beginning of August, four restaurants receive visitors, in 2019 the chain consisted of 10 restaurants – TASS). It is not without a reason that Goodman closed – they had a fairly strong concept, they have been two decades on the market,” Mironov said.
One of the largest restaurant holdings, Rosinter Restaurants Holding, is planning to overcome the crisis in stages. After the pandemic, at least 95% of the network is expected to resume operations, the company said.