Corporate events are in question – Kommersant FM

New Year’s corporate parties are under threat of cancellation: already concluded contracts with state-owned companies may fall through, market participants told Kommersant FM. The fact is that many contracts for corporate parties were signed back in July. But as food prices rise, party organizers fear they will either have to cut menus to stay within budget or break agreements altogether.

But catering also has a third option – to sacrifice its own margin, notes the CEO of the agency Communicator Creative Events Egor Dobrogorsky: “There is only one reason for a possible failure – if we have a pandemic again. The issue here is not about rising food prices. A price increase of 6–7% is not much, because the profitability of a catering company is 25–40%.

Either organizations will somehow reduce profitability, thereby maintaining contracts, or refuse them, which is fraught with some tenders that have already been awarded. Due to the difficult economic situation, many clients approve projects at the last minute, so a number of tenders are still ongoing, and some have not even begun.

Companies are planning to celebrate the New Year on a larger scale because people are tired of difficulties. Everyone remembers how we sat sadly at home, so there is a request for offline. People want to see each other, communicate, celebrate. But it probably won’t be like the good old days. Fewer stars are being booked, for example, due to the fees required.

The cost of organizing a corporate holiday this winter will depend on the company’s budget. If we are talking about banquet services, and this is only food, then the average bill per person starts from 6-7 thousand rubles, this includes alcohol. If this is a premium service, then from 12–15 thousand rubles. Added to this is the rental of the venue, the star you want to invite to perform. It can cost 1 million rubles, or maybe 5 million rubles. Therefore, the average bill is 30–40 thousand.”

At the same time, some companies are delaying the decision to hold corporate events. They prefer to wait until December to look at the remaining budget that can be spent on the holiday. Already, many clients of event organizers claim that the cost of services is too high, and by the end of the year they will become even more expensive. The main reason is the lack of labor and large fees for artists, explained managing partner of 4banket.ru Natalia Zharova:

“Let’s take pre-pandemic times, when the largest tenders for last-minute December dates closed already in September. Now the decision-making period will drag on, perhaps even until the end of November. In November, you will be able to book events for non-top dates, for January.

Clients don’t understand why everything is so expensive. And the secret lies, for the most part, in the staff and the cost of the products. There are few people, and those that exist are significantly more expensive. The same variables include the entertainment program; this is our entire show business. Rental companies, which are just as dependent on staff. These are the three main components on which price growth is based.”

The majority of Russian companies (about 80%) said that they minimized expenses this year. First of all, they cut costs on corporate events. The survey was conducted in September by the Zarplata.ru service. 40% of managers spoke about reducing the budget for corporate events. 16% of respondents completely abandoned the New Year celebrations. For comparison: last year there were twice as many.

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Svetlana Belova