“Revenue will grow and profitability will fall”: how restaurateurs see 2023

In January-November 2022, according to Rosstat, the turnover of restaurants, cafes and bars increased by 4.4% to 2.05 trillion rubles, in November in annual terms – by 15.2% to 215.6 billion rubles. At the same time, since September, the number of catering establishments has decreased. The number of closures increased by 25.7%, while openings decreased by 3.8% year-on-year, follows from a study by r_keeper cafe and restaurant automation service. According to these data, most closures were recorded in the segments of sushi bars, bakeries, cafes and pizzerias.

Vedomosti asked owners and managers of restaurants, bars and catering chains what factors have influenced the industry the most and what changes they expect in 2023.

President of the Federation of Restaurateurs and Hoteliers Igor Bukharov:

“Of course, the situation is better than during the coronavirus pandemic, when the planning horizon dropped to a week. The planning horizon now is as follows: first they look at the period before the New Year, then at the period until March, after – until spring, after – before the opening of the summer playground.

Those who were involved in large projects continue to invest in them. Those who have been working for a long time are well aware that after the crisis comes the rise. The information background greatly affects people and how they spend money, plan their spending.”

Ombudsman for the Moscow restaurant market, owner of the Meat & Fish chain Sergey Mironov:

“The restaurant industry is also affected by the growth of domestic tourism. In December, we record the growth of the restaurant business, especially in Moscow and St. Petersburg, cities where tourists go. Domestic tourism is now widely developed due to the fact that Western countries are closed.

Establishments that are located in shopping centers can really experience difficulties. This is a local recession. Such restaurants have to wait until shopping centers again take up space with tenants to replace those who left Russia, and also choose those shopping centers where there are high occupancy and which give discounts on space rental.

Based on the current situation, in 2023 revenue will grow, but profitability will fall. There are two reasons for this – there is a shortage of specialists due to the outflow of workers, which increases wages. At the same time, the well-being of Russians does not increase, so restaurants cannot raise prices.”

Dmitry Volodin, CEO of Sheraton Nizhny Novgorod Kremlin:

“There are several factors that are affecting the restaurant industry right now. One of them is an emotional factor, when bright decisions flush guests out of establishments. It was very clear when on Sunday you walk along, for example, the Patriarch’s Ponds [в Москве] and you can go to any restaurant or cafe, and there will be a place. These same decisions wash out workers because they feel insecure and no one can give them the level of protection they need.

The third moment is a change in the festive mood. All this reduces the guest base, when there are fewer people at the bar and at the tables. We also see a reduction in the check and bill.

Usually, after a fall, there is an increase, since people have lost the habit of cooking at home anyway, and they do not want to eat inexpensive, primitive food. I don’t expect big changes next year. Even the bright openings of the right restaurants with the right concept, with the right chefs could not gather a full hall, there are not a large number of guests. Whoever has money has no mood.”

Nikolai Richter, General Director of the Lepim and Varim dumpling shop:

“[Еще] after the September events, the market fell. There is a recovery trend, but it is rather weak. If there are similar shocks in 2023, then there will definitely not be a recovery, the market will immediately react to them. Prediction under such conditions is extremely difficult.

The average bill is about the same, but traffic is falling as people go to catering establishments less, and you have to fight for a guest even more than before. Departure of people definitely affects [на рынок]consumer values ​​are also changing – people save more and go to restaurants less.”

Mikhail Goncharov, founder of the Teremok fast food restaurant chain:

“There are systemic and situational problems. January and February are situationally weak months for the restaurant business, when [фиксируются] the lowest revs. If we take the figures that we have now and further reduce them, taking into account the traditional fall in January and February, then the situation [в начале 2023 г.] will be economically difficult. Companies that are resilient will survive two months, and those that are less resilient may not survive.

We need to look for an approach to solving consumer problems. It’s not just price cuts and new products. If a person changes his mind about going to restaurants, then a price reduction of 5-7% will not change his mind. A price decrease of 20% will increase turnover, but may not cover losses, which will lead to loss of profit.

It is also important to consider the planning horizon. If we live with tight belts in January and February, and then we understand that there will be an improvement in the psychological state [людей], then this is one question. If March and April continue to be weak, then systemic changes will be needed. Everyone has a chance to survive. The model of consumption outside the home has entered the current life.

People have learned not to eat at home, they do not want to spend time preparing food. For rich people, expensive restaurants will always be affordable, the middle segment will experience the most difficulties, and the affordable segment will experience less problems.”

Grigory Malyshev, Managing Director, Chef, Leman Restaurant:

“The sanctions have also affected products, including alcohol, so now there are Russian replacements for drinks like Jagermeister. We are also already seeing an increase in the production of various sausages, various types of meat, and cheeses.

There are few restaurants in Moscow with the cuisine of the peoples of Russia, and this niche is now developing. More and more such restaurants will be opened, for example, restaurants with the cuisine of the northern peoples, Dagestan or Chechen cuisine. At the same time, prices have also dropped significantly. Previously, a ribeye steak was bought for 4000-5000 rubles, now it can be done for 2000 rubles, while there are alternatives that cost less than 1000 rubles.”