This year every third restaurant went out of business in Ukraine

Restaurateurs hope that New Year parties will improve their financial situation

Photo: PHL

For the first time in five years the restaurant market in the country is in decline. In 2014, the market volume was UAH 21.4 bn, which is 11% less than last year, according to Restaurant Consulting. “In dollar terms it decreased by almost 50%,” says the company’s CEO Olha Nasonova.

The grim results did not come as a surprise to players in the restaurant industry. They assumed even worse results and at the beginning of the year predicted a market decline of 30% compared to 2013. This past fall restaurateurs managed to reduce their losses when attendance increased. They also experienced some improvements in December thanks to an average increase in the number of requests for Christmas events and parties by 20-30% compared to last December.

Mass closure

The year the restaurant market in Ukraine got off to a bad start. As previously reported, in the first half of the year establishments lost a third of their clientele due to mass unrest in the downtown area, rapid devaluation of the hryvnia (menu prices increased by 25–30%) and the panic moods of Ukrainians. The situation stabilized in autumn, even allowing establishments to raise their entrance fee for suppliers by an average of 30%.

Not everyone was able to survive the tough times. Nasonova says that since the beginning of the year almost 120 restaurants were closed in the capital and their total number dropped to 1,500. In general, there are 15,200 restaurants all over the country, which is approximately 30% lower than last year. “The total number of restaurants fell by 18% to 16,900 due to the annexation of Crimea and military operations in the east of the country,” said the expert.

The first victims are restaurateurs that open facilities in leased premises, said Nasonova. “Rent is mostly pegged to the currency and not all owners can afford to offer discounts,” she explains. As previously reported, Fanera Project closed the Hendel in Kyiv, Vik-Service closed its cocktail bars and Solo Pizza refused to work in the downtown area.

Presents under the X-mas tree?

Restaurateurs could earn some decent coin over the Christmas and New Year holidays. Nasonova says that in December the number of requests for Christmas parties increased by 20–30% compared to the same month in 2013. “December has just begun and we already have the same number of orders for parties as last year. I expect an increase of 30%,” says co-owner of the Pyvna Duma chain of pubs and The Burger restaurant Dmytro Zakhodyakin.

Commercial Director of Mirovaya Karta chain (Buddha-bar, Marakesh, Razhulyaevo, Tequila House, etc.) Vitaliy Shadchnev adds that unlike previous years, when companies booked halls for celebrating the New Year in October–November, the orders of companies are being sent in at the last moment. “The organizers of the events are interested in the nearest dates,” he says.

Last year companies canceled two-thirds of the planned corporate parties, says Creative Director of the Quest Event Network Vitaliy Zorin. “Most of the parties were planned in the downtown area of the city where protests were held at the end of the year. Some customers refused to participate in celebrations for moral reasons,” he confirmed. Zorin admits that their agency had to hire a special manager for cancellation of parties, who worked until March 2014.

Restaurateurs are in no hurry to make forecasts for next year. “We hope that we will not face such tough times in the foreseeable future,” says Shadchnev. Actually, establishments may see a slight increase in sales in Q1 2015 due to the low comparative base. In early 2014, the majority of Kyivans refused to go to restaurants due to the unrest in the nation’s capital.