1. How will the sanctions affect the catering industry?
With border closures, disruption to supply chains and the departure of international companies, new market challenges are creating the perfect storm for many businesses. At the same time, for areas such as HoReCa, the hotel industry and manufacturing, sanctions open a unique window of opportunity.
The restaurant industry has just experienced a business transformation in the face of numerous lockdowns and restrictive quarantine measures, has learned to quickly adapt to changing market conditions, optimize all management processes and communicate effectively with the audience. The Covid transformation has strengthened the restaurant business and is now ready for new challenges. Moreover, the exit from the market of international chains opens up excellent opportunities for developing a vacant niche and excellent popular locations that were previously inaccessible.
Of course, most restaurant business representatives will take advantage of the new opportunities and look forward to the actual exit of the multinational brands that have announced their departure.
2. Rising prices due to the situation: what to expect, how much will prices rise?
The restaurant market demonstrates a high level of adaptability of menu concepts, the ability to work with a local product and effectively manage costs in the face of increasing supplier prices. Given the large share of wages in the cost structure, which will remain unchanged, we expect moderate price growth for certain products and in certain segments of the restaurant business. Restaurateurs are already successfully negotiating with new suppliers and local producers who previously did not have access to the market.
Adaptability is a key skill in our restaurant industry, which faces various challenges on a regular basis. And it's not so much the price increase that's waiting for us, but many interesting updated menu concepts created on the basis of a local product.
3. What are or are possible anti-crisis measures and optimizations?
In a changing market environment, the first step is always to review the positioning strategy, product concept, institution specialization, cost optimization and adaptation of the team, which is experiencing psychological pressure and emotional stress from the consequences of the crisis. The Covid-transformation that the restaurant business has gone through has optimized processes and taught them how to take on a variety of challenges, from disruption of supply chains to complete closure and ban on the work of halls. Active work is underway to review suppliers and change menu concepts to reflect the new product policy. Some institutions are considering the need to adjust the positioning concept and diversify the audience in order to adapt to the changing level of market solvency.
4. How will the crisis affect the founders, employees and guests of the restaurant?
As in the initial stage of any crisis, business and society go through stages of acceptance and adaptation to new conditions. HoReCa in Russia is distinguished by the ability to quickly make decisions and effectively respond to crises in all their manifestations. Since 2014, restaurateurs have gradually learned to work with Russian producers and have largely switched to domestic products. And the last almost two-year battle for the survival of the industry in the face of the most severe quarantine measures, finally strengthened the adaptive skills of the industry. In the context of the fact that we are now seeing the final stage of the industry's covid crisis, all market participants are moderately optimistic about the upcoming and past changes.
Quarantine restrictions, which are a thing of the past, were perhaps the most difficult factors for both the management team, employees and guests. You can work without masks, gloves, QR codes with a full fit in any conditions. If only there was an opportunity to work, and the industry knows how to adapt to new prices.
5. Can domestic companies replace large international fast food chains?
The industry is looking forward to freeing up the niches occupied by international brands. Each region has developed local fast food chains with similar concepts, traditionally under pressure from transnational corporations in an unequal struggle for the consumer. Their product is competitive and in many ways even more attractive to guests, because surviving next to big business is not an easy task and requires more effort to create a more attractive product and personalized service. The restaurant business hopes that the declared exit of international fast food chains will really take place, freeing up good locations and a redistributed audience.
6. Are there players in Russia that can quickly take the place of foreign chains?
The market is not homogeneous and has its own regional specifics. There are many successful restaurant holdings in Russia that operate effectively in their regions. This trend will continue with the redistribution of niches vacated by international fast food chains. They will be replaced by local networks that are already present in these markets and build effective communications with the local audience. And given the fact that Russia has a rather low level of internal migration, the discrete structure of the restaurant market is not a problem.
7. What will happen to suppliers if the vacated niches continue to be empty?
The fast food niche in Russia is already filled with individual local chains, and suppliers have many years of experience working with them. Moreover, networks are now actively interacting with new suppliers.
8. What are the main problems that may arise for those wishing to take the vacant place in the market? Can these problems be solved?
The main problem that may arise is the lack of a real exit from the market of international networks, which so far are only declaring their departure, temporarily suspending some of the processes. If this scenario is actually implemented, perhaps with the use of counter Russian sanctions against unfriendly brands, then franchisees will retain their work in existing locations already under their own brand, or local fast food chains will enter. Restaurateurs in Moscow are already receiving grants to support the development of a domestic fast food chain. I think this practice of state support will be actively taken up by all regions in the near future.