Moscow is experiencing the largest wave of closures in the food service industry in recent years. In scale, it is comparable to the period of pandemic restrictions and, according to market participants’ estimates, may even surpass it. While restaurants, bars and cafes are shutting down both in the city center and in residential districts, industry representatives warn that the peak of closures is still ahead.
In January alone, 45 food service establishments ceased operations in Moscow.
As noted by independent PR consultant Denis Goldman, the issue is not only about VAT, although the increase of the base rate to 22% since the new year has added to the burden. The main problem is that the cost of ingredients has risen significantly, employee salaries have also increased due to staff shortages, and rental payments are also due. At the same time, customers have started to economize — dining out is no longer a regular part of leisure for many families. While people could previously afford to visit a cafe a couple of times a week, it now happens less frequently. Establishments are caught between a rock and a hard place: raising menu prices is risky because customers will simply leave, and no one can operate at a loss for long.
“The market will definitely change,” predicts the expert. “The first to go are high-concept projects with high production costs and small establishments without a safety margin. Chains are also closing locations, but they have more room for maneuver — they reallocate resources, optimize costs, and sometimes temporarily freeze unprofitable branches. Most likely, those working with simple, understandable formats featuring quick turnover and low average bills will remain. Fast food, delivery coffee shops, ‘home-style’ canteens — these niches will retain demand. However, complex fine dining and high-end bars will decline until the population’s purchasing power recovers.”
In his opinion, this is not the end of the industry but its natural cleansing. In previous years, the market overheated: too many establishments opened, competition became excessive, especially in central Moscow and popular districts. Now, the strongest will survive — those who know how to manage finances, are not afraid to change formats, and adapt to the new demand.
“When the economic situation stabilizes, which will happen sooner or later, new players will emerge in place of the closed establishments, but with more realistic business models. For now, it is important to weather this period and not lose faith that people will still go to cafes and restaurants — just under different conditions,” Denis Goldman concludes.