The pandemic-related restrictions have dealt a major blow to the restaurant industry. Public caterers’ cash returns dropped by nearly 100% when QR codes were temporarily required in June, as well as during a two-week lockdown imposed in October-November.
Moreover, unlike other consumer market segments, the restaurant business cannot benefit from the so-called pent-up demand — even after the restrictions are lifted, restaurants will hardly be able to make up for their losses.
To make things worse, with the economic and epidemiological situation still unstable, Russians are increasingly refraining from visiting public places. Restaurateurs noted an almost 45% decrease in on-site traffic following the ‘non-working days’ last fall.
As a result, in January-October 2021, restaurants lost about 40–50% of revenues on average across the country. In addition to shrinking revenues, the market situation also affected restaurant profitability — in 2019, successful businesses maintained profit margins at 10-15%, but this year, they have dwindled to 3–5%.
If Russia passes a federal law mandating QR codes in 2022, restaurant traffic will tumble to critical levels again. We expect another drop in revenues, by 40-50% in Moscow and up to 70% in the regions where vaccination rates are lower.
Against this backdrop, delivery remains the best development option for the industry. The segment continues to show booming growth, with the share of online orders in Yakitoria climbing 15–20% in 2020–2021. If public places become COVID-free zones, proceeds from delivery and takeout should increase by another 10-15%.
However, the conventional offline format still accounts for the bulk of restaurants’ revenue. To reduce the negative impact of COVID-19 restrictions, restaurateurs need to quickly adapt to the changing market and expand into foodtech. For example, they can launch or upgrade their own mobile apps.
This advice is especially relevant for the regions; caterers outside Moscow have been hardest hit by the pandemic due to an underdeveloped or completely absent delivery system.
In any case, according to our forecasts, even if all restrictions are lifted next summer, the industry is unlikely to recover until the end of 2022.
By Alexander Muratov, Development Director, Yakitoriya brand owner company