What will happen to prices in restaurants due to higher prices for imported products



Since February 24, many Russian restaurateurs began to receive letters from their suppliers about the increase in prices for imported products due to currency fluctuations and delivery delays. What losses does public catering bear and how much can prices for dishes in restaurants rise against the backdrop of the crisis?

“Suppliers and restaurateurs are in a panic, like in 2008: the price of food immediately soared, no one understands anything,” says Igor Bukharov, president of the Federation of Restaurateurs and Hoteliers. “We monitor prices and manually adjust the menu daily,” Alexei Vasilchuk, co-owner of the Restart Vasilchuk Brothers restaurant holding, describes the work in recent days.

On the morning of February 24, Vladimir Putin announced the start of a “military operation”* in Ukraine. The subsequent six-year record collapse of the ruble provoked an increase in prices for imported food products, and the closure of airspace in a number of countries changed supply chains and, as a result, delays in deliveries, representatives of the restaurant market, who received relevant alerts from their suppliers, told Forbes . Forbes learned how the market is reacting to these changes and where they will lead.

What changed

Product prices



From February 24, suppliers of many Russian restaurants began to report price increases. The growth was 10-35% and primarily affected imported goods, says Ombudsman in the restaurant business and founder of Meat & Fish restaurants Sergey Mironov. The owner of the Skotina restaurants, Mr. Drunkebar and Barbosco Tahir Kholikberdiev. Imported perishable goods, such as seafood and greens, rose in price most of all, he said. Since February 24, fish prices have risen by 30%, Igor Vitoshinsky, the founder of the Semifreddo Group, echoes him. Suppliers of Dodo Pizza fresh vegetables raised prices by 40-45%, especially green bell pepper, the shortage of which arose due to restrictions on supplies from Turkey, says Vladislav Mandryk, director of procurement and logistics of the network.



The increase in prices has also affected products with a long shelf life: for example, the cost of Italian imported flour has increased by 20%, says Christina Avakyan, co-owner of the Tutto-pizza pizzeria in St. Petersburg. According to Mandryk, prices for both coffee and equipment (stoves, coffee machines, TV panels, etc.) have increased.

The main reason for the rise in price is the growth of the dollar and the euro, Forbes interlocutors agree. However, some suppliers have raised prices for products purchased at the old exchange rate or made in Russia (not dependent on the exchange rate), Mironov says. The managing partner of the Tigrus restaurant holding (restaurants Osteria Mario, Shvili, etc.) Alexander Murachev speaks about this: Russian".



Global Foods, a major supplier of imported products, confirmed to vc.ru that it had raised prices by 15% from February 25. The press service of Metro Cash and Carry told Forbes that they continue to ship to their partners under the same conditions, but in the near future the situation may change (how exactly, the company did not specify). The wine trading company Fort has not yet changed the price of alcohol for buyers, but has canceled all "deep" promotions and sales, says its executive director Alexander Lipilin. According to him, the abolition of discounts means that the price for customers will be 30-40% higher. “The new price will be formed taking into account the increased cost of borrowed money and new rates,” says Lipilin.

On February 28, it became known that the largest importers and distributors of alcohol in Russia - Simple and Luding companies - completely stopped shipments due to price revisions. The press service of Luding told Forbes that they had resumed deliveries from March 1. The company did not raise prices for Russian alcohol, the increase in the cost of imported products amounted to 10%, the Luding press service said. Simple also declined to comment, while another major alcohol company, Diageo, did not respond to a request from Forbes.



Product delivery times

Another problem faced by restaurateurs is the delay in the supply of imported goods from suppliers. Due to logistical problems, some of the containers that moved towards Russia from abroad never reach - they got stuck at customs or “got a U-turn,” says Murachev from Tigrus: “All imports that went through Ukraine in transit got stuck . Cars are diverted through Poland, but now there are huge traffic jams, and everyone is standing in long lines. When they get to Russia, and whether they get there, is unclear.” Many suppliers, according to Murachev, report short pauses in shipments of 2-3 days.

The supply of fruits, in particular avocados, has stopped at the Michel restaurant, says its owner Evgenia Chassagniard. According to her, the restaurant's suppliers are complaining that the Netherlands forbids shipping containers to Russia, and warn that there may also be shortages in other vegetables and fruits in the near future.

Oleksiy Vasilchuk also speaks about delays in the shipment of some groups of imported goods. According to him, this problem is not yet critical for large restaurant holdings, since they usually have large inventories. Vladislav Mandryk, Director of Procurement and Logistics at Dodo Pizza, says that the chain is stocked with key ingredients for 2-3 months in advance. “At the same time, we know that suppliers of, for example, coffee and mozzarella, face difficulties in maritime transport. Logistics chains are changing from maritime to multimodal,” says Mandryk. He does not exclude that the network will face interruptions in the supply of imported products later.

Terms of payment for goods

The situation with prices and “floating” delivery times is complicated by the transition of many suppliers to prepaid work, complain Evgenia Shassanyar and Stanislav Lisichenko, founder of the Chinese News restaurant chain. “The main trend of recent days in the restaurant market is the transition to one hundred percent payment for goods before shipment. Such a system was not the norm before, ”says Lisichenko. The fact that most of the suppliers are now refusing to defer payments, says a Forbes source in one of the Russian alcohol companies.

The transition of suppliers to prepayment is associated with their financial difficulties, say Alexei Vasilchuk and President of the Federation of Restaurateurs and Hoteliers Igor Bukharov. “[Suppliers] often don’t have free funds, the [key rate] rate has skyrocketed, so they switch to prepaid work,” Bukharov explains. Luding refused to comment on the financial conditions of working with clients, Metro did not answer a Forbes question about switching to full prepayment conditions.

Attendance

In parallel with the change in the conditions for the delivery of products in establishments of all price segments, there is a drop in demand, Forbes interlocutors say. Starting from February 24, the revenue of Holikberdiev's restaurants, according to him, has fallen by 50-70%, depending on the format. “Going to restaurants is definitely not a top priority for the consumer right now. Everyone is waiting for news,” he explains the fall.

In all restaurants of the White Rabbit Family group, there is a decline in revenue by 15-45%, caused by the cancellation of bookings made before February 24, Boris Zarkov, the founder of the group, admits: “People are scared, they are not in the mood for fun now.” Alexey Vasilchuk talks about a 30% drop in demand in his establishments.



At the same time, the picture of Russian restaurants is not uniform, Irina Avrutskaya, founder of the consulting company Like4Like Hospitality Strategies and curator of Novikov School, notes: “In Moscow, there are those who have a slight fall, but there are those who have strongly felt it. There are cities where the weekend went well, but on Monday they sank a lot. In Siberia, sales are at the normal level, and in the Far East, the decline is felt only in club and bar projects.”

What will happen next

Boris Zarkov believes that the trend with a drop in demand is not long-term: “The stage of accepting the situation will come, and people will eat stress in restaurants.” But the rise in price of imported products and disruption of logistics is the new reality in which businesses will have to live for a long time, he says.

The largest international fast food chains (McDonald's, Domino's Pizza and others) produce up to 95% of their products in Russia, so import problems will affect them to a lesser extent, says Oleg Domino's Pizza franchisee, member of the Russian Franchising Association and owner of the Franch profi business scaling agency Oleg Yudin: “It will be much more difficult for chains of fast-casual (coffee houses), casual (steakhouses) and fine dining (haute cuisine) restaurants to cope with the crisis, where the dependence on imports is higher.”

The share of imported products in the restaurants of the Restart Vasilchuk Brothers holding is 10-40%, depending on the concept, says Oleksiy Vasilchuk. At Dodo Pizza, imported products account for 5% of the ingredients. Moremania's partner Artem Lomidze estimated for Kommersant the share of imported products in mid-price restaurants at 40%.



Despite the increase in purchase prices, most of the restaurateurs surveyed by Forbes have not yet raised the prices of dishes in their establishments - they are reviewing the menu and temporarily removing items from it, the cost of which has grown the most. But an increase in the price tag on the menu is still unavoidable, says Alexei Vasilchuk. According to his estimates, the cost of dishes in Russian restaurants may rise by 20% in the near future. About a similar imminent increase in the price tag - by 15-20% - says Goncharov from "Teremok". He believes that for many visitors such an increase in prices will be critical: "People will simply stop going to restaurants."

With the current purchasing power, an increase in the price of dishes by no more than 15% will be acceptable for visitors to restaurants in the middle price segment, Igor Bukharov believes. According to him, in order to keep growth within these limits and not depend on interruptions in supplies from abroad, restaurateurs will be forced to switch to Russian products: “Now the same thing will happen that happened after the introduction of the food embargo in 2014.” Vasilchuk echoes him. To keep prices down, the restaurants of his holding will gradually switch to the Russian alternative: “Our task is to provide guests with a service that they can pay for.”



Restaurateurs may be encouraged to work with Russian suppliers by the transition of importers to full prepayment terms, Bukharov believes: “Instead of buying imported goods on a prepaid basis, restaurants will choose Russian ones with a delay.” According to him, those expensive ingredients for which there are no alternatives in Russia, cafes and restaurants will either be removed from the menu or purchased from importers on a prepaid basis in small batches - for a short period. The prepaid model will not lead to an additional increase in prices in restaurants, Bukharov is sure.


*According to the requirement of Roskomnadzor, when preparing materials on a special operation in eastern Ukraine, all Russian media are required to use information only from official sources of the Russian Federation. We cannot publish materials in which the ongoing operation is called an "attack", "invasion" or "declaration of war", unless it is a direct quote (Article 53 of the Federal Law on the Media). In case of violation of the requirement, the media may be fined in the amount of 5 million rubles, so