Could the hospitality sector disappear in Hungary due to skyrocketing overheads?

The August utility bills have arrived. The increased costs are a big problem, not only for residents but also for caterers.

The first shock

We also wrote earlier about a pizzeria in Szeged that had to pay EUR 5,700 for gas for a month. The owners and managers of restaurants, cafés, pizzerias and pubs are experiencing similar issues. The increasing energy prices are hitting hard the hospitality industry.

A pub in Budapest has had a similar experience to the pizzeria in Szeged. Previously, it received a gas bill of HUF 300,000 a month (EUR 754), now it has to pay HUF 2.3 million (EUR 5780). Another unit had to pay HUF 900,000 (EUR 2260) for electricity instead of the previous HUF 180,000 (EUR 452).

The phenomenon can be observed in many places. However, unlike in the case of residential accounts, the change is not date-dependent. What is important is the date when the gas and electricity contract, which is usually concluded for 1-2 years, expires.  Generally speaking, energy costs have increased by 300 percent.

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In many cases, catering establishments do not even receive an offer. A restaurant owner in Pécs contacted 19 gas wholesalers. 9 did not reply and 9 gave a negative answer. This put restaurateurs in an impossibe situation, 444.hu reports.

If the restaurateur does not accept the companies’ offer, they just simply cut off the gas. According to one restaurateur, the energy market is no longer a real market. Restaurants are at the mercy of energy prices.

Is there a solution or will many restaurants close down?

The catering industry agrees that there is almost nothing that can be done. Such a sudden 300 percent jump in costs is unaffordable. It is not just energy prices that are rising, but food prices too. The increase can be passed on to consumers to a certain extent though. However, once a product or service reaches a certain limit, no one will buy it.

The solution may be to play tricks with opening hours. One pub owner told me that he puts a time switch on the fridge and as long as the place is closed, the fridges turn off.

Another option is to change the layout of the catering units. This means that the guest will have to wait longer. However, restaurants have less room for this manoeuvre, as they cannot turn off the fridges overnight.

The last resort is to close down. Not permanently, but only for the heating season. But they risk losing their staff and their clientele. The uncertainty caused by the pandemic is already causing staff shortages.

László Kovács, president of the Hungarian Hospitality Industry Association, believes that more places will close down due to rising energy prices than the coronavirus epidemic. Back then, 3,400 places were seized to operate. The G7 article points out that one restaurant after another is already announcing its closure.

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Source: 444.hu, G7.hu