Hospitality industry in Hungary: Challenges and closures

Several Hungarian restaurants, bakeries and hotels have been forced to close in the last 3 years. First, because of the outbreak of the pandemic, then came labour shortages and the collapse of raw material and energy prices. At this point, it looks like there will be further price increases and closures in the hospitality industry.

The path towards the brink of collapse

In Hungary, the quality of the hospitality industry has shown a steady increase since the mid-2000s, which lasted until the end of 2019. The problems in the sector started in early 2020, with the pandemic lockdowns, recalls telex.hu.

Although after the closures due to the pandemic, the remaining restaurants experienced higher customer traffic than before, they faced new problems: labour shortages and rising raw material costs. The labour shortage can be explained by the large number of hospitality workers who left the sector during the pandemic. Consequently, further restaurants were forced to close permanently by the end of 2021 due to a lack of staff. And rising food prices have also not been good for the sector.

This is how we got to the summer of 2022, when energy prices skyrocketed.

Mixed feelings about the future

There have been several recent reports of a wave of bankruptcies in the sector, which we have also covered recently. While there are indeed a lot of restaurants in trouble, and many of them have had to close permanently, the wave predicted so far has not yet happened. Therefore, telex.hu interviewed several people working in the industry about the situation.

László Kovács, president of the Hungarian Hospitality Industry Association (MVI), said that many restaurants had been struggling with bills, but the most critical phase had already passed. This phase lasted from August to September, and since then, the situation has improved, according to him.

There will be places closing due to high costs, but demand does not seem to be decreasing yet, and the vast majority of restaurateurs are hopeful that the situation will improve.

Máté Muha, the financial manager of 101 Bistro in Budapest, also confirmed that despite the increasing prices, there are still plenty of diners. He said that they have more than doubled their prices in 3 years, yet the number of their guests has not decreased much. He added, however, that he feared that there would come a time when they would be so expensive that only a small number of people would be able to afford to eat there.

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While Kovács and Muha are more positive about the situation, Nóri Vidó, founder of IDE and IGEN pizzerias, said that they have not raised their prices much, and are now largely maintaining themselves from their savings. According to her, many restaurants are now watching their competitors to see who raises prices or goes bankrupt.

Master chef Csaba Horváth also sees the situation as gloomy. He predicts a big drop in the number of restaurant customers by February.

What does the future hold?

The much-discussed wave of bankruptcies has not yet arrived, but those interviewed by Telex agreed that more restaurants will permanently close in the coming months. Despite this, some of the interviewees had a positive outlook on the current situation and held hope. The past few years have been full of challenges for those working in the hospitality industry. The question remains, how many will be able to survive this crisis.

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Source: telex.hu, DNH