Hungarian restaurants struggle to survive: what does the future hold?

Due to high energy prices and the lack of tourists, Hungarian restaurants are still struggling to survive. Home delivery might show a growing tendency. People spend more money, not because of increased purchases but as a result of the crippling inflation eating into customers’ budgets. The restaurants’ monthly turnover appears to be hugely dependent on pay dates.

Fewer tourists, also felt in restaurants

As Portfolio has reported, Hungarian restaurants are experiencing a drop in sales. This would not be such a big issue, but customers are turning increasingly price-conscious due to inflation. For instance, people pick cheaper wines off the menu and order only two courses instead of three. According to Rudolf Semsei, restaurant owner and vice-president of the Hungarian Foodservice Trade Association, restaurants with terraces have an advantage during the summertime. The number of foreign customers is still significant, although some ethnicities have completely disappeared. Russian tourists are not present this season, and there has been a considerable decrease in Chinese visitors since the Covid pandemic.

Skyrocketing energy prices

Many restaurant owners signed 1-2 years of fixed-rate contracts with their energy providers at the end of last year, as they did not have any better option. Now, these business owners are testing new possible marketing strategies to stay afloat and attract customers. However, the best “marketing ploy” out there is still based on providing high-quality service and aiming for customer satisfaction. The market situation is still not very favourable for restaurant owners facing an energy price trap. The Hungarian Foodservice Trade Association is not aware of any restaurant where the utility company has reduced the rates despite the fixed contract.

Help is on its way for restaurants

The Hungarian Foodservice Trade Association has been seeking help from the Hungarian government. A possible solution would be to cut these businesses loose from the fixed-rate contracts trap. Márton Nagy, Minister for Economic Development, seems to agree with this solution. He said that the government is already working on reviewing the contracts with electricity traders and will intervene if necessary and reasonable. Márton Nagy also added that updates concerning the pressing matter will be announced this week.

Spiralling spending at the beginning of the month

According to the calculations of restaurant owners, raw material prices have risen 40% in a year. Last year, the average order basket value was HUF 4,500 (EUR 12), while now it has reached HUF 5,800 (EUR 15.5). This price increase is mostly an inflationary cost. Therefore, it is not a profit boost for restaurants or delivery services. Most restaurants are cautious about raising their prices, as they do not want to lose customers. Usually, there is a temporary spike in turnover between the 1st and the 10th day of every month, around the time of pay dates. Although, after the 10th, there is a steady decrease. At the beginning of the month, people also tend to splash out on more pricey meals, while in the last days, they go for cheaper options or daily menus.

Restaurants are not the only ones facing debilitating challenges. Hungarian baths are also experiencing falling foot traffic, which you can read about HERE.