Hungarian restaurants suffering – Go bankrupt or lose customers?

It seems like the Hungarian catering industry is facing hardships again. Not long after the major ordeal restaurants and other catering units had to face due to the restrictions caused by the novel coronavirus pandemic, now they have to face a new problem: raise prices and lose a lot of customers or suffer the increasing expenses and risk going bankrupt.

The second blow

Világgazdaság asked László Kovács, the chairman of the Hungarian Catering Industry Association (MVI), about the current problems the profession is dealing with.

The expert said that many restaurants had not placed as much of the rising costs of running their businesses as they could have on customers, trying to keep their prices down and maintain a happy customer base.

The chairman said that this summer could bring a great divide; many outside circumstances had caused prices to increase or will soon cause disturbances in the supply chain and costs.

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Additionally, international tourism had not yet fully recovered in Hungary, so there is a great need for campaigns that would keep Hungarian tourists interested in domestic locations and spend their money at Hungarian catering units, Forbes reported.

Since the coronavirus caused great losses in the industry, recovering from that was difficult in itself, so many restaurants were not able to create emergency savings or reserves that could tide them over another crisis-like situation.

Global events impacting the catering industry

Infostart reports that the catering industry is also facing a labour shortage; after the restrictions of the coronavirus came to be, many people left their occupation within the industry altogether, and many of them do not want to return, or if they do, they now demand higher wages.

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Additionally, global price increases and inflation, which Hungary is particularly affected by, are increasing overall operating costs.

Not to mention that the war in Ukraine could also have a major effect on the industry; wheat import could dwindle, steel production is limited, and energy and gas supplies are uncertain at best these times.

All these events would be reason for a 40-50% price increase within the catering industry, but at that point, they could lose many of their customers.

However, they might need to implement a 20-30% overall price increase, otherwise they could go bankrupt due to the high costs of fuel, grain, gas, and labour force.

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Source: Forbes.hu, infostart.hu, világgazdaság.hu