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. Last Updated: 07/27/2016

Restaurants Survive Crisis by Going Native

With eating out no longer within the budgets of so many Russians who lost their jobs in banks and businesses after the August crash, restaurant owners said Tuesday they have retained at least some of their customers by lowering prices and doing something totally wild - serving Russian food.

The good times that the industry enjoyed throughout the economic boom of the past few years are over and no one is going to see superprofits for a while, but major restaurants say they are determined to stay in business by becoming more efficient and switching to local suppliers.

Fine restaurants have lost half of their customers and fast-food places have lost 30 percent, said Rostislav Ordovsky-Tanayevsky Blanco, the president of Rosinter, which owns the fast-food chain Rostik's and more expensive places in Moscow like Santa Fe, Patio Pizza and American Bar and Grill.

Restaurant owners developed bad habits during the last five years because "money was falling from the sky," but in the next year and a half they will face a tough reality, he said at the Restaurant World Expo-98 conference, organized by the magazine Vitrina, which is part of Independent Media, the publisher of The Moscow Times.

To weather the storm, Rostik's has cut its salad bar price nearly in half and slashed other prices accordingly, he said.

"You have to adapt to the realities of our country," Ordovsky-Tanayevsky said. "We have to give our guests an opportunity to come and enjoy themselves even during the crisis."

Restaurant owners and managers said at the gathering that giving up on imports was essential for staying afloat.

Arkady Novikov, the owner of the Yolki-Palki chain, which serves reasonably priced Russian food, and the top-end restaurants Sirena and Tsar's Hunt, said he has cut imported products by 60 percent. He used to import 90 percent of its products, including vegetables.

By keeping price increases below the rising value of the dollar against the ruble, the restaurants have maintained two-thirds of their precrisis clientele, Novikov said.

Only now restauranteurs are realizing "it's logical that a Russian restaurant should serve Russian food," Novikov said. "Life itself taught us this."

Ordovsky-Tanayevsky said he had started looking for local suppliers as early as May and also has cut down on imported food by about 60 percent.

"You can't get oysters in the Volga River, but you can get decent meat, chicken and vegetables here," he said. "The tomatoes may not be as rounded, but they are there."

Fine restaurants will still have to rely on imports to a certain extent, but they can save on other things, industry leaders said.

"The more expensive the restaurant is, the higher its class, the more difficult it is to survive," Novikov said.

"You can't reduce the prices without substituting the products: Salmon from Loch Ness cannot become cheaper," said Roman Rozhnikovsky, co-owner of the Nostalgie and Reporter restaurants, which have seen their profits go down by at least one-third lately.

But there are other things to save on.

Restaurants have to learn to live according to their means, Rozhnikovsky said.

"We had to review our expenses, save on something we didn't dare touch before," he said. "Some things the company should have done a long time ago," such as pick suppliers more carefully and review personnel policy.

"Our country cannot afford to pay the same wages as France or Spain, so now everything is simply back to normal," Rozhnikovsky added.

Maxim Privezentsev, manager of the theme restaurant Mephisto Castle, said the restaurant had to temporarily lay off about 30 percent of its staff during the crisis.

"The restaurant business had grown some fat, and in September our task was to get rid of it," Privezentsev said.

However, the manager said, the tide already is turning. After falling dramatically, sales are now growing by 15 percent to 20 percent each week, he said.

By becoming more efficient and cutting back on imported food "dramatically," the restaurant has been able to retain all of its clients, Privezentsev said.

"People have jumped to a different niche, and I jumped to another niche along with my clientele," he said. "Using Russian products is the only way to maintain prices atthe same levels. The dollar is a noose."

Fast-food restaurants have been hurt less severely by the crisis, but it also is more difficult for them to adjust to new conditions because of their heavy infrastructure and poorer clientele, Ordovsky-Tanayevsky said.

"They cannot react efficiently to inflation and devaluation," he said. Prices in the fast-food business can only be raised "bit by bit, selectively" so as not to chase away the clients, who "count every dollar and every cent."