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. Last Updated: 07/27/2016

Grabbing a Bite to Eat Has Never Been Easier

MTThanks to a thriving restaurant market that has been growing steadily since 2000, it is now easy to find sushi and just about any other type of food in Moscow's eateries.
It was hard to find a sushi restaurant in Moscow five years ago.

Today, however, "you can hardly drive 100 meters without finding one," said Henrik Winther, general manager of the Rosinter Restaurant Group.

Thanks to a booming restaurant market that has been growing steadily since 2000, it is now easy to find sushi and just about any other type of food in Moscow.

"Five years ago I could tell you the 10 best places to eat in Moscow without a shadow of a doubt," said Greg Thain, chairman of Interactive Research Group, a research and consulting firm. "But now I can't make that statement."

"About 400 new restaurants were opened in Moscow in 2002 -- that means the market is booming," said Alexander Utochkin, research analyst at IRG. The number does not include small cafes and fast-food outlets.

"This is the first year since 1998 with such impressive growth dynamics," he said.

According to the State Statistics Committee, the food service market grew by 6 percent year on year in the first half of 2002.

Utochkin said the growth was actually much stronger, because the committee tracks the development of only large and medium-sized ventures, excluding small companies and individual entrepreneurs.

"Our estimate of the growth rate is 15 percent to 20 percent in dollar terms per year," he said.

Rising disposable incomes among the Russian middle class are fueling the restaurant boom.

"New numbers of guests are able to afford coming to restaurants," Winther of Rosinter said.

A Russian Target Group Index survey conducted by market research company Comcon in spring 2002 found that 42 percent of Muscovites surveyed visit restaurants.

Forty-six percent of them described the frequency of their restaurant visits as heavy, 35 percent said they eat out with medium frequency and 15 percent said the frequency of their visits is light.

"There is a lot of spending power," Thain said. "A lot of people are spending a lot of money."

Moscow has seen exceptional growth, he said, because utility and housing costs are lower compared to Western countries, allowing Muscovites to spend a larger percentage of their income.

"Some people might say, 'Wait a minute, people in Moscow earn less,' but I don't think so, when you do the sums. What's absolutely clear is that they spend more," he said.

The most dynamically developing sector is restaurants aimed at the middle class, especially those that specialize in ethnic cuisine, IRG said.

According to data from Moscowout.ru, 46 percent of Moscow restaurants have an average bill of $21 to $50 for dinner for two people, excluding alcoholic drinks. Twenty percent of Moscow restaurants average below $20, and 29 percent average between $51 and $100. Only 5 percent have go above $100.

Restaurant chains, such as Rosinter and Dolce Vita Group, are opening more new eateries and seeing increased sales each year.

While restaurant chains are growing quickly, most new restaurants are opened by small companies or individuals.

"If you ask me who owns Moscow restaurants and cafes, I would say the typical Russian entrepreneur," Utochkin said. Many of these entrepreneurs have not previously been involved in the restaurant business.

Small companies and individual entrepreneurs are attracted to the restaurant business by a relatively small capital investment and the promise of quick cash profits, said Kirill Podluzhny, general director Dolce Vita Group, which owns Moscow-Berlin, Moscow-Rome, Mesto Vstrechi, Shyolk and Yaponskaya Gorodovoi.

IRG estimates that the average profit for a Moscow restaurant is $5,000 to $20,000 per month.

"By our observations, a small restaurant in the center of Moscow may yield more income than a mid-sized industrial plant," IRG said in its September 2002 Economic Overview report.

Vasily Boiko is one of these entrepreneurs who jumped into the restaurant business despite having no previous experience.

Boiko, a board member at the financial company Vash Finansovy Poruchitel, opened his restaurant, Venetsia, in July. The average bill for two people excluding alcoholic drinks is $40.

Venetsia's manager, Igor Repyov, said Venetsia sets itself apart from other Italian restaurants with its interior, decorated in Venetian style by Italian designers, and its food, cooked by an Italian chef.

Repyov said Venetsia does face competition but that there is still room for the market to grow.

"Many new restaurants are opening," he said. "But I think each restaurant can find its own little niche. [The market] is not yet saturated."

As more new restaurants open, the competition gets tougher, and a growing market does not guarantee success.

"You can't just open a restaurant and expect it will be successful," Winther said.

"You need to offer a product that's unique."

Sergei Tuvakov, project director at MenuOnline, predicted that professionalism of the restaurant market will increase along with the competition. Individuals and nontypical companies will soon find it more difficult to compete with specialists, he said.

"The prognoses for the development of the market say the future is the development of networked establishments managed by professionals," he said.

IRG analysts expect the restaurant market to become saturated in 1 1/2 to two years, but Winther of Rosinter expects growth to continue.

"The rate of growth in terms of opening new restaurants must be supported by the economy," Winther said. "If it keeps growing like it has in the last two years, I'm convinced the restaurant market will keep growing at a brisk pace. If the economy runs into trouble, it will still grow, just at a slower pace."