Editor’s Note: The Kyiv Post is partnering with ImpactMedia, an international economics journalism program sponsored by the Foundation for Effective Governance in Kyiv, to bring readers four special stories in today’s edition. This is one of them. The other three start on the front page.
Can you have a nice lunch in Kyiv for Hr 30, a mere $3.75?
To find the answer we visited four downtown restaurants: two classical fast food restaurants — Kryla and McDonald’s — and two casual dining restaurants — Olivye and Puzata Hata. Overall, we concluded that the options for that price were very limited and we didn’t get our money’s worth.
To find out why, we talked with restaurant owners, experts and an industry consultant.
Olga Nasonova, director of Restaurant Consulting, said it would be unrealistic to expect a great lunch for Hr 30 in Kyiv because of the restaurant market’s poor development.
Ukrainians rarely go out to eat. The number of restaurants is relatively low. And the meal prices are relatively high because of the high costs in taxes, rents and licensing as well as the lack of competition.
Ukrainians spend approximately Hr 460, or $56, a year for restaurant meals, while Americans spend $2,104 a year for meals outside their home and Poles spend $176, according to industry reports from each country.
The number of restaurants per capita in the U.S. and Poland also is vastly larger than in Ukraine. “Supply in average covers only 65 percent of the demand,” Nasonova said.
Because of the low supply and demand, Ukraine’s restaurants are generally charging higher prices for lower quality, compared with countries in other parts of the continent.
“European eateries generally offer a better price/quality ratio that Ukrainian ones do,” RuslanShibayev, co-owner of Pivnaya Duma restaurant chain, said.
Part of the problem is the difficulties people experience when trying to enter the restaurant market, and when dealing with the government after opening. “The licensing process is one of the biggest obstacles of the restaurant business,” Nasanova said. “Restaurant managers are more concerned about state official inspections than about their customers.”
Restaurant owners also are hindered by relatively high taxes and rent, experts said. For instance, rent prices are twice as low in the Czech Republic than in Ukraine.
Maksim Hramov, co-owner of Chelentano pizzeria, said, “If we compare Ukrainian and European restaurant businesses, we see that the price of labor in Ukraine is cheaper, while other important indicators such as rent price, food products cost and taxes are higher.”
This leads to a high mark-up. In Kyiv restaurants it reaches 100 percent or even 600 percent, according to Nasonova. The average mark-up at European eateries range from 50 to 100 percent.
Shibayev said a restaurant is considered successful if its profit margin reaches 20 percent. “Ukrainian restaurants working in the low-price segment have a 10-15 percent profit margin, while entities in the high-price segment have 20-25 percent.”
Market players have an optimistic vision of the future.
“The restaurant business will continue its development,” Shibayev said. Nasonova said the prospects are particularly good for low-price restaurants.
But Shibayev said there are no reasons to expect that prices will go down. And that means consumers are unlikely to be getting a fair lunch for their Hr 30 anytime soon.
Ukrainian restaurants fail Hr 30 exam
Lunch at Kryla is accompanied by the typical smell of fried oil, which is not usually appealing. A fried chicken leg, rice, small banana pancake and a glass of orange juice cost as much as Hr 32.40 here. A business lunch consisting of a chicken leg, fried potatoes and a glass of Pepsi would go for 29.90. The menu terminal offers some deals which the restaurant kitchen is not ready to cook. While the menu seems to be quite large, it is rather difficult to combine the proposed dishes in a decent Hr 30 lunch.
McDonald’s does not shock with absolutely perfect offers either. Plus, their restaurants are overcrowded during lunchtime. Getting a Hr 30 lunch in McDonald’s turned to be quite a complicated task— one had to spend Hr 37 to get a Big Mac and a portion of chicken nuggets. Did you feel full after getting such a meal? You did. Did you feel that the food was healthy? You did not.
Olivye located in Podil attracts visitors with short lines at the counters and many empty seats. Adding high quality food to those advantages would make them crucial for the lunch seeker, but the reality is different. You have to pay Hr 29.90 for a mushroom soup, beetroot salad, macaroni, pork rissoles with gravy and uzvar while the beverage’s taste seems to be close to what it is supposed to be.
The variety of dishes at Puzata Hata is outweighed by the large lines and lack of empty seats. It is a challenge to have a satisfactory lunch here for Hr 30, though possible—you just have to order the cheapest dish in each meal category. Borshcht, cabbage and cucumbers salad, buckwheat and pork cutlet would cost Hr 29.20.
