Culinary crash: Industry losing CZK 414 million a day due to government lockdown

Relaxed restrictions over the summer did not compensate for spring losses, more businesses on the brink of failure.

Raymond Johnston

Written by Raymond Johnston
Published on 20.11.2020 08:59 (updated on 25.11.2020)

The Czech culinary industry is losing CZK 414 million in sales every day due to coronavirus restrictions. By the end of the year, the decline in sales could be up to CZK 70 billion CZK. The steepest drop in sales has been recorded by bars.

According to business associations, a third of restaurants have had to close due to the coronavirus pandemic and related government restrictions, with up to 50 percent of food businesses on the brink of failing.

Jakub Špika, speaking for research company Nielsen, said in an online press conference that the easing of restrictions in the summer did not compensate for spring losses, and further losses are accumulating from the autumn lockdown.

Václav Stárek, president of the Czech Association of Hotels and Restaurants (AHR ČR), said sales from windows or cooking discount lunches for schoolchildren cannot save the industry.

The HoReCa segment — hotels, restaurants and cafés — recorded a loss of CZK 28.2 billion in sales in the spring, according to Špika. He added that the prediction that the losses would be balanced by a strong summer season did not come true.

Last year’s culinary industry revenues amounted to CZK 195 billion and Špika said that under normal circumstances revenues would have reached over CZK 200 billion this year. However, the industry must instead expect a drop in sales of CZK 60 billion to CZK 70 billion by the end of the year.

AHR ČR in mid-October asked the government to extend its programs for deferred rent and loan payments to help the HoReCa industry. Trade unions and associations said at the time that a third of restaurants were completely closed and that number was growing dramatically. Thousands of people have lost their jobs in the industry and more are being added every day, the association claims.

Catering establishments cannot save sales through take-out windows. That only generates 10% - 15% of normal sales. Cooking for schools also doesn’t help at prices set by officials, AHR ČR’s Stárek said.

He added that most companies cannot even cover costs by selling from windows, as food preparation costs are higher and there are also added costs for food packaging and hygiene. “For example, a specific restaurant in Libochovice, which normally makes 300 to 400 meals a day, now sells 30, a maximum of 50 through the window. It does so to tell the customer that he is still in the world,” Stárek said.

At the beginning of November, the Prague City Hall launched a project for restaurants to make affordable lunches for children and seniors. Restaurants can sell a meal for CZK 60 to schoolchildren and CZK 90 to seniors. Deputy Mayor Petr Hlubuček (STAN) said the price was based on consultations with restaurant representatives.

“I am quite skeptical about that. This is exactly the opposite way projects are created. One of the officials thinks, looks out the window and says, this is the price that should be,” Stárek said, adding the set amount is well below costs. Lunches at these prices are usually subsidized, either by the state or by companies, he said.