If you live in Hungary, you don’t need to read the newspapers to know that an increasing number of restaurants in the country are either closing down, or in obvious financial distress. Indeed, when I went looking yesterday for a shuttered eatery to illustrate this story, I only needed to walk around for a few blocks before I came across the “carcass” of one such casualty, the former Bisztro Oregano on Október 6. utca in Budapest’s District V.
But if you do follow the local media, you may have noticed that over the past few weeks there have been many prominent stories warning of a looming crisis facing the restaurant industry. Driving the boomlet in pieces about the restaurant bust are some dire predictions by catering and restaurant trade groups, including projections that up to 30% of the country’s 50,000 plus eateries could fail, putting tens of thousands out of work, unless the state takes immediate action. These trade groups blame some of the crisis on the almost comically (but still tragically) complicated and burdensome web of taxes and regulations the country’s restaurants struggle under. (By one count restaurants are liable for 29 different taxes.) They also have some specific suggestions for helping restore the industry to health. Gábor Antalffy, head of the Kereskedők és Vendéglátók Országos Érdekképviseleti Szövetsége (“National Federation of Traders and Caterers”), says his group is proposing the following:
- A reduction in the ÁFA (VAT) rate for restaurants and hotels to 8-10%, from the current 20%.
- A fixed subsidy of Ft 13,500 a month per employee.
- A drop in employer-side social contributions for employees.
- The abolishing of taxes on money spent by companies for “protocol” (entertainment).
- A change in regulations that would make tax-free food vouchers (étkezési csekk) only accepted for hot meals, rather than prepared foods sold at convenience stores and other non-restaurant enterprises.
- A pledge that the government will not change the tax status of travel vouchers (üdülési csekk), which currently represent a third of hotels’ income.
- Subsidies for training.
- The mandatory closure of “multinational” companies on Sunday that might compete with smaller, Hungarian-owned enterprises in the sector.
After first seeing this list, my impulse was to pick it apart item by item, and point out the dubious rationale or practicality of each of the suggestions. The EU, for example, would probably scotch a special VAT rate for restaurants and hotels, and would certainly veto a mandatory Sabbath for foreign-owned competitors of local restaurants. But that’s just nitpicking.
The bigger and much uglier truth that needs to be said is that, if 30% of Hungarian restaurants fail during the current economic crisis it would be a good thing, for the simple reason that at least this many have no business being in business in the first place. And any special measures used to keep these “zombie restaurants” alive will only serve to punish the 70% (or whatever percentage) of restaurants that have a chance, or at least a clue what they are doing. If nothing else, maybe the slowdown in business will lead some restaurateurs to send away service staffers who spend their shits diligently making patrons feel ignored and slighted.
I would not quibble, however, with the suggestion that the government could help out with some money for staff training, though most of it should be spent on teaching these zombie service personnel do something that will never require them to come face-to-face with a living customer ever again.
Well said dude. With the suggestions that were given in regards to subsidies, is that all these people can come up with? Subsidy after Subsidy! Cannot anybody in this country run a business without a handout from the government? COMMUNISM will not stop for the foreseeable future.
What the hell is going over there in Hungary within the Hospitality Industry and the Government.The writer in this article seems to have a good knowlege of the ins and outs of the industry perhaps more “noise”could be made so that the Government could wake up and take immediate action.Regarding those “zombie restaurants”:if they don’t make custmers happy/pleased/willing to come back they will eventually close anyway but in the meantime create a bad reputation for the whole industry (by word of mouth) by tourists,expats and soforth.As for survival of the fitest, in this time of economic stress:In Melbourne,Australia there is a restaurant (I won’t mention it’s name as it’s not paying me
) that is just taking “donations” from it’s customers according to how much the customer thinks the meal is worth or however much they can afford rather than set prices and believe me that particular resto will survive this very difficult period in time.I think we can all learn from that idea…
Ps.There needs to be a severe change in the training and/or attitutes of people working in the Hospitality Industry in Hungary.I think even after all this time there is still a bad hanover from the Communist era…Just look at what Hospitality Courses offer/teach to foreign students in Melbourne, Australia.
It seems that Mr.Gábor Antalffy, head of the Kereskedők és Vendéglátók Országos Érdekképviseleti Szövetsége (“National Federation of Traders and Caterers”) has smoked something “strange” or “out of date”. If that is the recipe of “his group” to help the restaurant industry, I understand why it is in so bad situation and should be nice to know who are the gentlemen in that “group”. Nice WE
SORRY, I FORGOT TO SIGN THE COMMENT!
It seems that Mr.Gábor Antalffy, head of the Kereskedők és Vendéglátók Országos Érdekképviseleti Szövetsége (“National Federation of Traders and Caterers”) has smoked something “strange” or “out of date”. If that is the recipe of “his group” to help the restaurant industry, I understand why it is in so bad situation and should be nice to know who are the gentlemen in that “group”. Nice WE
Hey Steph K.
Are you talking about that particular place in St
Kilda?
Am a Melbourne girl (St Kilda girl actually) as
well, however have been here for 3 years. As great
as the idea sounds, i so cannot see it happening
here!
Mind you, I think things need to be culled here a
little. This year is going to be about the
survival of the fittest. I just hope my favourite
places survive.
Can’t see this idea (pay what you think it’s worth) working here, though maybe worth a try one day. Have read about a bar in England that operates a self service beer tap for regular customers to use during busy periods and put their money in an ‘honesty box. They basically pour their own beer.
Can anyone explain what happened to The Venicia (might have spelt it a little wrong) on Jozsef Krt near the Ference Krt Metro. It was a great little Italian restaurant which was always full.
It seemed to get bought out by Planet Sushi/Some Other Italian name. This was the kiss of death.
It was then always empty except for the multitude of staff, we went there once and found out why. Absolute rubbish. We reckoned they were washing something else along with the dishes.
Now, after about a year, the same Planet Sushi/Some Other Italian name has opened up outside Deak station exit and closed the restaurant down on Jozsef Krt.
Really the end of an era. Such a shame.
Anyone know the full story?
Would never point out a type-o as I type terribly. However, this one made a dirty word – “Who spend their shits”
The article is right. A lot of restaurants need closing because of their service and quality. Gov’t action might be warranted to help the industry but not protect them from competition within the industry.
Maybe from the closures the best chefs, managers and servers will go to the restaurants that survive. But, I doubt it. There will still be predictably bad service throughout the industry. The good news is there will still be foreigners to rip off.
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