Two Czech restaurants go bankrupt daily over crisis – press

Two restaurants went bankrupt in the Czech Republic a day at the end of 2012 over the crisis, according to statistics of the Czech Credit Bureau monitoring firms' bankruptcy, and this year the situation in this branch is even to worsen, Lidove noviny (LN) writes today.

​One of the reasons is that people save money during the ongoing economic crisis and do not go to restaurants so often. And if they do, they mostly order a couple of beers only. Moreover, many people stopped having lunch in restaurants and they prefer bringing something to eat from home, LN writes.

Hundreds of small regional restaurants are offered for sale on Internet portals and tens of other owners have simply closed their restaurants since they were not profitable.

LN recalls that there are more than 30,000 restaurants in the 10.5-million Czech Republic. Three years ago their total proceeds exceeded 93 million crowns, but since then they have been constantly decreasing due to the crisis, LN says.

In addition, some 5 percent of restaurants annually disappear from the Czech market.

Out of business companies, restaurants are the most threatened with bankruptcy, LN says.

"Over 35 percent of customers go to restaurants less often than two years ago. Besides, those who did not limit their visits do not spend as much as in the past," Pilsner Urquell brewery spokesman Vladimir Jurina told KN, referring to a survey.

It shows that some 40 percent of customers tried to economise in restaurants in 2011, while a year later their share increased to 60 percent.
Even regulars who make up over 50 percent of restaurant clients economise.
Another problem is a strong competition in this branch, the paper says.
Along with the outflow of customers, the economic situation of restaurants is affected by the VAT rise as of January. This is why their costs have increased but many restaurants hesitate to raise prices not to discourage their customers, LN says.
This is why some restaurants are decreasing their profit margin to keep the prices or they offer various discounts to attract new customers.
According to experts, this is a suicidal strategy for the business in the long run since they must save money elsewhere, which is reflected on the quality of services and their customers' satisfaction, LN writes.
However, it adds that not all restaurants face economic problems. Some luxurious ones as well as restaurant chains in cities are thriving since well-off people do not mind paying a lot for top-quality services, LN writes.
"People have not stopped going to restaurants. They are only more choosy about where and on what they will spend their money," Coloseum restaurant chain head Jan Muzatko told the paper.
The paper cites an example of Koishi, one of the best and most popular gourmet restaurants situated in Brno, the second largest town in the Czech Republic. It is always full at lunch time though its lunch menu costs 225 crowns, while the average price of a lunch menu is some 80-90 crowns in the country.