The catering industry is undeniably one of the hardest hit sectors by the coronavirus pandemic. With dining-in forbidden for months, industry players have been forced to resort to drastic measures to survive. While opposition politicians are challenging the government for not doing enough to help them, experts warn that many market players are unlikely to survive the pandemic.
As Hungary starts the gradual easing of the latest set of pandemic-related restrictions, the question on many people’s mind is when dining-in will be allowed once again. And many are wondering whether their favorite restaurant, café or pub will ever open again. These are valid worries as many in the sector have either pulled the plug or are teetering on the edge of bankruptcy. The economic impact of the unprecedented malaise in the tourism and catering industry is enormous: the Association of Hungarian Hotels and Restaurants estimates that the economy lost a staggering HUF 900 billion due to the restrictions.
Stretched to the limit
The majority of catering establishments are struggling daily for their survival and for now see no chance of opening. Their options are limited, with most of them focusing on take-out, setting up their own delivery service or joining an online food delivery platform.
“No one knows how long we will be able to hang in there; we have to deal with difficulties beyond imagination, but seeing the infection data of the recent period, opening up seems out of the question,” László Kovács, president of the Hungarian Catering Industry Association told news website Index.
For cafés, pubs, and restaurants that rely on dining-in, the options are not promising. If they close, they may not be able to re-open again as the length of the current lockdown period is unknown. If they attempt to shift to a delivery or take-out focus, they are competing with large restaurant chains such as McDonalds and KFC that thrive off such services. Lajos Bíró, a celebrated Hungarian master chef who operates multiple restaurants, said they are preparing for a summer reopening, but even that is only likely to happen in the countryside. Bíró believes that installing Plexiglas dividers in restaurants would be a solution that would guarantee reasonable protection.
Too little too late?
The chef also emphasizes that government support needs to speed up, and instead of aid, the state should provide compensation. Restaurants should receive 50% of their average net income from 2019, as long as they don’t fire their employees.
Bíró’s words about the lack of appropriate state support are echoed by many in the industry. Sziget Festival founder and restaurateur Károly Gerendai told ATV that up to 40% of restaurants in Hungary may not reopen after the pandemic. Gerendai believes that after reopening, restaurants will need at least two years to return to the level of stability they experienced in 2019. If travel restrictions continue, many in the tourism sector will go bankrupt, which would be a terrible blow for Hungary since these services make up more than 10% of its GDP. According to Gerendai, the government did not do enough to help the catering industry. He also suggested that state support should go to restaurants that have been able to make it this far without shutting down.
Gábor Halmi, who opened his catering business in 2019, told 24.hu that they had been waiting for a year to receive some sort of aid from the government. “Our employees received the wage subsidies, but this does not pull a business out of its struggles,” he said. Halmi applied for a state-subsidized loan of HUF 10 million to pull through this period, but his application was rejected.
Opposition calls for state measures
The opposition Socialist Party (MSZP) has called on the government to access 1 billion euros in European Union funds to complement job-protection wage subsidies. “Families are being ruined by the coronavirus epidemic every day,” Imre Komjáthi, deputy leader of the party, said. Some 300,000 people have lost their jobs thanks to the government’s “slow, bungled and tight-fisted” wage subsidy measures. Komjáthi noted that Austria plans to spend EUR 430 million on paying a 13th month wage and compensation for unused official holidays. Catering sector employees will also receive a 100 euro “tip”, he added. Hungary, by contrast, is paying wage compensation of “only 50 percent”, he said, adding that the net amount is only enough “for people to starve to death.”
Meanwhile, the government is adamant that it provides ample support to struggling businesses. The Cabinet is extending wage support for companies hit hardest by pandemic restrictions through April, State Secretary for Employment Policy Sándor Bodó told profitline.hu. The government also exempted the hardest hit businesses from payroll tax, effectively subsidizing two-thirds of payroll costs. Subsidies were first available to companies in the tourism and catering sectors, and were expanded in March to include companies impacted by the closure of non-essential businesses. So far, more than HUF 52 billion in subsidies have gone toward preserving 132,000 jobs.
No one knows how many of Hungary’s restaurants will go bankrupt because of the pandemic. It also remains to be seen whether the government has done enough to help them, or if the measures were too little and too late.
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