Restaurant Market as a Mirror of the Economy

The city is growing — and public dining is growing with it

The restaurant market of Almaty is developing along with the city itself: new residential complexes become natural points of attraction for business: along with housing come cafes, gastro bars, lounge bars, fast food and, to a lesser extent, restaurants.

The industry cannot name an exact universal figure for the growth of establishments. Statistics here require caution: during a year, one establishment may close and another may open in the same place, formally the number of objects will not change. But the general trend for growing cities is obvious: more residents — more demand for public dining. That is why Almaty and Astana develop differently from cities where the population is shrinking.

We wrote about the restaurant as part of urban infrastructure here:

A Restaurant is Urban InfrastructureIf we stop viewing a restaurant solely as a business, it becomes clear that public catering is a fully fledged part of urban infrastructure. Veronika Daugaliyeva, chair of the Self-Regulatory Association of Public Catering of the Republic of Kazakhstan (SOOP RK), told HD magazine why public catering should be regarded as a sector of the economy.mag.humodoc.com

For the restaurant business, demography becomes one of the main indicators. If people leave the city in search of work and better living conditions, along with them the consumer market also shrinks. In Almaty the opposite process is happening: the population is growing, new residential complexes are being commissioned, new commercial spaces are appearing — and following this, the public dining market is expanding. At the same time, today's rental situation differs noticeably from what it was 15-20 years ago. In the mid-2000s there were significantly fewer quality commercial premises and restaurants often had to adapt Soviet or post-Soviet spaces to their needs, which did not always meet the requirements of modern business, the shortage of suitable premises automatically raised the cost of rent. Today there are far more offers, new residential complexes create more commercial spaces, and the rental market has gradually become more diverse. But rent remains only one part of the equation.

The average check, which deceives

Let's take a simple example of how economic indicators can be misleading — the average check. On paper it is growing, but this does not mean that the restaurant has started earning more. The main reason is inflation. If a year ago tea cost one amount, and today another, the average check automatically increases. But the entrepreneur may not receive additional profit: the cost of purchases has risen, expenses have risen, prices have risen. Therefore, comparing only the average check is not enough. It is far more indicative to look simultaneously at the number of guests, the number of dishes sold and revenue.

Let's imagine two guests who a year ago ordered coffee with milk, tea with lemon and honey. Today they still come to the restaurant, but order only coffee and tea. The number of visitors has remained the same, but the number of items sold has decreased. A paradox emerges: the restaurant may show growth in the average check, although in fact consumption inside the establishment is shrinking. That is why behind a beautiful figure one must see the structure.

How the Coffeehouse Became Tashkent’s New Chaikhana“In the East, in the East, what is life without a chaikhana?” goes a well-known song. Yet, as it turns out, even a cultural institution as enduring as the chaikhana can have its successor. After all, the chaikhana was never merely a place to eat and drink. It was a place for conversation, negotiation and community. And as generations change, so do the places where those conversations happen. This is the story of how, in little more than a decade, Tashkent went from instant coffee to specialty coffee... and to something much bigger.mag.humodoc.com

The economic situation also cannot be assessed solely through average indicators. Even during a period of high inflation, some people may increase their incomes. Someone finds new sources of earnings, others change profession, develop their own business. Therefore, the consumer audience of restaurants is not homogeneous: one guest begins to economize, another maintains the previous level of consumption, a third is ready to pay more — but expects corresponding quality of product and service. For a restaurateur this means the need to understand their own audience much more precisely.

Sometimes a restaurant loses part of its guests, but does not lose money. If after changing the concept it has fewer visitors, but the share of a more affluent audience increases, the till may remain the same or even grow. And vice versa: a large flow of guests does not guarantee high profitability.

The main thing is not the till, but profit

There is another indicator that is often lost behind general statistics — net profit. Two restaurants may have the same revenue, but a completely different financial result. Everything depends on the structure of expenses, purchases, the margin of individual items and the efficiency of internal processes. A restaurant may not increase turnover, but reduce expenses and find new points of growth. For example, negotiate properly with suppliers, change the structure of purchases or receive additional bonuses for volume of turnover.

Thus, the sustainability of the restaurant business is determined not only by how much money passed through the till. It is more important to understand how much is left after all expenses.

The market five years ahead

For business in this situation, predictability is especially important. It is much easier for an entrepreneur to work with a high but understandable tax burden than with constantly changing rules. If a certain rate or operating regime is established, it is important for business to understand that they will not change in just a few months. This allows planning investments, rent, personnel, equipment and development. In this sense, the restaurant market is a good indicator of the state of the urban economy. It is very sensitive to the cost of rent, staff shortages, purchasing power, taxes and regulation, but at the same time capable of rapid adaptation.

If the market continues to develop without excessive pressure, in the coming years one can expect the emergence of new formats, further growth of delivery, the development of digital tools and new restaurant clusters.

The city will become bigger — and along with it its gastronomic economy will become more complex.