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In recent years, the restaurant business in Ukraine has gone through two significant challenges: the COVID-19 pandemic and a full-scale invasion. These events have forced the industry to undergo a radical transformation. Businesses have adapted, optimized their processes, and become a lot more efficient.
Revenue seems to be growing, but mainly due to inflation, not because we have more guests. At the same time, challenges such as staff shortages and energy instability have accelerated the modernization of business models.
How to survive the “perfect storm”? Challenges and solutions
Ukrainian restaurateurs are working in conditions where problems are coming from all sides. This requires not only resilience, but also a profound adaptation of business models.
Staff shortages
This is the most acute challenge facing the restaurant business in Ukraine, caused by mobilization and migration. The consequences are systemic:
- In most establishments, the wage fund accounts for 20-30% of revenue, and in 12% of cases, it exceeds 40%.
- Businesses are forced to reduce working hours due to a lack of staff.
- The shortage of experienced workers inevitably affects the level of service.
Pressure on profitability
In 2024, 47% of restaurateurs faced a decline in profitability, and 21% operated at zero or below. The reasons are simple and painful:
- Food prices have risen by 10-20%.
- Generators and power outages cause direct additional costs.
- Competition for staff forces wages to rise.
Optimization as a survival strategy
In response to these challenges, the market is undergoing a tough but necessary optimization process:
- Unprofitable positions are being ruthlessly cut, and the focus is on “hits.”
- Clear instructions are being implemented to ensure consistent quality.
- High-quality semi-finished products (pre-cooked meat, basic sauces) are being used to speed up kitchen operations and minimize waste.
These forced changes are accelerating the modernization of the industry. And, let’s be honest, it’s not easy. BRG specializes in the development and implementation of such effective business models, helping establishments not only survive but also become market leaders.
Digitization of business processes
Technology has become an essential part of operations. Automation covers all areas of the business:
- QR menus, online reservations, advance orders.
- POS/CRM systems for managing orders, inventory, and finances.
Restaurants are also actively developing their own delivery channels (websites, chatbots) to reduce dependence on aggregators and increase margins.
Flexibility of formats
High rental rates are stimulating a shift to smaller and more flexible formats: coffee shops, bars, street food. The most striking example is “dark kitchens,” establishments that operate exclusively for delivery. This model, known in Ukraine since 2019-2020, is now more relevant than ever. Its advantages are low initial investment, minimal operating costs, and high flexibility.
Where to invest money? Investments in restaurants and forecasts
The COVID-19 pandemic has accelerated the digital transformation of the industry, making delivery a standard element of the business model. This has created a technological basis for further adaptation to the challenges of wartime. Smart investments in restaurants require careful planning:
- Entry cost. Opening a small café in a large city requires $50,000 (approximately 2 million UAH), with an optimal budget of $70,000–100,000. It is important to have a financial reserve to cover operating costs for the first 4–6 months.
- Profitability and payback period. A realistic return on investment for an establishment is 20-35%, which can generate 30-100 thousand hryvnia in net profit per month. The payback period for a project with an investment of 700 thousand to 1.5 million hryvnia is from 10 months to 2 years.
- Legal aspects. Starting a business requires registration (as a sole proprietorship or LLC) and obtaining permits from the State Emergency Service, the State Food and Consumer Service, as well as licenses to sell alcohol, if necessary.
The market forecast for the near future is cautious, and this is important to consider when analyzing the restaurant business in Ukraine:
- Moderate revenue growth of 6–10% per year is expected, mainly due to inflation.
- The average check will continue to grow by 8–12%.
- Attendance will remain unstable, fluctuating between -2% and +2%.
- The shortage of personnel will continue, making further automation a necessity.
Conclusion
Success in the new environment will depend on operators’ ability to carve out a niche for themselves at one of two ends of the market spectrum: either as champions of operational efficiency or as creators of unique experiences. Those who can implement technology and give consumers a compelling answer to the question “Is this experience worth my money?” will become market leaders.
If you are planning to open a new establishment or want to improve the efficiency of your existing business, the BRG team is ready to provide you with expert support. Contact us for a consultation to build a successful and profitable project.
Ukrainian restaurateurs are operating in conditions where problems are coming from all sides. This requires not only resilience, but also a profound adaptation of business models.