Cafés/Bars in Hungary

2021 DEVELOPMENTS

Pandemic-related restrictions significantly bite into sales of bars/pubs

Like most consumer foodservice channels, cafés/bars experienced significant sales declines in 2020 due to pandemic-induced lockdowns and various restrictions on capacity even when restrictions were eased, leading to low footfall, especially as inbound tourism was subdued and many Hungarians continued to work remotely. Some operators with outdoor seating areas such as terraces generally fared better than those lacking such facilities when indoor trade was banned, and during the summer and early autumn, when cafés/bars were free to operate without any major restrictions, but public health advice and fear of contracting the virus made many consumers inclined to favour outlets with open-air seating.

Concept of home delivery from cafés emerges during pandemic, but takeaway offers greater potential

The offer of cafés/bars is traditionally dominated by drink sales, and while some operators enhanced their food offer, with the latter gaining share in 2020, part of this was lost to drink in 2021 due to a relaxing of restrictions and in-person socialising due to pent-up demand to meet friends for a drink.

Costa Coffee exits market but brand remains present in retail and independent operators

Cafés/bars is a highly fragmented competitive landscape, dominated by independent operators under “others”, while leading international chains in the channel include Starbucks (locally operated by AmRest Kávézó Kft) and McCafé (locally operated by Progress Étteremhálózat Kft). However, the shock of the year was the exit of the Costa Coffee chain from Hungary when the domestic franchise partner of Costa Coffee closed all outlets in July 2021.

PROSPECTS AND OPPORTUNITIES

Mixed performances and pace of rebound

Many cafés/bars are likely to underperform in the short-term compared to their pre-pandemic results or change profile or ownership if the pandemic and related restrictions are prolonged over 2022 and beyond. The pace of rebound in terms of footfall, and domestic and inbound tourism will be the key drivers of transactions.

Prices are expected to rise – especially in cafés

There are multiple factors that are likely to drive up the higher prices of menus in cafés/bars over the forecast period. Operators are being forced to increase their prices to cover their expenses and make a reasonable profit following losses during the pandemic, especially as all major cost items such as rent, raw materials/ingredients, labour, and regulations to replace single-use plastic with more environmentally-friendly packaging or utensils are growing much faster than expected.

High fluctuation in outlet ownership

The pandemic has already generated massive losses for cafés/bars, and financing operations at the low level of transactions/sales seen at the end of the review period is likely to lead to a change in outlet ownership if players struggle to stay afloat. In particular, bars/pubs is set to further decline in outlet terms heading into the forecast period, because many players will struggle to survive losses previously sustained during the pandemic, but also because of the long-term trend of bars/pubs closing in smaller towns and villages, where many residents prefer the cheaper options of consuming alcoholic drinks at home or in tobacconists that are licensed to sell beer and spirits.