The restaurant industry in Eastern Europe is still relatively underdeveloped, with per capita spending on eating out far below that of Western Europe or North America, particularly in sizeable nations like Russia.

But demand is growing fast. Restaurant chains in the region are expected to average more than 8-percent annual sales growth between 2012 and 2017. Until now, the post-communist transition has been particularly slow for the restaurant industry, with the emergence of both an eating-out culture and a workforce to support it an ongoing process. But on the flip side, the lack of a strong tradition of independent restaurants has allowed chains to lead the way when growth is on the table. As in many markets, a flexible approach to existing concept menus and marketing will help capture a larger share of consumer traffic in this region.

Foodservice operations based in Russia occupy four spots within the Eastern Europe region’s ranking of its five largest players. The result is a bit unsurprising, considering that Russia accounted for just over one-half of total restaurant chain sales in the region last year and around one-third of overall foodservice spending. Cafe and coffee shop chains in Russia, like Shokoladnitsa and the intriguingly-named Coffee House, led the way in 2012, with a combination of Starbucks-style ambience, large menus and indulgence. While both chains borrow liberally from the global coffee shop template pioneered by Starbucks decades ago, they add in a substantial degree of localization, with much larger menus featuring pastas, alcoholic beverages, desserts and traditional Russian specialties such as blini, or crepes.

Data

• Chains by sales, growth
• Chains by worldwide units, growth
• Companies by sales, growth
• Chains by estimated sales per unit

Strong local offerings are a mainstay for the remaining top five players, as well, allowing them to generally avoid direct competition with the largest global restaurant players. Bakery chain Fornetti, for example, has built an empire of close to 3,600 outlets across the region with a business model that has remained largely the same in every market — sweet and savory pastries sold by weight and inexpensively priced. Franchising agreements remain simple, with a low up-front fee, while food products, ovens and marketing support are provided by Fornetti. Similarly, chains Teremok and Kroshka-Kartoshka have enjoyed steady expansion with an emphasis on two Russian specialties, blini and baked potatoes, respectively, served in a modern environment. Like Fornetti, both chains began with a network of small, stall-like locations and later added a more modern, eat-in approach.

Equally as important as localization is a strong emphasis on low prices. While there are signs of this changing, with Shokoladnitsa, in particular, presenting a more premium offering, the categories projected to see the strongest sales growth in Eastern Europe over the next five years are all in quick service, suggesting continued demand for affordable fare served in a modern environment.

By the numbers

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