Russia's economic downturn negatively impacts country's foodservice industry

2015 will be a challenging year as foodservice operators battle for share

Moscow, March 4th, 2015 —Last year began as a promising 12 months for the still young Russian foodservice industry with traffic growth strong, but ended with visits down as the country’s economy saw a sharp downturn in the latter part of 2014, according to The NPD Group, a leading global information company. Visits to restaurants and other foodservice outlets declined by 2 percent in the last calendar quarter of 2014, and 2015 will continue to bring challenges to foodservice operators as consumers become increasingly cautious of their spending, says NPD.

Full service restaurants experienced the highest traffic loss in the fourth quarter, with visits down 9 percent compared to same quarter year ago, reports NPD’s CREST® foodservice market research. Visits to quick service restaurants, which are popular outlets because of convenience and lower prices, declined by 1 percent. Two economically fragile consumer groups, young adults, ageds 16 to 24, and families with children, were major contributors to the traffic losses. Retail foodservice was the only commercial channel that realized visit gains (up 10 percent) in the quarter as consumers hurriedly shopped to use devaluating roubles.

Foodservice consumers cut back most on visits at lunch and dinner during the last quarter of 2014, reports NPD. Lunch traffic declined by 3 percent and dinner visits by 5 percent compared to the same period year ago. Breakfast remained one of the few bright spots in the foodservice market as working Russians still preferred to grab their morning coffee and food away from home while commuting to work. When consumers did dine away from home they spent more because of higher food prices. The boost in average bill size amounted to a 2 percent increase in spending for the total market in the last quarter of 2014.

“With the weakening domestic demand, Russian foodservice will continue to slow down in 2015,” says Maria Bertoch, foodservice industry analyst at The NPD Group. “The devalued rouble means consumers will carry on managing their spending. As a result, the foodservice market will be highly competitive this year and only the chains and outlets that truly meet consumer needs will maintain or grow traffic share. Those concepts that are less relevant to consumers will lose share or fail.”

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Lucy Green
Greenfields Communications
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