Is a Tsunami of trouble on its way? A view from Poland’s “street.”

We have a unique view of Poland’s restaurant consumer via our many restaurants around the country.  There is real concern in the market right now.  Here’s why.

Up until September of this year, the Polish consumer pretty much accepted 20 – 30% higher menu prices without much of a change in guest count in the restaurants and food halls.  However, since October of this year, restaurant traffic appears to be down by around 10% across the country.   October, normally a great month for restaurants, was awful.  A 10% drop in guests with a 25% increase in price gives the owner only a 12.5% increase in turnover year-on-year.  But restaurant costs (food, wages, rent and utilities) have also gone up by 25% or more in the past year.  Margins are already tremendously squeezed.

Now here is the REAL fear and I’m surprised we are not reading more about this in the news.  How will the industry address the mandatory 20% +/- increase in hourly wages in January 2024?  Minimum wages in Poland have DOUBLED in just six years.  Menu prices surely have not.  Not only are wages expected to increase, but utilities (and rent) will also go up next year adding to the stress.  The consumer is now clearly telling the market that they will not take-on more menu price inflation to cover the industry’s cost inflation.

It will be VERY interesting to watch in Poland how service industry owners and the consumers will react to this mandatory increase in costs when the Polish consumer (probably) is not in a position to absorb it.