Money | Restaurants are closing at a record pace in Helsinki

Restaurant industry the sharp decline can already be seen in the statistics. The number of collapsed restaurants in Helsinki clearly increased already in 2023, and the same pace has continued since the beginning of the year.

Restaurant bankruptcies in Helsinki increased by more than 70 percent last year, according to Asiakastieto's statistics.

When 41 restaurants and cafes went bankrupt in 2022, the number was 71 last year.

As for the current year, the situation is still difficult: 16 restaurants or cafes had gone bankrupt by mid-March. At the same time last year, there were 17 bankruptcies, so there is no sign of an easing of the situation.

In recent weeks, bankruptcy or corporate reorganization applications have been filed for, for example, the company behind the Tortilla House chain, Fat Lizard Herttoniemi, Lily Lee and the Fat Ramen chain.

Restaurants there are many reasons for the predicament, experts say.

The customers' behavior has changed and the teasing can be seen in the choices, says the restaurateur Leo-Jukka Salonen. People come to the restaurant less and, on the other hand, spend less money there than before.

According to him, there is a nice crowd at lunch, but it is not enough to replace the “very small” evenings. Salonen runs the Meiccu restaurant in Meilahti, Helsinki.

Before, according to Salonen, Fridays and Saturdays were full in advance, but now the situation is different. A handful of restaurants no longer draw full halls with him.

Now, celebrations such as birthdays, weddings and anniversaries that were spent at a restaurant dinner are now celebrated at home.

They toowho come to the restaurant, spend significantly less money than before, Salonen describes.

“Where before the vast majority ordered a starter, main and dessert, now they only order a main course or even just a starter,” says Salonen.

The same can be seen on the drink side: schnapps and cognacs have been left out, instead of wine they drink water.

Salonen has been in the restaurant industry for 30 years and has also seen his own parents' restaurant career spanning decades.

According to him, apart from the war years, the restaurant industry has never experienced such difficult times during the entire independence of Finland.

“Infinitely sad. At this rate, there won't be any small entrepreneurs like me in 20 years, there will only be chains. This is a disappearing folklore.”

Customers in addition to the decrease, restaurants are also being disciplined by the inflation that has started. It started with the war in Ukraine.

“Inflation was at its worst over 7 percent, which increased the price of raw materials,” says a product owner familiar with Asiakastieto's bankruptcies Jaakko Nors

“Practically all prices went up, but people's wages didn't.”

Nors thinks that, for example, restaurants have not been able to raise the prices of lunches in proportion to the growing expenses. Lunches are more expensive than before, but it is still not enough to cover the higher expenses.

Rents for business premises have also increased.

“Large international players who rent business premises are not happy to lower rents, even if the market environment changes. They prefer to keep their spaces empty,” says Nors.

Even in a pandemic has certainly had an impact.

During the pandemic, restaurants were financially supported, but it did not cover all the loss of income. So the restaurants had to eat their own cash to stay afloat.

The new “remote eating” created by the pandemic has directly reduced the number of lunch diners. Even in remote work, you may eat more of yesterday's leftovers than before, Nors describes.

in Finland according to Norsi, as many as 17 percent of companies in the food industry have major or very major problems in their financial situation.

However, Finland's situation is not unique. The plight of the restaurant industry is also great in Sweden, says Nors.

“Sweden's bankruptcies were at a historically high level in 2023. The biggest bankruptcy risk there is now in the construction industry, but the restaurant industry will be next.”