Betting that consumers who cannot swallow the high prices at most Moscow restaurants represent a large and hungry market, Russian-Venezuelan joint venture Rosinter, owner of restaurants Le Chalet and El Rincon Espa?€“ol, has set up several new establishments that focus on lower prices and volume business instead of big profit margins.
"It's more than just a niche," said Henrik Winther, general manager of restaurant operations for Kombi's, Rostiks, Patio Pizza, the American Bar and Grill and the Santa Fe Restaurant. "It's really the core of the market."
While many restaurants blame high prices on expensive supplies, unreliable suppliers, exorbitant taxes and payments to protection rackets, Winther fails to see the logic.
"You can make it in a half-full restaurant where people are paying $100 a meal," he said. "Or you can make it where you can come in and eat for $15 and have a restaurant full, and turn over five times a night."
So far, the restaurants under Winther's management have been among the few to recognize and target the wide-open market.
Kombi's, which offers deli sandwiches at prices of around 5,000 rubles ($2.50), opened its first outlet on Prospekt Mira in January 1993, and has since opened another three locations. Two more Patio Pizza restaurants, where an average pizza costs about $10, will open within the next eight months. And the American Bar and Grill has added a breakfast menu including such items as French toast and flapjacks, with prices ranging from $5 to $8.
Rosinter is looking into franchising Kombi's as well as Rostik's, which offers chicken and fries in a fast-food environment.
The ventures' newest restaurant, Cafe Artistico, opened this week on Ulitsa Pushkinskaya in central Moscow. This newest entry into the market offers pasta dishes at $6 to $8 and Italian entrees at $10 to $12, slightly higher than prices for lunch and dinner entrees at the American Bar and Grill.
Winther believes that there is still plenty of room for competition.
"The market in Russia is unlimited, and fully undeveloped," he said. "I hope to be changing the market, to bring in some competition so that other restaurants will have to eventually follow.
"It would give me a personal satisfaction," he said, to change "pricing philosophy in Moscow."
But Winther pointed out that with lower profit margins, long-range financial success requires a long-term commitment to the Moscow market.
The openings of the American Bar and Grill in March and the Santa Fe Restaurant in May, for example, were the products of long and careful planning. Negotiations for the site of Santa Fe took place four years ago, and it took a difficult three years of construction to turn a ruined shell of a building into a small piece of Southwestern Americana in Krasnaya Presnya Park.
"Business in Russia in general is risky," said Winther. "Changing laws, changing conditions are a major nightmare."
Entering the emerging market more than four years ago, he said, has allowed the company to slowly build an infrastructure and evolve along with the economic, legal, and criminal landscape of the city.
Rosinter's evolution has included the development of an internal security group to protect the venture from racketeers. "We have a very competent crew that are specialized in that area," Winther said.
He is not concerned that Rosinter could lose control of its investments under Moscow's special privatization plans, which would allow Mayor Yury Luzhkov's office to control prices, forbid layoffs, and impose other obligations on firms renting commercial property in the city.
"I haven't run into" any problems "yet, and I anticipate it even less," Winther said of Luzhkov's proposed controls. "I think even he recognizes that without business in Moscow, his job would not be necessary. Generally, he is pro-business."
The employees for the numerous restaurants are hired through newspaper advertisements, or preferably by word of mouth.
Nastya, a waitress at Patio Pizza, said she landed the job through a friend. She had a similar salary at her previous job in the commercial department at children's store Detsky Mir. But her new job is better, she said: "This place is more interesting, happier."
"It's more than just a niche," said Henrik Winther, general manager of restaurant operations for Kombi's, Rostiks, Patio Pizza, the American Bar and Grill and the Santa Fe Restaurant. "It's really the core of the market."
While many restaurants blame high prices on expensive supplies, unreliable suppliers, exorbitant taxes and payments to protection rackets, Winther fails to see the logic.
"You can make it in a half-full restaurant where people are paying $100 a meal," he said. "Or you can make it where you can come in and eat for $15 and have a restaurant full, and turn over five times a night."
So far, the restaurants under Winther's management have been among the few to recognize and target the wide-open market.
Kombi's, which offers deli sandwiches at prices of around 5,000 rubles ($2.50), opened its first outlet on Prospekt Mira in January 1993, and has since opened another three locations. Two more Patio Pizza restaurants, where an average pizza costs about $10, will open within the next eight months. And the American Bar and Grill has added a breakfast menu including such items as French toast and flapjacks, with prices ranging from $5 to $8.
Rosinter is looking into franchising Kombi's as well as Rostik's, which offers chicken and fries in a fast-food environment.
The ventures' newest restaurant, Cafe Artistico, opened this week on Ulitsa Pushkinskaya in central Moscow. This newest entry into the market offers pasta dishes at $6 to $8 and Italian entrees at $10 to $12, slightly higher than prices for lunch and dinner entrees at the American Bar and Grill.
Winther believes that there is still plenty of room for competition.
"The market in Russia is unlimited, and fully undeveloped," he said. "I hope to be changing the market, to bring in some competition so that other restaurants will have to eventually follow.
"It would give me a personal satisfaction," he said, to change "pricing philosophy in Moscow."
But Winther pointed out that with lower profit margins, long-range financial success requires a long-term commitment to the Moscow market.
The openings of the American Bar and Grill in March and the Santa Fe Restaurant in May, for example, were the products of long and careful planning. Negotiations for the site of Santa Fe took place four years ago, and it took a difficult three years of construction to turn a ruined shell of a building into a small piece of Southwestern Americana in Krasnaya Presnya Park.
"Business in Russia in general is risky," said Winther. "Changing laws, changing conditions are a major nightmare."
Entering the emerging market more than four years ago, he said, has allowed the company to slowly build an infrastructure and evolve along with the economic, legal, and criminal landscape of the city.
Rosinter's evolution has included the development of an internal security group to protect the venture from racketeers. "We have a very competent crew that are specialized in that area," Winther said.
He is not concerned that Rosinter could lose control of its investments under Moscow's special privatization plans, which would allow Mayor Yury Luzhkov's office to control prices, forbid layoffs, and impose other obligations on firms renting commercial property in the city.
"I haven't run into" any problems "yet, and I anticipate it even less," Winther said of Luzhkov's proposed controls. "I think even he recognizes that without business in Moscow, his job would not be necessary. Generally, he is pro-business."
The employees for the numerous restaurants are hired through newspaper advertisements, or preferably by word of mouth.
Nastya, a waitress at Patio Pizza, said she landed the job through a friend. She had a similar salary at her previous job in the commercial department at children's store Detsky Mir. But her new job is better, she said: "This place is more interesting, happier."
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