With coronavirus projections showing a plateau in cases within the coming months and summer on the horizon, the reopening of Hungary’s restaurants has returned to people’s attention. Unfortunately, many of these businesses did not receive the support they would have needed, and a number of them are unlikely to make it out of the pandemic.
Various business owners have shared their projections about the situation, and some have explained why they face a continued lack of hope in the potential for their reopening.
Sziget Founder: The Gov’t Has Not Done Enough
Károly Gerendai, a restaurant owner and founder of Sziget Festival, told ATV that 30-40 percent of restaurants in Hungary will not reopen after the pandemic.
He reminded viewers that this will be the second summer in the catering industry that services in open areas will only be able to operate under strict restrictions. Gerendai believes many businesses will not be able to recover.
We are trying, through unorthodox solutions, to ensure the entertainment our customers previously enjoyed. Except for domestic tourism, almost every branch of the tourism industry and countless other services have been shut down. The question is, will they ever return from this?”
Gerendai has told Index that even after reopening, restaurants will need at least two years to return to the stability they had in 2019. Also, if travel restrictions continue, many in the tourism sector will go bankrupt. This would be a terrible blow for Hungary since these services make up more than 10 percent of its GDP.
According to Gerendai, it is not that the government did not do anything, but that it did not do enough.
He believes the government should try to help those restaurants in Hungary which have been able to make it this far without shutting down. Gerendai told Index that the worst feeling would be to make it through such economic struggle only to go bankrupt once everything reopens.
At this point, he says, the money the government has already spent on wage subsidies would go to waste if the restaurants they invested in cannot reopen.
Wage Subsidies Amounted to Little
Attila Kiss, founder of Szimpla, the establishment that started the ruin pub movement, said there is a night and day difference between the pub’s Berlin location and its Budapest location.
In Berlin, he told Válasz Online, nobody needed to be fired, and there is no danger of bankruptcy. Neither does he know of any colleagues in the industry who would be in danger of going out of business. Despite this, Berlin’s restaurants are also closed, but effective government aid has allowed businesses not to have to worry about their future.
Szimpla in Hungary does not have the same luck, especially since wage subsidies amount to little, Kiss said. Due to the sharp decrease in revenue, the company has had to lay off almost all of its workers.
Before the pandemic, we had 116 employees. Today there are barely more than 10.”
Kiss believes the current situation is not enough to bring back the entirety of Hungary’s party district as it was before the pandemic.
Gov’t Offers Aid to Certain Struggling Businesses
Zsolt Zsabka, vice president of the Budapest Chamber of Commerce and Industry, stated that the Chamber will create a fund for struggling businesses. The fund will cost 75 million forint (206 thousand EUR), which will be shared with the various businesses that need it most. The Chamber will wave 50 percent of voluntary membership fees users can offer to the fund and ask all well-off businesses to pay into it as well.
The Chamber’s attempts to provide aid may have come too late for certain restaurants in Hungary, and it appears the government’s programs have proven too inaccessible.
In February, Prime Minister Viktor Orbán announced a 10-million-forint (27 thousand EUR) loan for small businesses most severely impacted by the coronavirus. The prime minister emphasized that this subsidy is for businesses that are “small and in actual trouble, requiring a sum of money quickly.”
Despite this announcement, it has turned out that the eleven requirements of the subsidy make many of Hungary’s restaurants ineligible for it, for arbitrary reasons. Among the list of requirements, businesses are not eligible if they opened after January of 2019, if their business results were negative in 2019 due to renovations and investments, or if they had more than a 50 percent transfer of ownership after March 16, 2020.
Small Businesses Waiting for Aid They Cannot Access
Gábor Halmi, who opened his business in May of 2019 with his wife, told 24.hu that they had been waiting for a year to receive some sort of aid from the government.
Our employees received the wage subsidies, but this does not pull a business out of its struggles. We were eagerly awaiting the 10 million [forint] loan, we thought that it would help us make it through this period of crisis. Then we found out that this was also created for big corporations, who could assemble enough reserve funds in 2019. Why is it reason for exclusion if a company was formed in 2019?”
Another restaurant, which has been operating since 2014, told 24.hu that since most of their investments fell onto 2019, they ended up ending the year in the negatives. This resulted in them also being excluded from the loan.
Our company has been operating since 2014 […] In 2019 we opened a larger restaurant and were expecting our year not to be in the positives, since the first year of a business is rarely profitable.”
Various other small business owners have voiced their reasons for being excluded from the loan, emphasizing that they were counting on this money to help them make it through the pandemic.
Only time will tell how many of Hungary’s restaurants go bankrupt because of the pandemic. These results will show whether the government ultimately did enough to help them, or whether its measures of providing aid were too little, too late.
Featured photo illustration by Tamás Kovács/MTI