According to data available to the market research agency COMCON, 32 percent of the population visits cafes and restaurants on a regular basis. Most recognizable on the market are Western fast-food brands, which are developed here mostly on franchising schemes and are rather widely represented on the Russian market (except Grillmaster). Unlike in the hotel industry, where world-famous hotel chains dominate the market, while national ones are in an embryonic state, a number of national brands and chains are present in the restaurant sector.

"The Russian market of public catering is experiencing a boom," said Andrei Petrakov, analyst at the consulting company Assessor and the head of the Restkon project.

"Some experts say the boom will continue for another two years, while others argue the market will be booming for a whole decade to come. In reality, the boom is largely an invented phenomenon caused by a widespread enthusiasm for going in for restaurant business. The fever was sparked by the growth in people's incomes, and, consequently, will abate as soon as the people's incomes go down. What the restaurant market needs in the first place at this stage is a rating classification. It is necessary to make up a unified system of assessment basing on a set of criteria. Another trait clearly visible on the market is a shortage of restaurants in the middle segment, which is one of the most promising segments of the business."

"Even in its most developed segment – fast-food in Moscow – the market is far from saturated, not more than by 60 percent," said Igor Slobodinsky, the head of the restaurant chain Mu-Mu. "There is a lot of space to develop, it's a real virgin land."

The Mu-Mu chain, which is part of the Andrei Dellos restaurant group, announced its plans to develop under a franchising scheme in the summer of 2001, but later had to abandon the plan due to the lack of clarity in the legislation. As Igor Slobodinsky commented, there is money and there is willingness to work, but there is no real business concept. A lot of offers are coming from the regions, but so far "Mu-Mu" has been forced to limit its operations to Moscow, where it is adding two restaurants soon.

Unlike Mu-Mu, the franchising project Yakitoria, owned by Vesta-International company, launched its first restaurant in the summer of 2001 and is reportedly developing successfully.

"In March, we plan to open a restaurant in St. Petersburg and in the near future we will open restaurants in Samara and Perm," Andrei Ozol, director of development at Vesta-International, said.

Here it has to be noted that such announcements in the press very often remain on paper only for quite long a time. For example, Russian restaurant holding's Rosinter recently announced plans to establish a chain of cafeterias named Barrista and a chain of beer bars in cooperation with Sun Brewing. However, these plans remain on paper only.

"Our first cafeteria will open in May," Yelena Novitskaya, PR manager of the company said in a recent interview. In general, Rosinter is developing at a high tempo, particularly in the mid-market segment. According to Novitskaya, seventeen new restaurants were opened during the last year, and the company's turnover rose 35 percent.

A number of Moscow-based companies plan to enter St. Petersburg market this year. Among them are YuNTD (holder of a Sbarro franchise), Lunch (owner of the Elki-Palki chain), Rosinter and O.G.I.

The tendency of Moscow-based companies seeking to establish presence is St. Petersburg is quite understandable. St. Petersburg's market is currently gaining momentum and is stimulated by certain political, economic and social factors. Besides, the companies are pinning hopes on the city's upcoming 300th anniversary, which will obviously cause a huge influx of tourists. It is interesting to note that both Rosinter, Vesta International and Lunch have potential of developing in all segments of the market, but are actually developing in the mid-market segment. Another promising segment of the market, according to experts and insiders, is that of cafeterias, despite the fact that Russia is traditionally called a "tea-drinking" country.

"Representatives of the middle class get together mostly at their houses," Andrei Petrakov said. "But there is a shortage of decent places where people can just seat and talk."

Deserving attention in this connection is the success of a number of rather specific projects, for example O.G.I., which was originally oriented on Moscow's artistic bohemians. O.G.I.'s business has rapidly developed through inconspicuous "sandwich-houses," which were designed precisely as places "to sit and talk." Besides, O.G.I. has enriched Russia's nascent restaurant market with a new instrument: It has issued shares targeted primarily at its regular patrons.

"The shares have sold slowly so far," company president Dmitry Itskevich said. "Not much time has passed – only a couple of months – and I hope success is ahead of us." Asked about his target group, Itskevich said middle class.

There is no clarity about market volume estimates, even for Moscow. The figure is changeable and depends on many factors. Recently, the marketing agency COMCON conducted a research aimed to figure out public preferences both in the choice of brands and cuisine.

"The market's growth in the last year was largely a result of the growth in the people's incomes," Andrei Petrakov said. "But only some 30 percent of the operations are really profitable – I'm not speaking of trendy spots like Novikov's or Dellos – but many people set up restaurants pursuing the goal of diversifying their business. Such operations barely manage to run with zero profit, and even that is only thanks to hosting banquets. I must say that a lot depends on the quality of management. And besides, it is possible to show a business as super-profitable as well as super-loss-making in the books," Petrakov explained. Commenting on the market in terms of restaurant sale/purchase, he said it's the seller's market, meaning that it is very difficult to buy a restaurant, especially in the center of Moscow.

The available data on the number of restaurants in Moscow are inconsistent, and vary from 700 to 2,000. This is not a high number by international standards: large European and American cities have by an order of magnitude more restaurants.

(The author is a Moscow-based freelancer)