Covid-19 Budapest update: restaurants start to grapple with life after tourism

As others globally, Budapest restaurants are scrambling to adapt to the new circumstances. However, places have become so dependent on foreign tourists — who have now all vanished — that the future looks especially grim.

For the last ten years, the number of visitors to Budapest’s thermal baths has been breaking its own record year after year. Ruin bars have been so packed they’ve needed to hire bouncers. As with many places around the world, tourism has become an increasingly important part of Budapest’s economy.

Restaurants across the city were some of the primary beneficiaries of the influx of visitors. On Friday and Saturday evenings, foreign chatter would spill out of dining rooms across town. There were places that went for days without a single Hungarian patron. Same-day bookings proved nearly impossible, not just in the city center and the Jewish Quarter but as far as remote neighborhoods in parts of District 8 and District 9.

Foreign visitors to Budapest nearly doubled in the past decade, exceeding four million people in 2019. The growth has been especially strong from well-off countries like the United States (and also China: the number of Chinese tourists more than quadrupled). Last year, tourism accounted for a total of 11 percent of Hungary’s GDP, up from 9 percent in 2013. The sector employs nearly 500,000 people across the country, much of it concentrated in Budapest.

The novel coronavirus has now decimated Hungary’s tourism in just a matter of weeks. Airlines are stranded, hotels empty, cabbies without a ride for days. Restaurants are just starting to face the scale of the pandemic. As elsewhere globally, they desperately pivoted to delivery service, but things aren’t the same without deep-pocketed tourists.

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Cafe Gerbeaud, a historic establishment dating back to 1884, has largely depended on traffic from tourists.

“We can’t make home deliveries economical when locals spend on average 2,000 forints (€6) for a meal,” said Ágnes Szalai, the proprietor of Hilda, a downtown restaurant that largely depended on tourists. Last Wednesday, Hilda closed its doors at least until the end of June. As an unusually generous gesture, Szalai retains all employees and pays them a reduced salary until then.

In addition to Hilda, dozens of restaurants have immediately shuttered their doors for now: Mazel Tov, Fricska, Mák Bistro, Börze, and Padron are just a few of the prominent establishments.

With an average monthly after-tax salary of €1,000, most people in Hungary can’t afford to regularly eat out. Plus as tourism increased, so did restaurant prices: €9-11 main dishes have become the new standard across much of the city. Restaurants usually offer a wallet-friendly lunch prix-fixe geared to locals, but the money was made on tourists (many waiters automatically greet walk-in guests in English).

Even some legendary establishments are now in trouble. “We’re fighting for survival,” said Anna Niszkács, Managing Director of Gerbeaud Group, to which belongs both the historic Gerbeaud Café, which opened in 1884, and also Onyx, Central Europe’s only two Michelin-starred restaurant. “About 90 percent of our customers were tourists at both Gerbeaud and Onyx,” she added. For now, Gerbeaud kept most of its 210 employees but Niszkács says that high fixed costs and rent payments are quickly eating up reserves.

Kiosk, a major restaurant group, decided to stay open and service deliveries. Although their regular tourist-centric a la carte menu features things like a €15 roast pike-perch and a €17 schnitzel, now they’re offering a multi-course lunch for less than half of those prices. “Our goal is to keep as many of our people employed as possible,” said Ildikó Tőke, the head of marketing.

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The road leading up to the normally packed Chain Bridge in Budapest. Photo: Tamás Kovács/MTI.

An unforeseen consequence of so many restaurants suddenly shifting to home deliveries is that they make life harder for places that had historically relied on online orders.

“Both of the bars on our block started offering burgers for delivery just this week. This is bad for us,” said Laci Nguyen Duc, a Vietnamese-Hungarian who runs a banh mi shop in District 7 and relies heavily on takeout orders.

Steep road ahead

“I hear from chefs who’re moving out of their apartments because they can’t pay rent. The lucky ones get to move in with their parents,” said Tamás Molnár B., president of the Hungarian Culinary Society (Magyar Gasztronómia Egyesület). “We’ll need a massive bailout similar to what the Germans did,” he said, referring to the German stimulus package that includes a program helping small businesses with direct payments of up to €15,000.

So far, the Hungarian government has announced two sets of economic measures in response to Covid-19. Some of these are specifically aimed to help restaurants: payroll and tourism contribution taxes have been eliminated, and landlords are forbidden to terminate rent contracts through June 30th.

These are good initiatives, but more is needed, say restaurateurs. “How should I pay for anything when I have literally zero money coming in?” asked Péter Andrusch, the owner of Alabárdos, a restaurant in the normally tourist-heavy Castle District.

The government promised that new measures will be announced soon. Balázs Csapody, the president of Pannon Gasztronómiai Akadémia Egyesület, the main lobbying coalition for restaurants in Hungary, said they’ve “submitted specific bailout proposals to the Hungarian Tourism Agency,” but he wouldn’t say what those proposals were.

Stimulus plans already in place in other countries could be useful pointers for Hungarian restaurants and lawmakers. The coronavirus relief bill in the United States provides forgivable loans to restaurants to cover fixed costs like rent and utilities subject to places rehiring their staff by the end of June. In Denmark, the government is paying workers’ salaries for the next three months and also covering rent payments as long as companies keep employees on payroll.

In the meantime, there's more that Budapest restaurants could do. Selling merchandise and gift cards and soliciting donations to employee relief funds can provide much needed short-term funding, but few places have explored these alternatives. In New York City, there’s even a dedicated website where people can directly buy gift cards from thousands of restaurants. Also there, some chefs have started to capitalize on their celebrity status to raise funds. Daniel Humm, head-chef of three Michelin-starred Eleven Madison Park, is offering private wine tastings and cooking events via online auctions.

Overall, it seems that the long-term bailout of Budapest restaurants will have to come from tourists returning to the city. This, of course, depends on how long it takes to contain the global spread of Covid-19 and whether people will have money left to travel. The worry is that the gap between life returning to normal and tourism bouncing back may be painfully long. Péter Andrusch isn’t optimistic. “Economies will be in ruin, people jobless. Visiting Budapest won’t be a priority.”