Restaurant Industry in the Tourist City of Eastern Europe: Post-COVID-19 Perspectives – The Case of Lviv, Ukraine

Restaurant Industry in the Tourist City of Eastern Europe: Post-COVID-19 Perspectives – The Case of Lviv, Ukraine

Mykhailo Rutynskyi, Halyna Kushniruk
DOI: 10.4018/978-1-7998-9148-2.ch012
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Abstract

This chapter is devoted to the issue of post-COVID-19 revitalization of the restaurant industry in Lviv – one of the most representative tourist cities in Eastern Europe. Lviv is a fashionable and inexpensive destination of international gastronomic tourism. The modern restaurant industry developed in Lviv until 2020. Statistical trends of losses of the city's restaurant industry, in 2020 to the the first half of 2021, are unprecedentedly: 27% of establishments were closed; more than 55% of staff lost their jobs. However, the status of the cultural and tourist capital saved the restaurant industry of Lviv from collapse. Thanks to the acquired image and promotional campaigns in 2020–2021, domestic tourists actively visited Lviv during periods of easing of quarantine restrictions and enjoyed original local gastronomic products. The strategic goal in the post-COVID-19 era is to complete the transformation of the traditional business partnership into an updated smart hospitality cluster in Lviv.
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Introduction And Background

Due to the COVID-19 pandemic, which had led to social distancing, remote working, and even the closure of the restaurant business, many restaurants have faced enormous operational challenges. However, in 2021, the restaurant business is expected to grow, mainly due to companies rearranging their operations and recovering from the COVID-19 impact. The global restaurants market is expected to grow from $2193.94 billion in 2020 to $2619.27 billion in 2021 at a compound annual growth rate (CAGR) of 19.4% (Restaurants and Mobile Food Services Global Market Report, 2021).

The COVID-19 pandemic caused massive restrictions on the restaurant market in 2020, as governments imposed restrictions on domestic and international travel, limiting the need for services offered by these establishments. In 2020-2021, Ukraine proved to be the weakest country in Europe in terms of the effectiveness of counteracting the COVID-19 pandemic and supporting business entities. In particular, the tourism sector and the hospitality industry have been the most vulnerable to restrictions. As a result, tourist centers in Ukraine have suffered large-scale destructive losses (Danylyshyn, 2020; European Bank Report, 2020; etc.). The hospitality industry of Ukraine consists of almost 100 thousand commercial facilities – restaurants and cafes, hotels, tour operators and travel agencies. From March 2020, all these facilities were completely closed until the summer for the period of total lockdown. Further functioning of the hospitality sector graphically resembles a sinusoid, where situational restarts chronologically coincide with the easing of quarantine restrictions introduced by the government, and alternate with periods of stagnation in the relevant periods of total lockdown in Ukraine.

According to official data, the hospitality business in Ukraine by the end of 2020 lost at least $ 1.5 billion. More than 400,000 HoReCa employees have lost their jobs. The hospitality industry of major tourist cities of Ukraine has suffered huge financial and infrastructural losses. In particular, in 2020 the restaurant industry of Ukraine lost almost 4 thousand restaurants (20.7% of the total). As of January 1, 2021, there were 14,786 restaurants, cafes and bars (vs 18,636 establishments in 2020). The capacity of the restaurant market decreased in 2020 by almost 30% and amounted to $ 0.5 billion (State Statistics Service of Ukraine, 2021).

At the beginning of 2020, about 550,000 people worked in the restaurant sector. Now there are a third less of them. Almost 150,000 employees in the restaurant industry have lost their jobs due to lockdowns and quarantine restrictions in Ukraine. These are the people who worked in cafes and restaurants that closed due to the pandemic COVID-19 and those who were fired due to falling restaurant attendance. Most of these people will not return to work in the restaurant industry. Most of them have found work in other fields. The professional labor market, which has been formed over the years, has suffered huge losses. In 2021, this caused a big problem for the restaurant industry, many restaurant establishments simply cannot find enough professionals.

The biggest financial and infrastructural losses were suffered by the hospitality industry of large tourist cities of Ukraine, which was market-oriented to serve tourist flows, which grew steadily until 2020 (Rutynskyi & Kushniruk, 2020a). In Kyiv, Lviv and Odessa, every seventh restaurant closed after the spring lockdown (14% of the total). The number of other food establishments decreased by 12%.

Lviv is one of the largest tourist cities in Eastern Europe. It should be noted that the historical center of Lviv is included in the list of the UNESCO World Heritage Sites (L’viv – the Ensemble of the Historic Centre, 2021). The city is located near the eastern border of the EU and thanks to popular low-cost flights is tightly integrated into the pan-European international travel industry. Lviv is closely connected with more than a hundred large cities of Great Britain, the EU, Turkey and other countries of the Eastern Mediterranean, the Caucasus, and the Arabian Peninsula through a network of low-cost routes.

Key Terms in this Chapter

Post-COVID-19 Perspectives: A period of recovery of the potential of the global and regional markets of the restaurant industry and gastronomic tourism after the lifting of quarantine travel restrictions imposed by governments around the world in 2020-2021 to counter the spread of the COVID-19 pandemic.

Pre-COVID-19 Era: A period of stable dynamic development of the restaurant industry in the 21 st century (except for the collapse of 2008 due to the financial crisis), which lasted until March 2020, that is, before the global COVID-19 crisis.

COVID-19 Crisis: A global complex crisis caused by the COVID-19 pandemic. The outbreak began in December 2019 in Wuhan (Hubei, China), and was recognized by the WHO as a pandemic on March 11, 2020. Restaurant industry has faced huge financial losses due to international quarantine measures.

Lviv (Ukraine): The city is located in the west of Ukraine, near the eastern border of the EU. It is one of the most representative tourist cities in Eastern Europe. Lviv is a fashionable and inexpensive destination of international gastronomic tourism. The historical center of Lviv is included in the list of the UNESCO World Heritage Sites.

Ukrainian Ethnic Cuisine: It is one of the richest and most colorful national cuisines in Central and Eastern Europe. Today, Ukraine is at the stage of international legal consolidation of the top ten of its food geographical indications. And such restaurant dishes of Ukrainian cuisine as borshch, galushky, varenyky with cherries or cheese, potato pancakes (deruny), Carpathian dishes with white mushrooms and others are recognized tourist cards of the state.

Gastronomic Tourism: It is a type of tourism associated with acquaintance with national and local culinary traditions of the world and with the tasting of local cuisine. Gastronomic tourism, in addition to the actual consumption of unusual (exotic) dishes and drinks, includes a number of other events. Among them: culinary master classes; visiting festivals and fairs of food and drink; participation in thematic gastronomic excursions to local cuisine establishments; participation in specialized gastronomic ceremonies; purchase of local food products; visits to farms and plantations (coffee, tea, etc.), food markets and producers of popular local food.

Local Cuisine: It is a cuisine based on the traditions of cooking and serving dishes typical of the culture of different nationalities and local communities. Features of local cuisine: geographical mosaic of ethnocultures of the world; the influence of different natural and agro-climatic living conditions, mentality, religious and ritual and other traditions; geographical diversity of historical traditions and cooking, etc. As a rule, local cuisine has noticeable differences from the national cuisine of the country.

Restaurant Industry: It is an industry of restaurants, cafes, bars, fast food and other food service providers that allow customers to enter, order food, and eat on the premises, as well as order takeaway food. The restaurant industry is part of the hospitality industry.

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