Russia's dining slump deepens as cafes close and demand fades

By Ekaterina Maksimova

MOSCOW, Feb 19 (Reuters) - Restaurants and cafes are closing down in Russia at the fastest pace since the start of the war in Ukraine four years ago as consumption stalls even in affluent Moscow.

The closures, visible on streets from the capital to Vladivostok 6,500 km (4,000 miles) east on the Pacific Ocean, point to a significant slowdown in Russia's $2.8 trillion economy, which has so far proved surprisingly resilient in the face of stringent Western sanctions.

At the BonCafe bakery in southwestern Moscow, the shelves are empty of cakes and pastries, the espresso machine is silent and owner Yekaterina Oreshkina, 39, sits amid the dust and regret of a failed business. 

"When we opened, we didn't expect such a downturn," Oreshkina, who owns a chain of such cafes, told Reuters over the mosaic-topped tables her children helped to decorate.

For Oreshkina, the traditionally slow January proved the final straw after costs ballooned due to the combination of a 50% rise in ingredient prices, high rent and higher taxes. She closed the bakery but has kept her other cafes open.

Their signature "Napoleon" cake, said to be named after the French emperor who invaded Russia in 1812, is a decadent mille-feuille dessert of multiple puff-pastry and cream layers that costs 2,850 roubles ($37) per kg, or 300 roubles ($4) a slice.

Many Russians, though, are cutting back on discretionary spending - particularly on expensive eating out - at the fastest rate since the shock of the February 2022 invasion.

RUSSIANS TIGHTEN BELTS 

Guided by President Vladimir Putin's crack team of economic officials, Russia has reported better average growth than the euro zone over the past four years despite being hit by some 24,000 Western sanctions. 

But high interest rates, higher taxes, rising prices and a $20-per-barrel discount for Russian oil are taking their toll - even in Moscow, a vast urban area of 22 million people that has been largely insulated from the worst impact of Europe's deadliest war since World War Two. 

"To let" signs are prominent in retail spaces across the capital. Sales of new light commercial vehicles and trucks, a good indicator for the health of the retail and construction industry, fell by 38% to 147,000 units in 2025 and have continued to fall in the first weeks of 2026, Autostat said.

Data from Sberbank, which as Russia's biggest bank sees the ripples of expenditure across the economy, showed that the fall in the number of catering outlets in January was the biggest since 2021 and that restaurant spending hit the lowest in three years in November-early December 2025.

The change is especially striking as major Russian cities saw a restaurant boom before the pandemic, and some politicians bridled at what they saw as Moscow's "decadent frivolity" while soldiers were being killed or injured at the front. 

Overall, real consumer spending growth fell to zero in February for the first time in two years, Sberbank data showed. Russia forecasts economic growth of 1.3% this year after 1% in 2025, 4.9% in 2024 and 4.1% in 2023. The International Monetary Fund forecasts 0.8% growth for 2026.

Across Russia's 11 time zones, central bank research showed, people are seeking cheaper options: fast-food or supermarket meals instead of restaurants, discounted food in supermarkets, repairs of cars rather than new purchases, and a cooling housing market.

"Cafe and restaurant closures increased in the capital in 2025 compared to 2024, while the number of takeaway coffee outlets continues to grow," the central bank said.

WAR ECONOMY 

Russian sources say that while there are certainly problems in the economy, it is still performing remarkably well and they dismiss suggestions of its demise as premature. Besides, Putin is unlikely to change course on Ukraine due to restaurants shutting their doors, they said.

Nevertheless, Putin earlier this month told top economic officials to restore the growth rate and urged them not to simply monitor prices. Just 10 days later, the central bank cut rates by 50 basis points to 15.5%. 

Olga Belenkaya, head of the department of macroeconomic analysis at FG Finam, a leading Moscow financial services company, said state statistics showed Russians were saving more and paying off mortgage debt, especially as money became so expensive after the central bank hiked rates to 21% in 2024.

Borrowing costs - advertised by major banks at about 18-19% for unsecured loans to business - have hit small businesses and consumers hard, especially after some lenders imposed stricter limits on consumer credit. 

"Because we are a goods-based business, we have to borrow constantly, taking on new loans and refinancing old ones," said Yelena Bannikova, the founder and owner of the "VeroVika" Korean beauty store.

"High interest rates have had a very strong impact on us. The refinancing rate is high, and refinancing has become extremely difficult, almost impossible."

(Writing by Guy FaulconbridgeEditing by Gareth Jones)