Estonian restaurants need luck and resilience to survive

Running a restaurant or café in Estonia is a high-risk business, with rising costs and growing competition, ERR’s programme AK. Nädal reported. The programme examined what allows some food establishments to remain successful for years after Tallinn’s Boheem café announced it would close following 18 years in Kalamaja.

Entering the restaurant business means facing intense competition, high value-added tax and rising raw-material prices. Success depends not only on good food but also on the right location, a patient investor and a considerable amount of luck.

The first three years are critical for a restaurant, said Taigo Lepik, head chef at the Härg and Pull restaurants and president of the chefs’ association.

“Often, people do not consider that the first year will not bring a profit. At best, you may get close to breaking even,” Lepik said.

Estonia has more than 3,000 restaurants and cafés, a large number for a small country. On average, however, a food establishment survives for only five years, and the sector has faced a major wave of closures this year.

“People in the sector already know that another wave of closures will come in the autumn, so the closures we have seen today are only the first ones. I think things will become more challenging in the coming months,” said food journalist Paula Säre­kanno, presenter of the programme Toidujutud.

Experts say every restaurant must endure significant ups and downs. Those able to save some money during better periods have a clear advantage when difficult times arrive.

Very small restaurants with limited seating can create demand because customers struggle to get a table, Säre­kanno said. This can produce a fear of missing out, encouraging people to wait longer for a reservation.

Businesses built around high volume, including café chains, also tend to perform well. Between these two models is a middle ground where some establishments succeed and others do not.

“The sweet spot is finding the optimal size, a good location and an excellent product that people come to like,” Säre­kanno said.

Even a precise business plan and a top-level kitchen may not guarantee success if the surrounding urban space changes and the neighbourhood becomes saturated.

Rotermann, an area of central Tallinn, has 26 or 27 food establishments, with more planned at the forthcoming Talsinki development, Lepik said.

“Opening a restaurant is a very large investment. I do not believe anyone opens one with the goal of lasting three years. That is an idea doomed to fail from the outset,” he said.

Few establishments in Estonia remain in the same location for more than 10 years. Boheem café in Kalamaja was one of them.

“We have been here for 18 years. At first, people did not believe that a café would succeed here. That was luck,” said Boheem founder Harry Randma.

Location is often described as the secret to making a restaurant work, Randma said, but he added that the surrounding people also matter: regular customers, friends who visit almost every week and the wider community.

Boheem is nevertheless now preparing to close. Randma said one restaurant owner in the same district had remarked that so many food establishments had opened that by the time a customer reached his restaurant, they had already eaten three times and drunk five beers.

Survivors must therefore find a balance in a changing urban environment.