Anna-Christin first visited Russia whilst still a student in 1997. She came to practise her Russian, but such was the impression St. Petersburg made on her, she soon decided that she wanted to live here. Having taken in her surroundings, she found an opening for herself: there was nowhere in the city to go and unwind. Everywhere there were clubs and music venues, but not a single chilled-out bar.
– I’m not one of those people who likes to “hang out” in clubs, -Anna-Christin tells us. - I prefer quiet places. After university, I soon realised that an office job wasn’t for me. The decision to move to Russia swiftly led to the desire in me to open a bar. Although I hadn’t tried my hand at business in Hamburg, I reckoned that it couldn’t be all that difficult. I find it bizarre that Russians travelling round Europe never noticed that in Russia there was such a totally untapped market. In my student days, I came to Petersburg again and again. In 2004, I turned up for the final time and opened the bar Dacha. I had a network of friends and acquaintances, by then. I figured that if only they turned up, then the business would still be viable. And, if not: what did I have to lose? Not a great deal.
About Anna-Christin Albers
Graduated from the Philological Faculty at Hamburg University. Studied Russian Language and Literature. Visited St. Petersburg several times as a student to practise her language. In 2004, moved to St. Petersburg on a permanent basis and opened a bar called Dacha. A few years later, she embarked on a new venture, The Dunes: a beach bar in the centre of the city. In 2011, along with a Russian partner, she opened the karaoke bar Poison. All ventures have turned out to be successful.
She was 28 then. The optimal age for a startup. And the investment required was minimal.
– The 13,000 euros invested in Dacha was made back in two months. You can’t imagine how many times it was full to the rafters! – continues Anna-Christin. – And why was that? Just because there was now an interesting new place that was not like any of the others. It became the talk of the town. And the people came. They were queuing down the street.
When the punters come to Dacha, they are not expecting anything in particular to be laid on: they create the necessary ambience themselves. There are no waiters, no need to book a table. Visitors congregate at the bar, moving to the lounge tunes which are playing.
– Even compared to average prices in the city, the rent for this place is not expensive – Anna-Christin says, letting us in on the finer points of her business. – On the very same crossroads, one place can cost 1,500 roubles (about 40 euros) per square metre per month, and another 3,000. Why is that? No-one seems to know. I know what the prices are in this area. On Sadovaya St., it’s 5,000 per square metre. Nevsky Prospekt: 14,000. I pay 2,000. As the building, as it says in the contract, is in a critical condition, when we moved in here in 2004, we were told that it could be shut down at any time for structural repairs. That was a little bit scary. But what can you do? They dropped the hint that the building would probably be alright for the next two years. We took a risk, and we have now been working in these “critical” conditions for nine years.
A huge plus-point was my naiveté, something which is completely understandable at that age. Now, nine years on, I think: if I had known then what I know now, perhaps I wouldn’t have risked starting a business.
All the same, Anna-Christin came through all of these difficulties. She gained in experience. And she expanded the business.
Inga Mikaelyan, senior analyst of RBK.research:
– The restaurant market in Russia is experiencing a real boom today. New restaurants, cafés and bars are opening all the time. They offer interesting menus and also high quality service to their guests. The reason for such rapid development is the undersaturation of the Russian public catering market, and in particular the low level of competition compared with the US and European markets. For comparison, there are over 616,000 registered and operating restaurants in the USA, which is almost ten times the number of restaurants, cafés and bars operating in Russia. Note that according to the official statistics, at the beginning of 2012, there were 63,500 such establishments in Russia. There were also 30,400 eating houses and snack bars operating on the country's territory, as well as 62,300 canteens in educational establishments and industrial enterprises.
The investment climate is still further improved by forthcoming events: the Winter Olympics and a stage of the Grand Prix Formula One in Sochi in 2012, and also the World Football Championship, which is to take place in Russia in 2018. Investments have flooded into the industry in recent years, particularly due to the attractive investment climate in Russia compared to the stagnation seen in Europe and the USA.
It is worth noting that the restaurant market is not developing uniformly. The highest level of competition is in Moscow and St. Petersburg, which account for 14.3% (154.4 billion roubles) and 5.5% (55.8 billion roubles) respectively of the public catering turnover in Russia. Furthermore, the situation is not going to change radically in the near future (within the next two years), due to the high rates of development in these cities. Thus, of a total of 1,151 new chain restaurants, 157 and 186 respectively opened in St. Petersburg and Moscow over the past year, which confirms how attractive these cities are for investors.
– I’m starting something to fill a void I feel in myself. You work all summer and never get the chance to get out of the city. That leaves you knocking on the door of depression. I want sand and a beach right here in the city! That too, is very much a European concept. You bring in beach sand to the city centre and open a temporary bar outside. Which is what we have done on Konyushennaya Square, in one of the courtyards. The bar is called Dyuny (The Dunes). It paid for itself in a week. The most expensive thing about it was having the sand delivered.
Soon, of course, the economic crisis set in. They had to move to another location. Now, The Dune in Ligovka is a bar and café. With an outdoor area in the summer time. Parents come with their children to enjoy a cup of tea and some sunshine: right in the heart of the city. Young people stroll barefoot on the sand, sipping on a beer. Summer fare is kebabs from the barbecue, and, in winter, they serve sandwiches and hamburgers. And there are DJs on the decks 24-7. The bar recouped its outlay of 600,000 roubles (around 15,000 euros) in 2011, over a single summer.
– I invite local DJs. Resident DJs earn 500 roubles an hour. Technically speaking, it’s not that much. The bar staff are probably the best paid in Petersburg: they get up to 200 roubles/hour (weekends and holidays) and a bonus, depending on the takings. And, of course, they get their tips. It is a very good wage. I prefer to pay a bit more to make sure they provide good service and are honest. If you don’t, there is always the chance they might get up to some shenanigans. Ripping off the customer or their employer. I may pay more than most, but at least I know I won’t have my customers getting anything less than the 50 gram measures they order.
Although Anna-Christin hasn’t started a business in Germany, she is very much aware of the situation both at home and in Russia.
– As they say in Russia, both here and over there, they have a way of putting a spanner in the works. Although the problems in Germany are somewhat different. It’s easier to be granted an alcohol licence. Once you’ve got it, as long as you don’t break any rules, you’ve got it for life. Here, to obtain a licence, you have to go around numerous places, paying something to all of them, and, even then, the licence is only a temporary one. You have to renew it every year: and that costs 40,000 roubles (about 1,000 euros). Which is no small beer, especially when you’re still only a startup. Not to mention the rental agreement and permits from the fire department and from the SES (Health and Safety Executive) which you have to have to start with: and it’s only then that you can submit your application for a licence. And then, when you get up and running, there’s the rent to pay, and the stock to buy in. And then, what are you supposed to do, wait until you get the licence? I don’t think anybody does wait: I think they all operate without one at first. They just pray that they receive it sooner rather than later. You wouldn’t get away with that in Hamburg: there everything has to be in order in the first place. On the other hand, in terms of taxes, there are similarities. Back there, they are at 13%, like here.
On 1 March, a new law came out. Now, they don’t need as many documents. You don’t need papers from the fire department or SES but, on the other hand, you have to wait for permits from the Project-Investment Bureau and Federal State Registration Service. And I have to apply for a new license as well, so, in the meantime, we will have to work in a state of limbo, waiting to see if it’s successful. It’s hard, but such is the nature of business in Russia.
It is considered that Russians drink far too much alcohol. And Anna-Christin is further facilitating this. Is there not a moral dilemma there for the western entrepreneur? Anna-Christin laughs in response to this already anticipated question.
– When I am asked about whether I think that I am helping people to get drunk, I reply: yes, I do. But not Russians: foreigners. They don’t know how to drink, and think that in Russia you have to drink beer with vodka chasers. And then they wonder why they can’t find their way back home. The ones who always get into the worst state are the foreigners. But, I don’t get angry with them. So, they’ve had a bit too much on holiday: who hasn’t done that? And alcohol brings in a lot of money. You can use spirits as an example to work it out. Rum. I buy that for 1,000 roubles (25 euros) a bottle. If we sell it for 200 roubles (5 euros) per 50 gram measure, then that’s a profit of 400%. But most money goes on beer. That’s what people drink most of all. The purchase price is 50 roubles per half-litre. We sell that same half-litre for 120 roubles. And these prices are by no means the highest in Russia.
Anna-Christin has many regulars who come during the day just to sit, take in the relaxing atmosphere, and chat. Several of her former employees have opened their own similar establishments.
– For my third project, the karaoke bar Poison, a partner and I invested around a million roubles. It took longer to pay for itself than the previous places: almost a year. But we had factored that in. That, after all, is the way karaoke-lovers are. It’s not like in Dacha where I once counted 300 people on a Friday night. There are a lot of bars around here. People come in and sit down for half an hour, then move on. Then they come back, and go back and forth like that.
Aleksandr Prosviryakov, managing director of an investment bank:
– As in the majority of businesses related to property, the guarantee of success in the restaurant field is location, location and again location. Therefore we only looked at the most prestigious places in Moscow – the streets off Tverskaya, the Patriarshie ponds and the Arbat. This enabled us to find a suitable site, but not the usual type. It is a former top-class car showroom next to the Federation Council on Bolshaya Dmitrovka. It took about four months working virtually round the clock and more than two million dollars to turn the car showroom into an exclusive restaurant and bar. As for St. Petersburg, I think that such a business could be opened there for a third to a quarter of the price, because the basic costs, apart from repair, furniture and equipment, are the lease and the staff (in my case, these costs exceed $200,000 per month). I recently consulted a friend (who, by the way, is also a top manager of one of the investment banks), who opened a three-storey restaurant, bar and club in Kostroma, which only cost him $300,000.
For comparison: in the fashionable Meatpacking district of New York, my friends invested $600,000 in opening a restaurant and bar of 550 sq. m.
It doesn’t take a lot to succeed in this business – reckons Anna-Christin. The main thing is to keep the beer flowing and the music playing. However, the landlady must, of course, “mingle”, with her customers, get to know them, and take an interest in how they are getting on. Keep all the threads of relationships together. After all, some people go to Dacha to see her as well. Arguably, that is her main role in the business. All the formalities are taken care of by a lawyer.
– I recruited a lawyer and accountant through my friends. You need people to help out: running a business on your own is impossible. I look at the paperwork, and it’s some kind nightmare: I can’t make head or tail of it. But in Germany, my businessperson friends deal with the paperwork themselves. It’s so easy there with just a computer. Go online, two clicks, and your accounts are submitted. But here, there has to be five copies of everything. All with their own rules on how to fill them in. Some have to be by hand, others mustn’t be. It drives you mad.
Overall, I don’t see myself as a professional businesswoman. More of an amateur. I probably have an antiquated perception of a businessman as someone who learns law and understands bookkeeping. I’m not like that. But business has worked for me in Russia. Which means that it can work for others too.